Are supply chain issues improving as we close out the year? (Tony Hatch)

The Supply Chain problems as seen in rail intermodal persist, and the debate continues concerning inflection.  The Intermodal Association of North America (IANA) November volume numbers show, as did the separate, red apples-to-green-apples comparison from the AAR, a tough month: Intermodal volumes down 9% (the AAR’s figures, rail-only, are worse – down almost 12% for North America – and that’s with Mexico “only” down 1.2% as Lazaro re-opened). IANA’s splits show domestic down a tad (-1.2% - domestic containers down “only 0.5% YOY), while ISO, 40’ internationals were down a whopping 17%. YTD numbers by both trade associations report gains in the +5% range. This a big complex situation impacted of course by global events and, as reported today by the WSJ, by unequal global growth: with US ports up ~20% YTD (note the gap to IANA YTD ISO container growth of 7.4%), EU ports are essentially flat YOY. Maybe that will change – November US retail sales were up only modestly (month/month – still up 18% YOY).

Are things getting better?

  • There are only about 30 ships staged outside of LA/LB – but of course, as we all know now that’s as much to do with staging ships (queuing all the way across the Pacific; totaling still ~100) – talk about “optics”!
  • The administration has put in place plans to speed up certification and apprenticeship for truck drivers.
  • Warehousing scarcity is real and unbalanced – the US vacancy rate is 3.6% (tight) while California’s is 0.7% (diamond-creating tight). 
  • UP and BNSF have stopped metering traffic into Chicago, etc – and, rather bizarrely on the surface, are encouraging more ‘Intact” (40’) volumes at the expense of trans-loaded 53’ containers, to help the storage issue at AL/LB.  I am sure this pleases the Ag interests who have complained about the lack of 40’ boxes to stuff backhaul west, but how does JB Hunt feel about that?
  • The real tragic, Grinch-like news from BNSF is the “re-idling” of Harvard Yard.  So now where does one go to pahk ones’ cah? Of course, this is an IM yard in Arkansas, as far from Cambridge as may be possible, but still….