As the Gulf Coast looks to rebound from Hurricane Katrina, Union Pacific - a major rail carrier - is rerouting traffic to reach its customers.
The plastics industry is especially vulnerable to rail disruption, since it ships an estimated 85 percent of its raw materials by rail and uses rail cars to store raw materials.
``While New Orleans continues to not be a viable interchange gateway, we are working with Eastern carriers to keep commerce flowing as effectively as possible,'' officials with Omaha, Neb.-based UP said in a Sept. 6 news release.
UP is working with Norfolk Southern and CSX to patch together temporary rail routes. UP officials are advising customers to anticipate as much as a 48-hour delay on detoured shipments.
While no UP lines suffered major damage, it's unknown when full service throughout the region will resume.
In a Sept. 6 report, plastics and chemical industry analyst Balaji Singh estimated that almost 21 percent of U.S. capacity for major plastics and monomers was affected in some way by Katrina.
Almost 30 percent of the affected capacity belongs to Dow Chemical Co., which has declared force majeure for polypropylene produced at its plant in Hahnville, La.
According to Singh - who is president of Chemical Market Resources Inc., a consulting firm in Houston - polystyrene and PVC are the two plastics most affected by the hurricane. More than 60 percent of U.S. PS capacity and almost 30 percent of U.S. PVC capacity was affected, he said.
However, he noted: ``Overall, the damage to the chemical industry is incidental and minimal compared to the overall impact on the people, infrastructure [and] future economy of the Gulf Coast region.''
Singh added that the impact of the storm ``could last much longer than an average hurricane disruption'' because of the concentration of oil refineries - which produce ethylene and other plastic feedstocks - in the New Orleans area.
Elsewhere, the Congressional Budget Office in Washington said Katrina could knock a full percentage point off U.S. economic growth in the second half of 2005. Growth for full-year 2005 had been pegged at 3.7 percent before the storm hit.
The Banc of America Securities investment firm in New York also reduced earnings estimates for several companies with plastics operations, including Dow, DuPont Co., Eastman Chemical Co., Nova Chemicals Corp., Westlake Chemical Corp. and Georgia Gulf Corp.
Banc of America analyst Kevin McCarthy cited ``surging costs for energy and raw materials'' following Hurricane Katrina as a reason for the downgrades, which ranged from 2-18 percent.