Railroads Warn Harvey May Cause Long Closure of Houston Tracks
Aug. 30, 2017, at 12:32 p.m.
The closure of rail lines in the grain transport hub and nexus for cross-border traffic with Mexico presents a costly headache for companies ranging from automakers to farmers which use the lines to send ethanol, cereals and auto parts to and from Mexico or to be loaded onto ships.
The top two U.S. railroads, Union Pacific Corp and Berkshire Hathaway Inc’s BNSF Railway have suspended operations in the area affected by the storm, as has regional railroad Kansas City Southern.
“We don’t have a historical precedent with this one,” said Thomas Williamson, owner of Florida-based rail broker Transportation Consultants Co. “I expect service to be disrupted anywhere from two to six weeks.”
Union Pacific, the No. 1 U.S. railroad, told customers on Wednesday that it is using helicopters and drones to inspect track and facilities in areas without road access.But the company warned that the “majority of areas east of Houston are still inaccessible at this time.” Union Pacific has been re-routing traffic away from Houston.
Kansas City Southern, with much of its business focused U.S.-Mexico trade, may have greater exposure to disruption caused by the storm than the other two railroads, said Cowen & Co analyst Jason Seidl in a client note. Kansas Southern said in its last update on Monday that it had stopped traffic through impacted areas. It said it will update customers as the situation develops.
Once the rails are up and running, railroad operators will likely benefit as goods for recovery and rebuilding are sent to the region, said independent railroad analyst Anthony Hatch. “We can be sure that the rails will be quicker to recover than most as they have been through this before.”