Peak Season for Intermodal

The peak shipping season in 2018, which appears to be starting earlier than in prior years, will give cargo owners some unprecedented challenges.

Intermodal traffic went up 7 percent from January to May, according to the Intermodal Association of North America. 40-foot container numbers moving on the rails rose 7 percent. 53-foot containers increased 6.4 percent and trailer-on-flatcar shipments jumped 17 percent. Over the past five years, overall intermodal volume grew 12 percent.

A god deal of the upturn in this year's domestic intermodal has been tied to the US electronic logging device (ELD) mandate. With truckload capacity tightening to record levels, many shippers have turned to rail to get goods off port docks. Because truck drivers can no longer use paper log books, some regional drays from ports have transferred to intermodal hauls.

Intermodal marketing companies (IMCs) and truckers are warning cargo owners that this peak season will be as tight as ever, and the last minute, or 11th hour, appears to be now, and not in August.

Union Pacific Railroad is booked up on contracts out of Southern California for the rest of the year, the company has stated. Although UP hasn't made other announcements, it's likely that more markets will be locked up soon, with surcharges possibly on the horizon for excess freight beyond contractual allotments.

The intermodal spot rate per 53-foot unit from Los Angeles to Chicago is up 65 percent from last year, and from Los Angeles to Dallas is up 110.3 percent. The rate from New Jersey to Chicago is up 39.4 percent, with the New Jersey-to-Dallas rate jumping up 42.6 percent.

Phil Shook, intermodal director for C.H. Robinson, said there will be very few trucks or domestic containers available in Southern California through October or November.

"While this is earlier than usual, I think we all planned for this tightness, which is why you saw the announcement from [UP]. Other large capacity providers are taking a similar approach, though they may not be as public about it," he said. "The bigger concern I have is the tightness in some of the secondary markets such as Dallas, Houston, Atlanta, and Memphis. Dallas and Houston are normally points of surplus container capacity, which can be used to generate empties into Southern California. If these secondary markets are tight, it reduces the number of relief valves for Los Angeles."

Perhaps not surprisingly, finding a truck to haul a 53-foot container in Los Angeles is difficult right now. "You have an ocean box, you'll find five or six draymen able to take it out today. You have a 53-foot box out of UP, it'll take two days to get a driver," said Jason Hilsenbeck, founder of LoadMatch and Drayage.com, an intermodal directory and container-matching service in the Chicago area.

Rob Kemp, president of DRT Transportation, said shippers learned their lesson during the past 12 months. "There is an appetite on both sides to prepay and lock-in capacity today," he said. "It's going to become a free for fall come Aug. 1."

For shippers who haven't locked in their capacity, it's likely that they'll have to turn to the spot market and pay at least 50 percent more, or even double the rate of last year on some routes.

While containers are the primary concern in domestic intermodal, chassis tend to be a chokepoint in the international business. Although chassis providers have taken considerable efforts to upgrade and buy new equipment, there is more to the equation than raw numbers. One problem can trickle throughout the system. This winter, for example, inclement weather and staffing and equipment shortages wreaked havoc on the supply of chassis, usage of containers, and available drayage.

Patrick Maher, executive vice president of Texas-based drayage provider Gulf Winds International, said he was already seeing issues in Dallas and he anticipates chassis shortages this autumn.

"When trains bunch, boxes pile up in a railyard or a shipper's yard and they're sitting on chassis for a longer period of time. That's when you see the shortages. So it's a question of fluidity, not necessarily the number of chassis in the market," he said.

COSCO Suffers Cyber Attack

In late July, COSCO Shipping Lines was the victim of a cyber attack. They have recovered from the hack, and have stated that its network applications in the Americas have been totally recovered.

"All communication channels including telephone, email, and electronic data exchange have been restored. There has been a further increase in our service response. We are working at full stretch to process all the service requests received previously, and the service response is expected to be back on track within this week. Global networks of COSCO Shipping Lines are safe and stable, and our global business operations are steady and orderly," the company said in an update.

Initially, it was reported that the customer service platform at COSCO's terminal at the Port of Long Beach was targeted by hackers. The company later said that the network breakdown affected offices across the American continent. Included in the network failures were the United States, Canada, Panama, Argentina, Brazil, Peru, Chile and Uruguay. The company's ships, however, were not affected and continued operating as normal.

