Rail Disruptions: Cause Supply Chain Challenges for Chemical Companies in Canada and the US

Rail Disruptions: The disruptions in rail traffic between Canada and the United States have caused a third consecutive weekly decline. The strike at West Coast Canadian ports has caused gridlock, worrying chemical companies with materials stuck in transit and causing supply chain challenges.

According to The Association of American Railroad’s latest report, rail volume from Canada to the U.S. declined by 12%. While there was improvement compared to previous weeks, the first week of the strike
saw a 46% decrease, followed by a 36% decrease in the second week.

The Port of Vancouver has 9 containerships waiting with an average wait time of 7.8 days. The Port of Prince Rupert has 6 container vessels waiting with an average wait time of 8.9 days, according to Marine Traffic data.

The Railway Association of Canada estimated that recovery would take 3-5 days for every day of the strike. With the strike continuing intermittently, rail container delays increased from 39 to 66 days. Due to the strike, the congestion removal timeline is now 42 to 70 days, with delays leaning towards the longer end.

Chemical supply a top concern amid rail disruptions. The NACD also said its members expect delays at the higher end.

CN, in its earnings call on July 26, detailed a recovery plan started on July 14, with more trains being run from Vancouver and Rupert to ease the backlog. Full recovery is expected to take up to eight weeks, if all supply chain components cooperate.

Rail Disruptions

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Chemical Solvents, an Ohio company, faces delays in receiving critical goods for peak shipping season. The delays affect businesses relying on Vancouver Port for Asian imports. The paint company faces supply shortages and delays, causing financial difficulties.

Chemicals like sulfuric acid, phosphates in laundry detergent, and acetone for nails and solvents are stuck at Canadian ports. Chemicals like sodium fluoride and sodium bicarbonate used in various industries are also impacted.

Railroads struggle to transport ammonia, potassium compounds, urea, and fertilizer materials.

The situation is concerning as customers may experience delays or higher costs due to disruptions. While waiting for the agreement with BCMEA to be ratified, missed shifts are causing longer periods of goods on the water.

The turmoil has led logistics managers and the trade industry to grapple with uncertainties, making strategic decisions about changing ports in response to the strike challenges.

The ILWU West Coast Canadian Chapter members will vote on a tentative agreement. There is no set timeline for the vote results announcement.

The proposed deal offers a four-year package with a 19.2% wage increase. This would lead to the median ILWU income rising from $136,000 to $162,000, excluding benefits and pension. The proposed deal includes an 18.5% increase in retirement lump sum payment, as well as improved tool allowances, benefits, and pension contributions.

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