EPCA '07: US railways avoiding chemical business

01 October 2007 13:16  [Source: ICIS news]

BERLIN (ICIS news)--Some US rail carriers are openly trying to discourage chemical traffic with steep prices as a means of addressing their liability issues, two butadiene producers said on Monday.

"They have been raising rates to the point where they want shed business," one of the producers said on the sidelines of the European Petrochemical Association conference.

Railway companies face huge insurance and potential liability costs because of the risk of accidents involving chemicals.

However, they cannot refuse the business of chemical companies, because US laws regulating transportation define railways as common carriers that must be open to all who want to use them.

The second producer said the rail companies often seek to impose double-digit percentage increases in freight rates whenever the opportunity arises.

The rail companies make no secret of their desire to create a cost barrier to deter chemical business, the producer said.

The US chemical industry's issues with rail safety have been brewing for several years, with ammonia shipping seen as a particular problem.

In 2006, NS Railroad chairman and CEO Charles Moorman declared that his company "would walk away" from handling materials such as ammonia if the US common carrier regulations would allow it to do so.

The cost and the bureaucracy involved in organising rail transport for ammonia have contributed to a widening in the gap between ammonia prices in the US Gulf and the fertilizer demand centre in the midwest, according to market sources.

By: Stephen Burns
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