Union Pacific RR Temporarily Halting All Eastbound Containers To Chicago.

JonDouglas

JonDouglas

Senior Member
Location
New England
Another breakdown in the supply chain. From FreightWaves:

Union Pacific is temporarily suspending eastbound service from West Coast port terminals to its Global IV intermodal facility in Chicago to help ease “significant congestion” at inland terminals, especially Chicago, and at the ports. The suspension is aimed at helping ocean carriers reduce backlogs.​
​
UP (NYSE: UNP) hopes this suspension, which will start on Sunday and last for about seven days, will not only help relieve port backlogs for Chicago-bound container traffic but also ultimately help address backlogs for containers destined to other markets.​
​
The suspension applies to UP-served terminals at the ports of Los Angeles, Long Beach and Oakland, California, and Tacoma, Washington. ​
​
More at source.​
​
This would suggest there's a real pile-up at UP's Chicago intermodal terminal/yard and that things may be getting worse. This shutdown is a big deal and could have a big ripple effect in availability and pricing of intermodal goods. We say this noting that Chicago is also a big seaport (great lakes via St. Lawrence Seaway into Calumet River port) in addition to being a huge rail hub.
 

The supply chain is a bit of a mess....all over the country. There are reports of ships waiting for weeks to unload at the California ports in LA and San Diego. Other reports say that empty shipping containers are being stacked in huge piles, because of the lack of ships taking them back to China, etc. Then, virtually all the nations carriers are having trouble finding sufficient numbers of truck drivers to keep the stores stocked. Locally, we've seen empty store shelves on various items nearly every time we go shopping....one week its "this", the next week "something else".
 
It is the shortage of truck drivers here too Don, all the foreign
drivers went home for the duration of the lockdown and none
have yet returned.

I have also seen empty shelves in supermarkets, but local produce
seems to be holding up fairly well where I live anyway.

First they blamed the container ship that got stuck in the Suez Canal,
now it has worked its way through all the excuses to the drivers.

Mike.
 

Here's what I learned from Trains:
  1. The UP embargo is scheduled to start tonight and is intended to help the railroad clear a container backlog at the Global IV intermodal terminal located at coordinates 41.470443, -88.115956.
  2. Labor shortages and covid-related restrictions have slowed unloading and loading of containers at customer facilities, leading to a shortage of chassis and drayage capacity.
  3. It is thought UP’s move will create massive backups at West Coast ports,
  4. Steamship line HMM told customers to expect delays to containers that are on ships or already on docks at West Coast ports
  5. Other railroads, including BNSF Railway and Norfolk Southern have taken steps at various times this year to limit inbound volume at congested terminals in Memphis, Chicago, and elsewhere.
In the words of acquaintances who've more experience with these types of things, "This is a giant cluster f*** of global proportion". I would agree. The overall cost of this supply chain breakdown will be enormous and one that YOU will pay for, directly or indirectly. What's happening here is the result of long-standing incompetence at higher levels. They either did or should have known this would happen.

Edit Note: The last time I used the word "incompetence" in a post, the entire thread got shut down. I am watching to see if that happens here.
 
Last edited:
oldman said:
Here’s an idea. How about bringing more of our industries back onshore? That should alleviate some of the backlog.
Click to expand...
I'm sorry but that's too obvious. The obvious doesn't seem to be in vogue these days. What isn't obvious to some is the reality that if you don't have an economic and social climate conducive to manufacturing, it will go to some place that does.

Edit Note: It is probably worth also mentioning that manufacturing creates wealth. It was Henry Ford's type and scale of manufacturing that helped give rise to the middle class.
 
Last edited:
JonDouglas said:
I'm sorry but that's too obvious. The obvious doesn't seem to be in vogue these days. What isn't obvious to some is the reality that if you don't have an economic and social climate conducive to manufacturing, it will go to some place that does.
Click to expand...
I have a good friend who was a machinist and tool and die maker. He complained all the time about so many jobs in industry that were leaving and going to either Mexico or China. A lot of experience walked out the doors of those factories that closed their doors and sent the work offshore. Now, most everything we pick up to buy is stamped, “China.”
 
Even Mexico is losing jobs to China. Thousands of jobs in textiles, clothing and plastic industries have left Mexico and gone to China. This is just insane. The U.S. had all the resources needed to be a 100% self-reliant country. So, why aren’t we? I blame at least 50% of this on our politicians.
 
Here's a quick summary of what Harvard Business Review had to say about the situation;

The U.S.-China trade war and the supply and demand shocks brought on by the Covid-19 crisis are forcing manufacturers everywhere to reassess their supply chains. For the foreseeable future, they will face pressure to increase domestic production, grow employment in their home countries, reduce their dependence on risky sources, and rethink strategies of lean . . . .​
​
More at source​
​
 
oldman said:
Even Mexico is losing jobs to China. Thousands of jobs in textiles, clothing and plastic industries have left Mexico and gone to China. This is just insane. The U.S. had all the resources needed to be a 100% self-reliant country. So, why aren’t we? I blame at least 50% of this on our politicians.
Click to expand...
I'd have to go with a 50-50 split between idiot politicians whose policies drive manufacturing out and stupid company managers who drive a company down the porcelain facility. I have seen both happen, up close and personal.
 
