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North American Rail Congestion Leads to Additional Surcharge from One Resin Transportation Company
March 14, 2022
Growing rail yard congestion along with increasing labor, fuel and switching costs have prompted one North American supply chain service company servicing the resin and chemicals industry to implement an additional surcharge on its railcars.
In a letter to customers, Texas-based Quantix said it would impose a one-time Export Rail Congestion fee of $175/railcar that will impact contract and non-contract customers, effective April 1, in order to manage its bottleneck.
"As the global economy continues its recovery from COVID-19, we have seen the combined effects of record export volume and supply chain disruptions impacting our Gulf Coast and East Coast export facilities," said Quantix. "We have used efficiency gains and wage increases in the market to increase staffing and drive improved capacity at these locations. However, the challenges imposed by ocean vessel congestion, port congestion, and insufficient drayage availability have pushed our export facilities beyond their designed capabilities."
The company added while its management team explores storage alternatives, it has effectively lost the ability to package railcars in a timely manner due to lack of space to store finished goods.
Quantix expects when to remove the surcharge when the export shipping market stabilizes, product once again flows smoothly, and excessive switches will no longer be required.
The increase comes alongside increased North American rail traffic, according to data from the Association of American Railroads (AAR). Based on AAR data for the week ending March 5, North American chemical railcar traffic was up for four straight weeks, led by the US where loadings rose 17.8% from a year earlier. For the first nine weeks of 2022 ended 5 March, North American chemical railcar traffic was up 5.2% year on year to 420,894 railcar loadings.
The ongoing supply chain crunch and rail congestion have also impacted resin producers and transportation companies alike over the past year, which have also led to increases in truck driver, mechanic, and warehouse wages. Major resin producers including TotalEnergies and LyondellBasell have announced truck transportation increases during Q1.
By Brian Balboa for The Plastics Exchange.
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