<B>Railcar Problems Easing</B>

The Union Pacific and the Southern Pacific, according to several sources, are attempting to get their railcars back into rotation. In the meantime, the rail lines are reducing their exposure by halting some recovered fiber shipments into Mexico.

According to who is talking there is either a significant problem with inventory levels in Mexico, or a minor correction that needs to take place.

While there have been problems with the movement of material into Mexico, a spokesman for the Union Pacific says the problem, for the most part, has been remedied. There was at one time several hundred cars that were backed up at some Mexican mills. However, this situation has been remedied lately. "There was definitely a hiccup there," the UP representative noted. However, that issue has been resolved, he added.

A spokeswoman for the Kansas City Pacific also says that there is only a minor slowdown in northbound traffic from Mexico to the United States, while there is no delay for material moving north to south into Mexico.

While the problems with railcars has eased, there are some questions about the slow payment that is taking place at the mill. Several vendors report of one Mexican paper company in particular pushing out its payment schedule for OCC to past 120 days. This is resulting in some vendors opting not to ship the material into the region, which is causing some additional tonnage to be available in the South.

At the same time some paper stock dealers are now halting all shipments into Mexico due to the lack of timely payment.