Canadian Manufacturing

Chemicals industry expects railway crash will prompt review of shipping rules

by Ross Marowits, The Canadian Press   

Canadian Manufacturing
Operations Supply Chain Energy Transportation Chemicals Lac-Megantic Shipping

Railways transport up to 80 per cent of chemicals produced in Canada

MONTREAL—An explosive Quebec railway crash has put the focus on the growing transportation of crude oil, but the association which represents Canada’s chemical industry expects the disaster will prompt a broader review of how even more hazardous materials are shipped.

“I do believe that we’re going to see some serious re-examination of some of the rules and regulations around movement of hazardous goods and that’s probably a good thing,” said David Podruzny, vice-president of the Chemistry Industry Association of Canada.

“We should continuously be improving the way in which we move goods.”

Railways transport up to 80 per cent of chemicals produced in Canada, including some very hazardous materials that pass near small towns and communities daily.


Canadian railway companies shipped 86,000 carloads of petroleum products in the second quarter, up 18 per cent from last year and 62 per cent from 2011.

But, at the same time, railways transported 154,000 carloads of chemicals during the most recent period including refined energy products like diesel and jet fuel.

Twenty people have been confirmed dead and about 30 are missing following the derailment, explosions and fire that devastated parts of Lac-Megantic, Que.

Podruzny said the tragedy could prompt some communities to no longer welcome such products, even though they are essential to treat drinking water or sewage, or are used in the production of pulp and paper products that are the lifeblood of these towns.

“Whether this incident alone is going to result in us having to build tracks around all the towns in Canada, I don’t think so,” he said in an interview.

But it will make people conscious of the risks of hazardous materials, much like the Bhopal gas leak that killed thousands of people in India did following the 1984 incident, he added.

“Risk management is what it’s all about. We can’t eliminate risk but we should do all we can to manage it,” he said.

Analyst Cameron Doerksen of National Bank Financial said some of the chemicals transported are even more dangerous than crude, which has come under increased scrutiny.

Any movement to limit the shipments of crude by rail would also hit the transportation of chemicals.

“We cannot see this being an improvement in safety given that the alternative is to move some of these hazardous materials by truck,” he wrote in a report.

The cause of the derailment disaster is under investigation.

Ed Burkhardt, president of Chicago-based Rail World Inc., said during a visit to the devastated town that the handbrakes on his company’s train might not have been applied properly.

The American Association of Railroads says 99.9977 per cent of all rail shipments of hazardous materials reach their destinations without incident.

Accident rates have dropped 91 per cent since 1980 and the estimated spill rate of crude by rail was 0.38 compared with 0.88 for pipelines.

The rate measures gallons spilled per million barrel miles moved.

Doerksen said the Lac Megantic disaster could prompt additional safety measures, including regulations to upgrade tank cars to more modern standards.

Tank cars used in hauling crude are generally owned by oil producers and refiners, not the railways.

However, Doerksen said he doesn’t expect new safety regulations will be overly burdensome to the country’s two largest railways—Canadian National and Canadian Pacific.

Incremental costs could be recovered by higher pricing.

While transportation of crude oil by rail is the fastest growing segment for both railways, he said it will represent only three to five per cent of CN’s revenues by year end and seven to 10 per cent of CP revenues.


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