Canadian National (CN) Railway set a new record for grain shipment in 2016-2017, nudging past the 2014-15 record by two per cent. The railway moved a total of 21.8 million tonnes in the last year, and also set new monthly shipping records during the fall and winter.
The railway attributes its success to a combination of better communication with supply chain partners, better use of equipment, and larger, more efficient trains.
The average grain train length is 9,600 feet, which 18 per cent longer than four years ago, says David Przednowek, CN’s director of marketing grain.
CN also ran 200-car trains last year, which measured just under 12,000 feet. The 200 car trains are created by combining two unit trains from different origins, Przednowek says.
Why the emphasis on longer trains? The West Coast corridor has limited shipping slots, Przednowek says. “So the more grain you can put in a single shipping slot, the faster you can get those grain trains to port.”
Commercial contracts for shippers
CN introduced allocation contracts, such as fleet integration programs and car auctions a couple of years ago, Przednowek says. But at first only a small percentage of grain moved under such contracts.
However, in 2016-17, about 70 per cent of grain was in contract. And it’s not just big shippers that use those contracts, Przednowek says. Auction and fleet integration programs are good fits for 25-car block shippers as well.
Any new offering that improves reliability and service for shippers is good, says Greg Northey, industry relations director for Pulse Canada. Northey also works with the Ag Transport Coalition, which represents several grower groups and grain shippers.
Northey’s understanding is that the allocation contracts have been welcomed by shippers. The contracts Northey has seen include reciprocal penalties, payable to the shipper, if CN doesn’t deliver rail cars within a set time frame. Shippers also pay penalties if they don’t order or load a contracted car.
That reciprocity has “provided a level of reliability,” says Northey. But the Ag Transport Coalition would like to see reciprocal penalties go beyond car supply, to include standards for CN’s performance after the car is loaded. Such provisions would include a timeframe on moving the car to port and spotting cars at port terminals, for example. Shippers themselves pay penalties for not unloading a car on time, Northey says.
“There’s no financial accountability (on CN’s part) for that part of the service,” he says.
The Ag Transport Coalition has a bigger vision for reciprocal penalties and service level agreements, Northey says. Still, CN’s progress has been welcome.
“Any kind of advancement from the railways is good.”
Gearing up for new crop
Przednowek says they’re not anticipating any unusual challenges in moving the new crop. So far signs are pointing to it being a smaller crop than last year.
“We’re ready to move whatever size grain crop that we see this year,” he says. Still, CN is preparing.
“We’re increasing crewing resources. Our locomotives are ready to go. We’ve got sufficient fleet to move the crop. So all those pieces of the puzzle are in place for new crop,” says Przednowek.
CN has also invested about $3 billion in its Western Canadian network over the last five years. “Sidings have been extended. We’ve had some sections of track double-tracked. We’ve added sidings.”
That gives CN more “work-around points,” says Przednowek.
Northey says that given that amendments to the Canada Transport Act are under review, he expects railways “to be very focused on providing good service.”
Harvest will be a factor in how the year plays out, Northey says. The early part of the shipping year generally reveals how the railways are going to perform, he adds.
“If there’s a bad week, that can set them back for three weeks, and you can start to see slow-downs.”
Northey notes that CN has outlined how they’re getting ready for the new crop year. Right now, “it seems promising as the railways are gearing up.”