The bad news from Hurricane Katrina just keeps coming, this time by train.
A recent report from the National Retail Federation warns that the ports of Long Beach and Los Angeles could become congested when it would hurt most during the peak fall season when goods are imported to fill retail shelves for the holiday shopping season.
The report cites the wide diversion of cargo trains around the New Orleans area after Hurricane Katrina flooded rail yards, amid an already strained national rail system.
“It’s a cascading effect,” said Paul Bingham, principal at Waltham, Mass.-based economic forecasting and analysis firm Global Insight Inc., which authored the report. “Locomotives have been tied up there for days. And there’s a lot of stuff in the pipeline from China, so the boxes keep coming.”
A Union Pacific Corp. official acknowledged the railroad is experiencing 12- to 24-hour delays for trains carrying cargo from Los Angeles to East Coast destinations. The trains normally pass through New Orleans, but are now being diverted to St. Louis and Memphis, Tenn.
However, the railroad expects that the delays will only be temporary, and once a consistent route around the hurricane-battered area is established they will disappear.
“Right now, our traffic in and out of the ports is extremely fluid,” said Mark Davis, a spokesman for Union Pacific, which together with Burlington Northern Santa Fe Corp., handles local, statewide and cross-country shipments out of the ports of Long Beach and Los Angeles. “We’re handling some record volumes this year and moving it just about on time during the peak season so far.”
Stretched to limit
The Retail Federation wants to ensure that its 1.6 million members don’t get caught flat-footed if holiday season port and rail congestion emerge again locally.
Last year, a flood of imports caused such congestion that retailers and importers diverted shipments, some permanently, to the ports of Oakland and Tacoma where they now pay for expensive truck transportation down to Southern California.
In response, both ports hired thousands of additional longshoremen and started the PierPass system, which moved nearly 30 percent of trucking activity to nights and Saturdays.
Those measures are widely credited with reducing port congestion. Officials at both ports say there is no congestion now, and they don’t expect problems stemming from the rail diversions around New Orleans.
Still, even before the full extent of the hurricane damage was known, railroads nationwide were stretched to the limits of their capacity and were 3.6 percent slower in August than July.
A report this year by the American Society of Civil Engineers found railroads invest about $2 billion a year on improvements in addition to repair and maintenance. Union Pacific and BNSF have both added double tracks to existing lines and have beefed up hiring, according to Bingham.
But while the $2 billion figure sounds like a lot, the report concluded that for the railroads to maintain their current share of the freight market they would need to invest $4 billion to $5 billion on infrastructure repair and maintenance annually.
“Our concern is that they still won’t be adequate to handle the September peak. There’s more traffic than the peak last year. They’re running slower than last year this time,” Bingham said. “Retailers ought to exercise caution, so they can take mitigating steps, such as diverting shipments to another port.”
Jack Kyser, senior economist with the Los Angeles County Economic Development Corp., said that despite the measures taken by the local ports to lower congestion, he is worried that Katrina could indeed cause significant problems.
“These are the months we keep our fingers crossed,” Kyser said. “The rail network is operating at capacity. If you have congestion in the New Orleans area, it will definitely impact us.”
