United States: The Ocean Shipping Pandemic Moves To The Rails: The Lot "W" Metaphor In Chicago

As a result of the contagious ocean carrier saga, recently the subject of a Presidential Executive Order dealing with anti-competitive developments in ocean shipping, the contagion has now fixated on rail ramps where intermodal deliveries of ocean freight moves has come to a virtual standstill. At least that is the case at Lot W.

A supposed well-intentioned rail company on May 26, 2021, issued a public notice intended to assuage container unloading train delays at Logistics Park Chicago ("LPC") caused by strong volumes, longer dwell times, and chassis shortages. (Emphasis is on the last item). The Notice, among other things, was to create an additional stacked container area where containers could be quickly ferried from the LPC to create room for incoming import cargo from the West Coast. This area is the now infamous "Lot W" in Chicago. There are currently thousands of containers stacked at that location (obviously not on chassis), and they seem to have gone to the mythical elephant graveyards to die. The publicized information by the rail company was that no containers from Lot W would be available there for driver pick-ups, nor would they provide notification for pick-ups of these containers. They were intended to be moved to Lot S where four new stacking cranes were to be moving cargo at a fast clip. Nonetheless, the containers at Lot W have been there for months with no immediate sign of resurrection. Small, mid-sized shippers are in some cases in peril of losing their business. The outcry is audible. My sense is that once it reaches these levels, political interests will, or at the very least should, focus on the immediate Lot W problems as well as the longer term solutions. A first move is surely the above referenced Executive Order. There is currently, this date (July 15, 2021), an industry meeting with the Secretary of Transportation and other cabinet level officials to address these and other ocean shipping issues.  The ocean shipping and railway components of ocean shipping will surely be topics of today's meeting. Possibly, "Lot W" may be an issue of discussion surely as a metaphor of the larger supply chain issues that are currently prevailing in our economy.

One last word on this issue is whether or not rail demurrage should be charged for containers doomed to Lot W where the rail company specifically indicated in its May 26, 2021 Notice that containers in Lot W would not be notified for pick-up, nor could they be picked-up from Lot W. On the ocean carrier side this has been a contentious issue—i.e., ocean carriers have been demanding demurrage/detention amounts owed notwithstanding that in some cases there have been factors preventing the pick up or return of equipment in no way caused by the negligence or willful acts of the importers/exporters. Amounts of claims in the hundreds of thousands of dollars are not uncommon.

This issue of Lot W is merely another layer of malfunction in our ocean shipping supply chain. This issue is now appearing in the context of ocean rates quadrupling in the last few weeks on traffic from Asia. This is also at a time when a handful of ocean carriers, are acting in concert through three Alliances with anti-trust immunity granted by the Federal Maritime Commission. It is time that these agreements providing these consolidations be reviewed and reconsidered.  See our previous International Trade Insights post.