Europe PE logistics threatening 'collapse' on rail, truck issues

Source: ICIS News

2017/09/20

BASF rail tank containers

LONDON (ICIS)--European polyolefin logistics are threatening to ‘collapse’ as a result of continued rail and truck issues, sources in the market said on Wednesday.

Germany’s rail problems initially started in August, which has then put pressure on other transportation as market participates looked for alternatives.

During construction work at the New Rastatter Tunnel some subsidence occurred, causing the closure of the rail route between Karlsruhe and Basel and between Rastatt and Baden-Baden.

“The problems on the railway lines near Rastatt, which have been causing massive disruption on the north-south main artery for several weeks, appear to be more serious than previously assumed,” said one European distributor.

“European goods traffic is threatening collapse,” it added.

It has been estimated that over 10,000 additional trucks and drivers would be required to make up the shortfall from the rail issues, according to market players.

While alternative rail routes have been considered, strikes in France on the rail network by the CGT union have added to the difficulties.

There is talk in the market of trucks being cancelled at short notice, which is causing lengthy delays to the deliveries of product.

Although normal operation is expected from the German rail from 7 October, when the New Rastatter Tunnel is repaired, there will then be a back log that will need to be addressed.

“The emergency situation remains until further notice, almost gridlock.”

A number of companies have contacted customers on this, with a letter from LyondellBasell seen by ICIS explaining the impact on polyolefin deliveries.

“LyondellBasell, like other companies, relies heavily on this rail route to and from Italy for its supply of polyolefin raw materials and LyondellBasell is heavily impacted by this shut down,” said the company in the letter to customers.

The producer also warned customers of further problems in October, on the back of German holidays on 3 October, 31 October and 1 November.

“This will heavily affect transport to, from and through Germany,” the producer added.

Pictured: BASF rail tank containers (source: BASF)