Congestion clogs Chicago and Midwest rail ramps in wake of western labor strife
ITS Logistics forecast also says shrinking profit margins could soon trigger trucking capacity to exit the market at an “alarmingly high rate”
Congestion and delays are manifesting at Chicago and other Midwest rail ramps as the industry continues to rebound from the recently resolved British Columbia labor issues, according to the August forecast of ITS Logistics’ “US Port/Rail Ramp Freight Index.”
“There are side effects still being felt from the labor disruption in Western Canada, specifically at the Eastern Region rail ramps in Chicago and the Midwest,” Paul Brashier, ITS’ vice president of drayage and intermodal, said in a release. “As weeks of affected IPI container volume finally begin to make its way via rail from Vancouver and Prince Rupert to Chicago and other Midwest ramps, congestion and delays are occurring at those locations. For most of August, these ramps will experience a lack of ocean container chassis availability and significant congestion causing an increased likelihood of storage and detention charges.”
The study also predicted an increased likelihood that trucking capacity will start exiting the market “at an alarmingly high rate,” the Nevada-based third part logistics provider (3PL) said. That’s because analysis of trucking rates versus carrier operating costs and recent increases in fuel prices are crimping profitability, meaning that many small to medium size trucking companies will be operating at a loss unless rates increase.
“Current forecasts show rates for trucking to start increasing around Lunar New Year 2024, as regular container volumes should return for that period. This will occur for the first time in almost two years, as shipper and BCO inventory levels should normalize for the first time since the pandemic,” Brashier said.
In reaction to those challenges, ITS advised that companies should avoid booking low-inventory or high-demand SKUs to the ramps of the Midwest via inland point intermodal (IPI). Instead, that inventory should be transloaded and then moved inland by way of truckload or intermodal. Furthermore, as the freight sector of the industry experiences a slower season as of now, shippers should take time to properly vet the overall fiscal health of their trucking providers, selecting trucking partners that provide more value, not just the least expensive rate.