Historic, catastrophic flooding continues in the Midwest after major snow melt and heavy rain last week. Some of the worst conditions are in eastern Nebraska and western Iowa, including Omaha. People and animals have been trapped by high water; bridges, roads and rails have been washed away. With neighborhoods practically underwater; homes, farms and ranches ruined; and lives at risk, the National Guard has come to the rescue. As recovery continues, transportation and freight movement – especially by rail – are suffering major disruptions.
Off the Rails
The flooding has caused significant damage to the Union Pacific (NYSE: UNP) rail network, which has led to embargoes for traffic originating, destined or moving through its network. On March 17, 2019 the company announced that the following subdivisions and corridors will continue to be out of service:
• Omaha Subdivision (Missouri Valley, Iowa to Fremont, Nebraska)
• Blair Subdivision (Fremont, Nebraska to Missouri Valley, Iowa)
• Columbus Subdivision (Fremont, Nebraska to Grand Island, Nebraska)
•Lincoln Subdivision (Valley, Nebraska to Lincoln, Nebraska)
• Falls City Subdivision (Council Bluffs, Iowa to Kansas City, Kansas)
Because the flooding across Union Pacific’s network is widespread, affecting a large number of stations, there is very limited rerouting capability. Specific parameters for embargo notices can be found here. Additional operational impacts may include delayed movement of manifest, bulk and intermodal trains through the impacted areas, as well as trains holding at strategic locations until service can be restored. To view the latest map of the flooding impact to the network, in addition to the best practices to follow during flooding events, visit Union Pacific’s Flood Planning and Recovery website.
BNSF Railroad, owned by Berkshire Hathaway (NYSE: BRK), also has several subdivisions currently out of service in many of the same areas as Union Pacific. BNSF’s North Region includes Nebraska and western Iowa, as well as other states devastated by a blizzard the day before the flooding began last week. Since March 15, BNSF crews have been assessing main line locations impacted by the flooding, and are making necessary repairs where possible in order to restore service. With the current extent of the flooding, service outages may continue in some locations for an extended period.
According to the company’s latest customer letter, the number of total trains held increased significantly late last week. While key performance indicators were positive versus the previous week, velocity and terminal dwell remain below average levels from March of last year.
In order to support optimal conditions at all intermodal facilities, BNSF is encouraging its trucking partners to park in the designated spot identified on their J1 receipts. Drivers who are unable to park according to the instructions may park in a nearby space and update their location through BNSF’s RailPASS Mobile App, or by alerting the Driver Assistance Building (DAB). Drivers who do not follow parking instructions and block nearby parking stalls, roadways or aisles could be kept from entering a facility on their next visit. Anticipated Mississippi River flooding may impact service by early next week at the company’s Hannibal and River Subdivisions, where main lines run adjacent to the river in Missouri.
BNSF Heartland Division teams have implemented procedures, including the re-routing of some traffic, to mitigate impacts of the storm. Both BNSF and Union Pacific may be taking loads off trains and sending them on trucks. Therefore, look for truck volumes to increase between Chicago and the West Coast this week into early next week as flooding continues, possibly spreading farther downstream toward St. Louis.
On the Road
Flooding is expected to continue this week, and possibly into early next week, as snow continues to melt upstream of Omaha. This will disrupt freight markets further south along the Missouri and Mississippi Rivers and communities are displaced. Parts of I-680 are already closed in Omaha, and further west, critical intermodal rail lines from Salt Lake City to Chicago is out of service today; I-80 look okay for now heading through Nebraska. However, portions of I-29 in western Iowa remain closed.
SONAR data on March 18, 2019 (chart above) shows outbound tender volumes for Omaha, Nebraska, Hutchinson, Kansas and Oklahoma City, Oklahoma (OTVI.OMA, OTVI.HUT, OTVI.OKC) - markets along the Missouri River - are increasing in anticipation of capacity constraints due to flooding, already evident in Omaha where van outbound tender rejections (VTRI.OMA) increased 4.14% over the weekend to 12.73%. Flood Warnings remain posted by the National Weather Service (NWS) for many areas of the Midwest.
Look for more weather updates throughout the week on the FreightWaves website.