Numbers newly crunched by a clutch of Canadian grain shippers paint a picture of a gap that’s wide, and getting wider, between the numbers of rail cars they say they need and what they say they’re getting.
The Ag Transport Coalition — which so far includes eight Canadian grain-handling and crop commodity groups, working with funding from the federal/provincial Growing Forward 2 framework — released aggregate data on Monday from “more than 15” shippers showing what amounts to an 11 per cent shortfall in shipper demand for cars.
Overall, the railways “have at no point this year been able to meet shipper demand” for rail cars, Greg Cherewyk, chief operating officer for coalition member Pulse Canada, said Monday on a conference call with media and stakeholders.
The coalition’s report, covering the first 21 weeks of this crop year, said railways through that period have “failed to supply” 11,461 hopper cars ordered. Of that shortfall, the coalition said, over 5,500 orders have been outstanding for four weeks or longer.
Boxcar shippers — mainly handling bagged commodities such as pulses, to be transferred to intermodal containers — have seen an average weekly fulfillment rate of about 60 per cent during the crop year to date, and just 50 per cent for Week 21 (Dec. 22-28, 2014) alone, the report said.
The shortfall for both Canadian National and Canadian Pacific Railways (CN, CP) “has continued to grow weekly since the beginning of the crop year,” the coalition said in the report, prepared by Edmonton-based QGI Consulting.
Timeliness of supply in response to orders has “consistently declined throughout the course of the crop year for both railways,” the report said. “To date, the railways have supplied only 50 per cent of customer orders in the week for which cars were ordered.”
In Week 21 alone, the coalition said, CN and CP spotted 1,928 and 1,679 hopper cars respectively in the country. The total of 3,607 cars included 2,500 cars that had been ordered for prior weeks, the QGI report said.
Week 21 car spotting performance is “significantly lower than weekly average car spots of 2,481 and 2,363 for CN and CP respectively for the crop year to date,” the coalition added.
The QGI report also shows traffic destined to Western Canada’s bulk port terminals getting 30 per cent more cars than other corridors. “Non-bulk” traffic corridors, such as to the U.S. and Mexico, Vancouver transloading sites and domestic Canadian buyers, are seeing “significantly lower” fulfillment rates.
In Week 21 alone, the report said, non-bulk corridors got just 15 per cent of cars ordered for delivery. CN that week fulfilled about 30 per cent of its orders in non-bulk corridors and CP “supplied no cars.”
(QGI said its numbers are aligned on a weekly basis to account for any delays by shippers reporting the delivery of cars, such as during the Christmas period in Week 21.)
QGI partner Milt Poirier said that based on his observations, the “expressed demand” from U.S. and Mexican destinations for Canadian crop commodities has been “tempered somewhat” by the rail backlogs.
Asked whether grain growers can expect such delays to continue in the coming crop year, Wade Sobkowich of the Western Grain Elevator Association, another coalition member, said it will depend on what resources the railways are willing to put in.
Last fall’s crop was smaller than the previous year’s record harvest, but there’s still significant carryover, he noted. Weather conditions so far this winter have also been more favourable for trains to operate.
The QGI report also pegs average “dwell times” — the time between a shipper releasing a block of loaded cars to a railway for transport, and the railway picking up said cars — at 50 hours in Week 21 and 39 hours for the crop year to date on CN lines, and 41 hours in Week 21 and 55 hours for the crop year to date on CP.
Average dwell times at destinations, before recipients take delivery of loaded cars, have “deteriorated noticeably” for both CN and CP since early last month, the report said.
For example, the report said, loaded railway dwell times in Week 21 at Thunder Bay were at 160 hours for CN, and 85 for CP.
Sobkowich said WGEA members have found the railways put on only enough resources for “100 per cent asset utilization,” a level below what shippers demand.
“We believe the railways have the ability to bring on more capacity; they just choose not to,” he said on the conference call.
The coalition’s report, he said, provides an aggregate picture of what grain shippers have been experiencing over the past 15-odd months.
Given the number and scope of the coalition shippers providing data so far, Poirier said the report’s figures represent about 65 to 70 per cent of grain industry participation.
Future reports will fold in data from more shippers as the crop year goes on, bringing the representation figure to about 90 per cent, he added.
Each week, the coalition said in a release, its reports will show rail performance across “key indicators” including rail car demand, car supply, timeliness of car supply, corridor performance and dwell times.
“If Canadian exporters are going to be seen as reliable suppliers we’ll need to see a rapid improvement week over week across the range of indicators being measured,” Pulse Canada CEO Gordon Bacon said in the coalition’s release Monday.
“We can expect that customers reading these reports will ask what is being done today to improve Canada’s logistical performance each week.”
Every individual grain shipper knows its own experience with rail car backlogs, Sobkowich said, but the coalition’s weekly reports will now allow them to compare their numbers with what’s happening across the industry.
— Dave Bedard is the daily news editor for AGCanada.com in Winnipeg.