Chem producers alerting customers of US railroad embargo ahead of possible strike

HOUSTON (ICIS)–Chemical producers in the US are alerting customers about certain shipping restrictions implemented by Class 1 railroads ahead of a possible strike on Friday.

LyondellBasell said in a letter to customers that it anticipates being able to ship material until 15 September, with the exception of hazardous and time-sensitive materials, but also expects service to slow down beginning on Wednesday.

LyondellBasell said ethylene oxide (EO), allyl alcohol, ethylene and styrene are among their products that are under embargo.

The Class 1 railroads enacted the embargo as the 30-day window for negotiating a labour agreement between US freight railroads and rail workers closes on 16 September.

The National Carriers Conference Committee (NCCC), a part of the National Railway Labor Conference (NRLC), is representing the nation’s freight railroads in the negotiations.

The NCCC has reached tentative agreements with 10 of the 12 rail worker unions, but The Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD), are holding out for better quality of life issues.

The BLET and SMART-TD together represent about 90,000 rail workers and they are accusing the railroads of declaring embargos on certain materials as a negotiating tactic ahead of the deadline.

BACKGROUND
US rail workers voted almost unanimously in mid-July to strike, but railroads are governed by the Railway Labor Act, which substitutes bargaining, arbitration and mediation for strikes to resolve labour disputes.

US President Joe Biden appointed a Presidential Emergency Board (PEB) a day later, which opened a 30-day window to convene, hold hearings and issue a report in mid-August that includes settlement recommendations.

When the PEB published its report in August, it recommended significant increases to pay and benefits, setting up a framework for continued negotiations during a 30-day “cooling off period”, which ends on 16 September.

WHAT IS NEXT?
US Representative Steny Hoyer told Bloomberg in a podcast on 12 September that Congress could get involved if no agreement is reached by the deadline.

Hoyer said Congress has authority and could pass legislation aimed at keeping the railroads moving.

“We are very focused on the issue, and we want to avoid a crippling railroad strike,” he said.

In 2021, freight railroads moved 2.2m carloads of plastics, fertilizers and other chemicals.

The highest-volume chemical carried by US railroads is ethanol.

More than half of all rail chemical carloads consist of various industrial chemicals, including soda ash, caustic soda, urea, sulfuric acid and anhydrous ammonia.

Plastic materials and synthetic resins account for close to a quarter of rail chemical carloads.

Most of the rest is agricultural chemicals.

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

In Canada, producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

Additional reporting by John Donnelly