June 16, 2008 / 6:12 PM / 12 years ago

Union Pacific enacts force majeure amid floods

CHICAGO (Reuters) - Union Pacific Corp, the No. 1 U.S. railroad, said on Friday it was enacting force majeure provisions immediately because of severe flooding in the Midwest.

Declaring force majeure allows shippers to extend deadlines for cargo delivery due to events beyond their control, such as natural disasters or war.

Overflowing rivers in Iowa and other Midwestern states caused more evacuations on Friday and further damaged the region’s economy. Thousands of people have been forced out of their homes in the worst Midwest flooding in 15 years.

Earlier on Friday, Union Pacific declared an embargo across parts of its main line through Iowa citing severe weather and record floods.

In a letter to customers posted on its website, the company said parts of the line were “intermittently out of service” and it was monitoring other parts of the Midwest for flooding.

Union Pacific said the embargo could last as long as a week, depending on the weather.

As concerns mounted over fragile levees and more rain, barge lines were having difficulty moving cargo on rivers due to flooding.

Several locks and dams have been closed on the upper Mississippi River with more expected to stop operating by Sunday. The closures will halt commerce on a 300-mile (483-km) stretch of the most important U.S. commercial waterway, possibly for several weeks, said the U.S. Army Corps of Engineers.

Iowa Gov. Chet Culver said damage to his state could cost billions of dollars. Scores of bridges spanning nine overflowing rivers have been swept away or weakened.

Iowa is usually the top U.S. corn and soybeans growing state and is a major producer of hogs and cattle.

Flooding has also swamped parts of Minnesota, Illinois, Wisconsin, Missouri, Kansas and Indiana.

Reporting by Lisa Shumaker, Additional reporting by Nick Carey, Editing by Toni Reinhold

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