Union Pacific Railroad is raising its fees for low-volume customers in California who exceed their peak season container allotments. This increase, effective from the start of next week, will particularly affect those shippers who are not covered under specific shipping contracts.
This rate adjustment comes as a response to a surge in import volumes across the West Coast of the United States, marking a notable growth spot in the national logistics landscape. Notably, the increase in intermodal shipments, both domestic and international, has been significant. According to the Intermodal Association of North America, there’s been a 4.8% rise in domestic and a 15.8% increase in international shipments year over year for the first eight months of 2024.
The epicenter of this growth has been California, with outbound volumes showing robust increases. For instance, shipments from Los Angeles to Chicago saw a 20.4% rise, contrasting starkly with the relatively stable volumes from New York to Chicago, which increased only by 3.4%. This data comes from Railinc, under the American Association of Railroads.
Container traffic at the ports of Long Beach, Los Angeles, and Oakland has also seen a sharp uptick, rising 22.7% over the same period last year, as reported by PIERS and S&P Global’s Journal of Commerce.
Under the new pricing structure, shippers will now face a $750 per container peak season surcharge (PSS) in Los Angeles if they exceed their allotted containers, a significant jump from the previous $500. Additionally, a new fee of $300 per container has been introduced for shippers in Northern California.
The heightened demand for EMP and UMAX containers has persisted, with notable increases at UP’s ramps in Lathrop and Oakland, California, over the past six weeks. The railroad is actively working to reposition containers and enhance train capacities to accommodate the growing needs of shippers.
This adjustment in fees only affects low-volume shippers, reflecting ongoing market constraints in California, which remain tight but stable. Industry insiders have likened this peak season’s dynamics to those before the pandemic, with private intermodal operators also implementing targeted surcharges, contrasting with the broader applications seen in the preceding years.
Lastly, it’s noteworthy that intermodal providers typically apply these surcharges only when container volumes exceed the seasonal allotment. Many shippers, especially those with less time-sensitive cargo, have developed strategies to circumvent these additional costs, such as delaying shipments to the start of the new week.
