Plastics and chemicals executives aren't buying engineer's caps just yet, but ongoing rail congestion in the Houston area has revived the possibility of such firms building their own rail lines to avoid delivery problems.
Although all proposals are still in the discussion stage, they're being lent more significance as the Union Pacific Railroad Co. struggles to absorb traffic it took on when it merged with Southern Pacific in 1996.
At the time of that merger, Dow Chemical Co. was negotiating with SP over the possibility of building a 35- to 40-mile rail line that would extend south of Houston to Freeport, Texas, where Dow operates a large chemical complex.
After the merger, Dow successfully lobbied the Surface Transportation Board to retain the right to connect to the UP system, according to Bill Gebo, Dow's director of rail services procurement. The value of such access has become more apparent as UP's delivery times have tripled in some cases.
``We were granted that right and we still have it in our hip pocket,'' Gebo said.
But he was quick to point out that an independent rail line was only one of a number of options Midland, Mich.-based Dow is looking at to improve delivery.
He added that, contrary to some published reports, Dow would need other companies in the Freeport area to participate in the project, which carries an estimated cost of $100 million. BASF Corp., Shintech Inc. and several other companies operate in Freeport and could benefit from such a line.
``It would clearly have to be a group effort with other companies participating,'' Gebo said. ``And any line that gets built will have to offer a combination of service and costs. You're not going to build it at a premium just for service.''
Another executive at a major Gulf Coast resin manufacturer confirmed his company is looking at working out a deal with other nearby railroads to bring track in to at least one of its facilities.
``I think we've been forced since last July to say, `What is our alternative?''' said the official, who spoke on the condition the company not be identified.
But the official noted the chemical companies generally may find it too costly to build their own rail spurs or work out deals with other railroads to bring in tracks because they ship products a handful of cars at a time, rather than in entire trains like coal companies do.
Ron Mick, logistics manager for Phillips Petroleum Co.'s Pasadena, Texas, site, said the company has considered building independent rail lines at refineries and petrochemical plants in other parts of Texas, but not in the Houston area. Houston's Port Terminal Rail Authority switching connection, which is used by all Houston-area railroads, already offers Phillips access to other railroads, Mick said.
``We've struggled just like anybody else to get cars back to the PTRA,'' Mick said. ``We can hire the same people to go 20 or 30 miles and spend millions of dollars, but is it worth the expense?''
A spokesman for Equistar Chemicals of Houston said the company has discussed an independent rail line ``strictly as an idea,'' but has no one working on such a project.
Officials at DuPont Co. of Wilmington, Del., and Huntsman Corp. of Salt Lake City also said they are not considering building rail spurs.
``[Building rail spurs] would take a very long time [and] it certainly wouldn't provide any immediate relief,'' said Hugh Fischer, manager of distribution sourcing for DuPont Sourcing in Wilmington.
DuPont is shipping more of its resin by expensive trucks and slower barges and has seen expenses pile up since it estimated in October that the problems had cost it $16 million, Fischer said.
The overall traffic problem has improved slightly, according to some officials contacted, such as Phillips' Mick. Other companies apparently aren't seeing the same improvement.
``I haven't talked to anyone around the Gulf Coast who said [rail traffic] is getting better,'' said Edward Rastatter, policy director for the National Industrial Transportation League of Arlington, Va.
Huntsman is ``very, very seriously'' considering suing Union Pacific to recover damages, according to Huntsman spokesman Don Olsen. Huntsman told UP in November it wanted $10 million in damages, but since has pared back that amount, he said.