LyondellBasell declares FM on rail shipments to Canada amid CPKC, CN work stoppage

HOUSTON–Global chemicals major LyondellBasell has declared force majeure on all rail shipments to Canada after that country’s two largest railroads shut down operations after negotiations for a new collective bargaining agreement stalled.

The labor stoppage and embargoes already implemented by the rail companies could impact LyondellBasell’s ability to deliver polymers, it said in a 22 August customer letter. The company did not immediately reply to a request for comment.

The shutdown at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) began at midnight eastern time on Thursday, with more than 9,000 workers locked out after failing to reach an agreement with their employees’ union.

CN and CPKC have issued all-commodity embargoes, according to US railroad Norfolk Southern (NS) in a service alert.

The embargos from CN and CPKC cover all NS originated traffic destined for Canada and all Canadian originated traffic destined for NS destinations for all commodities.

US railroad CSX issued an embargo on all shipments to and from CN and CPKC that contain highly hazardous, toxic inhalation hazards and poisonous inhalation hazards such as chlorine gas, which is used for water treatment.

Container shipping company Hapag-Lloyd told customers it has ships in various stages of loading and unloading in Vancouver, Canada but has three vessels on various services that are under review because of the rail disruption.

On 21 August, the carrier said it is ceasing taking new rail bookings originating in the US and loading via a Canadian gateway.

Following is a map of the rail network and main chemical production hubs in Canada.

BACKGROUND
The simultaneous rail disruption at CN and CPKC has been looming over the chemical and other industries for months.

Canada’s chemical production is heavily geared towards export, with 80% destined for foreign markets – primarily the US, accounting for 80% of exports.

Rail transportation plays a crucial role, handling over 70% of Canadian chemical producers’ shipments, with some relying entirely on rail.

Officials from the chemical and other industries have repeatedly warned about the impacts simultaneous disruptions at both railroads could have on Canada’s already weak economy and on trade with the US.

(Recasts, adds force majeure details in paragraph 2)

With additional reporting by Nurluqman Suratman and Stefan Baumgarten

Thumbnail photo: A Canadian National train. (Photo by Shutterstock)