Wednesday, August 30, 2017

Harvey hits BNSF hard

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Water rising above the rails on BNSF’s Conroe Subdivision in Cleveland, Tex. Cleveland is approximately one hour north of Houston. Water rising above the rails on BNSF’s Conroe Subdivision in Cleveland, Tex. Cleveland is approximately one hour north of Houston. BNSF

Catastrophic flooding in the Houston, Tex., area and other parts of southeastern Texas from Hurricane Harvey continues to cause major disruptions to BNSF Railway service and operations in the region. The storm has created water levels the likes of which have never been experienced before.

Several BNSF subdivisions remain out of service due to multiple washouts and high water reported (see map, below). All traffic destined to/originating from Houston, as well as traffic scheduled to route through Houston, remains suspended. Other area rail lines, including those with BNSF trackage rights, are also out of service.

All operations at BNSF Houston-area railyards and facilities, including the Pearland Intermodal and Automotive facilities, are also suspended as road closures continue to limit access to these locations. BNSF says there is currently no estimate on when these facilities may reopen.

“Given the size and scope of this historic flooding, normal train flows in the area are not likely to resume for an extended period,” BNSF says. “Customers should expect continued delays on shipments scheduled to move through the area.”

BNSF crews have begun conducting inspections and initiating repair work in some locations. “Equipment and resources are positioned to support these restoration efforts as conditions improve,” the railroad reports. “As always, safety is our top priority. We will continue to provide customers with further updates.”

According to the Bureau of Transport Statistics, railroads haul 11% of U.S. freight tonnage (truckers carry about 65%). Cowen and Company estimates that BNSF, Kansas City Southern and Union Pacific haul about half of that or 6% of the U.S. tonnage. “We would expect a bigger impact on KCS volumes than UP’s, given the structure of their respective networks,” says Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl. “About 58% of UP’s chemicals business is centered down in the Gulf Coast or about 7% of the company’s total carloads. We suspect the exposure is higher for KCS, which, with BNSF and UP, has suspended operations in the storm-affected region. It is likely to remain that way for at least the next 48 hours.”

Laredo/Nuevo Laredo, the key U.S./Mexico cross-border hub, “appears to be in better shape than feared, and freight is currently passing through, but it is too early to assess damage throughout the broader area as the storm continues to make its way east,” notes Seidl. “More will become clear as areas like Beaumont and Port Arthur, Tex., are assessed over the coming days. From an immediate cost perspective, KCS is self-insured up to $10 million, or about $.06 per share. We would expect investors to back these costs out of their adjusted results. UP does not disclose the terms of its insurance policy.”

Harvey Map 2017 08 29

 

 

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