Commenting on the cyber attack, Naval Dome CEO Itai Sela said that the incident was very worrying.

"While COSCO shut down its connections as a precautionary measure, we have to emphasize that ships are not islands, they are not self-contained units. This is a mistaken belief. Shore- and ship-operations are cyber-connected," he said. "If shore-based and ship-based IT systems are linked, it could open a gateway to the COSCO ships, leaving them highly susceptible to an attack. Vessels do not need to be attacked directly but an attack can arrive via the company's shore-based IT systems and very easily penetrate the ships' critical OT systems.

Charleston Begins Wharf Work on Terminal

In the post-Panamax era, vessels have been discharging cargo on the US East Coast because it's a cost efficient way to move goods. At the port of South Carolina, officials believe that within the next ten years containers will be moving on mega-ships.

With ocean carriers purchasing 22,000 TEU vessels, the 10,000- to 14,000-TEU vessels are being bumped from Europe to US destinations. Some are traveling through the expanded Panama Canal, but port officials in South Carolina predict that ocean carriers will eventually send 18,000-TEU vessels to the East Coast through the Suez Canal. Mega-ships like these enable ocean carriers to reduce their costs and pass those savings on to beneficial cargo owners. In 2020, the low-sulfur fuel rule could push carriers even further toward mega-ships and scrapping smaller ones.

In order to accept the mega-ships, the South Carolina Ports Authority (SCPA) has given the go-ahead for building the Hugh K. Leatherman Sr. terminal in North Charleston to capitalize on the outlook. The project, which is expected to open in fiscal 2021, will allow the terminal to unload one 18,000-TEU vessel. The Port of Virginia, in a similar move, is also eyeing mega-ships as part of its redevelopment project.

The SCPA approved a $53.8 million contract to a joint venture of Cape Romain Construction and McLean Contracting in mid-July to build a 1,400-foot berth at the Leatherman Terminal. WSP will construct ship-to-shore gantry crane rail and support beams, a ship fender system, mooring bollards, water service stations, power cable vaults and conduits, an extension of exisiting stone revetments, and other ancillary works. Work is scheduled to begin next month and be completed in April 2020.

A second berth, 1,300 feet in all, will be finished in 2026 and a third in 2032, capable of handling 2.1 million TEU annually. While Leatherman's berth will be the same length as the Wando Welch Terminal, the new terminal can handle 18,000-TEU vessels because of a stronger fender (bumpers that absorb the kinetic energy of a vessel against a berth) and cranes capable of lifting 169 feet high and reaching wider, the port authority said.

An average 18,000 TEU measures 1,300 feet long and 194 feet wide. The COSCO Development - a 14,000 TEU vessel that visited the East Coast in 2017 - is 1,200 feet and only 158 feet wide. So while an 18,000 TEU vessel is only 7.7 percent longer, it's 23 percent wider.

Jim Newsome, executive director of the SCPA, stated that he believes a commercial 18,000-TEU vessel will discharge on the East Coast within two years. "There will be 52 slings of ships that are 14,000 TEU and above by 2020 and you only need 35 to handle the Asia-to-Europe trade. So there are 17 that can go elsewhere. Where is elsewhere? A large share has to be here," he said. "If you want to remain a top 10 port, you need to spend to keep up with these latest shipbuilding trends. This is what will separate niche ports from top-notch locations," Newsome said.

Barbara Melvin, senior vice president of the SCPA, added, "Charleston will be ready when those ships are regularly calling the East Coast."

Getting to Know IFT:
IFT Spotlight Salomon Wainberg

In the post-Panamax era, vessels have been discharging cargo on the US East Coast because it's a cost efficient way to move goods. At the port of South Carolina, officials believe that within the next ten years containers will be moving on mega-ships.

Salomon has a strong work ethic that he learned from his family and previous professional experiences. He prides himself on going the extra mile to find solutions to problems and satisfying the requirements of both clients and co-workers alike.

He finds that the family nature of IFT suits him very well. The closeness of the team and the structure, discipline and vision of the company stirs a passion in him to give his best in every situation.

When he has some down time Salomon enjoys spending time with his family and friends on the weekends. During the week, he finds it relaxing to unwind and reflect on the business of the day by listening to music and recharging himself and freeing his mind.

We wish the best to Salomon in his future at IFT as both he and the company grows and succeeds in providing the highest quality services to their customers and partners.