Midwest floods shut rail lines

Supply disruptions not expected to impact commodity prices

By Dave Hannon -- Purchasing, 7/5/2007 3:06:00 PM

Several freight rail lines in the Midwest have been closed due to flooding, cutting off supply of coal and other commodities.

On June 30, The Kansas City Southern Railway Company notified its customers of a main line outage between Hume and Eve, Mo. due to torrential rains. “Some trains have been able to pass through the area since that time,” the company said in a statement.

Union Pacific said multiple lines operating between Kansas City, North Little Rock, Ark., and Fort Worth, Texas, have been under water. Repairs will begin as the water recedes and it becomes safe for employees to work on the tracks, said James Barnes, a Union Pacific spokesman.

Burlington Northern Santa Fe said a key line supplying the Southeast U.S. has been shut down in Kansas as well.

While the supply disruptions are playing havoc with supply chains, most analysts don’t see an impact on coal prices because inventories are already so high. "The outages can't hurt prices, but I don't think they are going to be the catalyst to turn this market around," said Steve Doyle of Doyle Trading Consultants in a recent Reuters report.

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