Railways expect to meet government’s order on grain

Canada’s big two railways expect to be able to meet the federal government’s new mandatory requirements for Prairie grain movement — but warn it will take further commitments all along the supply chain.

Canadian National (CN) and Canadian Pacific (CP) Railway responded Friday to Transport Minister Lisa Raitt’s order-in-council, which immediately sets out minimum volumes of grain the two railways must move weekly — initially 5,500 grain cars, and up to a “combined target” of one million tonnes. [Related story]

“Our assessment shows that an upper limit of around 5,500 cars per week may be achievable, but only if all members of the supply chain work together closely,” CN CEO Claude Mongeau said in a release Friday, noting that’s “broadly in line” with Raitt’s order.

“Despite an extraordinary crop size that was not forecasted by anyone and periods of extreme winter weather, our railway has continued to move record amounts of grain, and despite this unfortunate order in council, (CP) is committed to matching the record volumes we moved in the fall, which will align with the order,” CP spokesman Ed Greenberg said in a statement.

CN said it intends to ramp up toward 5,500 cars delivered to country elevators each week, “as soon as weather conditions permit and a strong Thunder Bay program starts,” and will have the locomotives, cars and crews in place to support that record weekly spotting level.

CP, Greenberg said, now expects to transport 240,000 carloads of Canadian grain during this crop year, “a more than 20 per cent increase over last year’s record.”

However, sustaining such a level of traffic will take “strong collaboration” from the supply chain, including grain companies, country and terminal elevators, CN said.

“Critical factors,” the company added, will include use of all sale corridors; timely loading and unloading of grain cars; and “encouragement from the federal government to act in a collaborative, as opposed to accusative, manner in the grain supply chain.”

CP, Greenberg said, believes the government’s order raises more questions than it answers and only focuses on the railways, not the entire supply chain.

“CP’s position remains that moving grain from the farm to the port is a complex pipeline involving many parties and requires all participants of the Canadian grain handling and transportation system to work together, which requires a 24/7 commitment similar to the railways.”

Mongeau further panned Agriculture Minister Gerry Ritz’s plan, also announced Friday, to introduce further legislation including “measures to ensure Canada maintains a world-class logistics system.”

“More regulation would lead to adversarial relationships within the supply chain, at a time when collaboration is essential,” Mongeau said Friday. “Sound policy calls for exactly the opposite: a more collaborative and commercial framework is what Canada needs to support a world-class grain growing sector.”

“Best efforts”

CN reiterated last year’s Prairie grain crop was “by far the biggest in Canadian history,” resulting in the company having to move 10 million more tonnes of export grain, or 50 per cent more than for any other crop.

Echoing comments Thursday by CP CEO Hunter Harrison in a full-page ad in Canada’s two national newspapers, “no supply chain in the world can reasonably be expected to handle a 10 million-tonne increase in traffic on such short notice,” Mongeau said. It takes eight months to “on-board” and train a crew member and seven to eight months to acquire cars and locomotives, he said. [Related story]

On top of the size of the crop, CN has seen “extreme weather conditions” across much of its network this winter, and “despite the best efforts and personal sacrifices of our employees, we have not been able to keep up with a normal winter grain flow during this polar vortex,” Mongeau said.

The weather conditions helped lead to a shortfall of around 10,000 carloads compared to a normal winter grain flow, CN said.

“Indeed, even after a very slow start in August, when grain elevators decided to ship at least 10,000 carloads less than the available rail capacity, CN has moved approximately 10.5 million tonnes of grain out of Prairie Canada so far this crop year.”

That throughput, CN said, is “on par with the average to-date performance over the last five crop years,” noting its performance to date benefited from “record spotting performance” from September to November. — AGCanada.com Network

 

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