More railroad problems restrict chem shipments – LyondellBasell

HOUSTON (ICIS)–Two LyondellBasell subsidiaries warned customers on Friday that problems with railroad companies are restricting shipments.

Two of the Class 1 railroad companies in North America said they plan to restrict traffic on their networks because of high demand, operating problems and personnel issues, according to the subsidiaries, Equistar Chemicals and Basell Poliolefinas. The results are causing significant amounts of congestion and backlog.

LyondellBasell did not name the railroad companies.

However, Union Pacific (UP) had curtailed fertilizer shipments back in April, according to CF Industries.

In June, BNSF issued a temporary embargo on some shipments heading to California.

LyondellBasell said it is trying to work through the problems, but making the deliveries on time is becoming more difficult.

“We feel it necessary to formally advise you of these delays in transportation, which are beyond our reasonable control,” LyondellBasell said.

The company gave no indication that it had declared force majeure.

Among the disruptions identified by LyondellBasell was the BNSF embargo in California. That embargo is restricting shipments from Texas and several other states.

In addition, BNSF service for shipments is worsening from Clinton, Iowa, where LyondellBasell has a complex, the company said. LyondellBasell is reviewing options to re-route using Union Pacific or Canada Pacific as the origin carrier. However, the company expects significant shipment delays out of its complex in Clinton.

In New Orleans, five Class 1 railroads that interchange there have congestion problems, LyondellBasell said. Those include BNSF, CSX, Kansas City Southern, Norfolk Southern and Union Pacific.

LyondellBasell is looking for other interchange points and where the receiving railroad can accept traffic, the company said.

In addition, the Surface Transportation Board has issued an emergency service order for grain moving to some farms in the Pacific Northwest on Union Pacific, LyondellBasell said. As a result, those trains have top priority across the entire railroad network. LyondellBasell expects the direct impact of the order to be minor.

BNSF, CSX, Kansas City Southern and Norfolk Southern did not immediately respond to a request for comment on Friday evening.

Union Pacific said it could not comment because it was in its quiet period on the eve of its second-quarter earnings release. The company highlighted an article that it published about the steps it took to relieve congestion at the ports of Long Beach and Los Angeles in California.

Service issues among railroad companies have drawn criticism from chemical companies.

The American Chemistry Council (ACC) documented it and other logistical problems in a survey it conducted in March.

Because of rail rates and service problems, 75% of companies had reported switching to truck deliveries, according to the survey results.

In mid-June, the Surface Transportation Board ordered Union Pacific, BNSF, CSX and Norfolk Southern to correct deficiencies in their rail service recovery plans and to list steps its taking to improve service and communication to customers.

In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest.

Additional reporting by Adam Yanelli

Thumbnail shows a railroad. Image by Shutterstock.