We are paying the price for a few decades of poor political , business and social choices. I suspect it will take a while to sort out. I see too many companies more focused on share buy backs and doing what they can to increase the value of the stock rather than looking at building a solid company. Outsourcing of many jobs has not helped, nor the fincialization of 'everything'. Politicians seem to focus best on re election rather than rebuilding the infrastructure we need for efficient movement of goods and services. Interesting times
 
Cameron said:
too many companies more focused on share buy backs and doing what they can to increase the value of the stock rather than looking at building a solid company.
Click to expand...
That was my experience at a company that appeared to perform fantastically, but they didn't achieve their amazing quarterly numbers by any real growth, but through things like laying people off and moving jobs overseas.
 
Cameron said:
We are paying the price for a few decades of poor political , business and social choices. I suspect it will take a while to sort out. I see too many companies more focused on share buy backs and doing what they can to increase the value of the stock rather than looking at building a solid company. Outsourcing of many jobs has not helped, nor the fincialization of 'everything'. Politicians seem to focus best on re election rather than rebuilding the infrastructure we need for efficient movement of goods and services. Interesting times
Click to expand...
For right or wrong, I don't think politicians should be involved in infrastructural rebuilding, political pork being what has become. Rather, they should help create an economic and social climate conducive to rebuilding (e.g., tax breaks and other incentives) rather than pouring money down local crappers. I happened across such an example just days ago, encountering this tiny monument to something both parties can take credit or blame for.

jul5_2021_troy-nh_sign.jpg


The objective of this project was the cleanup and redevelopment of various facilities. Here's the result of one such place - an abandon mill that hasn't been cleaned up and is falling apart. Not what you'd call redevelopment or something with a noticeable ROI.

jul5_2021_troy-nh_mill2_sky.jpg


The problem in this instance is that money was poured into something that the economic and social climate couldn't support. Blanket and fabric mills, along with a lot of other manufacturing, moved out of New England long ago. In any event, people should see what their tax money often buys. As for the broad scale of the Recovery and Reinvestment Act, it's value can be argued both ways.

PS: Looking at a building's roof can give you a reasonable idea of when it may start to collapse, plant growth and small, partial collapses being the indicator to look for.
 
Last edited:
Malinvestment seems to rule the day in the developed countries these days , china included. where money is spent and invested seem to come down to either political decisions or how fast investors can make a buck. all that has been with us for centuries but its a bit alarming to see how far down the path we have gone to allow our global infrastructure crumble. Just in time inventory works great but its an extremely fragile system as we are seeing. Meanwhile as economies are becoming less productive we are less efficient at allocating the capital to where it needs to go. Debt creation has temporarily given us the illusion all is fine I believe. I'm thinking the global movement of goods is a canary in the coal mine right now and it will be interesting to see how its addressed given the issues and political back and forth going on these days.
 
Cameron said:
Malinvestment seems to rule the day in the developed countries these days , china included. where money is spent and invested seem to come down to either political decisions or how fast investors can make a buck. all that has been with us for centuries but its a bit alarming to see how far down the path we have gone to allow our global infrastructure crumble. Just in time inventory works great but its an extremely fragile system as we are seeing. Meanwhile as economies are becoming less productive we are less efficient at allocating the capital to where it needs to go. Debt creation has temporarily given us the illusion all is fine I believe. I'm thinking the global movement of goods is a canary in the coal mine right now and it will be interesting to see how its addressed given the issues and political back and forth going on these days.
Click to expand...
Being somewhat of a rail fan who's spent some quality time in Chicago as a kid near the yards, I keep a weather eye on railroading there. From the standpoint of transportation infrastructure, Chicago has been a mess for quite some time now, with the lack of flyovers and upgrades creating what might be described as a switching and logjam nightmare. Given the importance of its rail/ship/truck hub to Chicago employment and wealth, you'd think somebody would take better care of it by incentivizing investment and improvement. It's like seeing a town letting its streets fall into disrepair and knowing that's usually the beginning of something much worse to come. As for JIT, there are a lot of things that have to mesh or it's NIT as you correctly pointed out. Are all those HBS consultants who preached the gospel of JIT still talking it up?
 
Last edited:
Also, there's another major factor affecting the nation's supply chain - rail yard theft in Chicago.
​
​
​

There's more but you probably get the point. The point some people miss is that you are paying for what's being stolen in the huge Chicago rail yards. Chicago crime is not an isolated problem given the extent to which it is happening in the country's transportation hub.
 

You must log in or register to reply here.

Back
Top