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Rail embargoes pose hurdles to resin exports

HOUSTON, October 15, 2018 (PCW) -- Commodity resin shipments from the US to Mexico are being slowed by railroad congestion in the Southern US and Northern Mexico, the result of a strong economy and rapid growth in cross-border volumes, market participants said this week.

Union Pacific at the end of September placed an embargo on southbound rail shipments at Laredo, and yesterday Kansas City Southern Railroad (KSCR) placed an embargo on "certain types" of manifest traffic going to Monterrey, San Luis Potosi or Mexico City and surrounding areas.

This is being done with the expectation that this action will accelerate the recovery of service, KCSR said in customer advisory posted to its website on Tuesday.

Exclusions to the Union Pacific Laredo embargo include intermodal service, automotive multi-level shipments, auto parts, gasoline, diesel fuel, liquefied petroleum gas, propane, wheat and corn.

Total rail transit times for bulk resin shipments from US manufacturers to Mexican customers have risen to 35-40 days, according to one market participant, which includes delays of 7-10 days to cross the border and 7-10 days once inside Mexico.

Some PE exporters believe the embargo could boost short-term demand for packaged resin, which can be shipped intermodally or by truck instead. -- David Barry

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