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Moving canola to market

We can increase our canola yields, but experts question whether we have 
the transportation infrastructure to get that extra production to buyers

Dr. Stephen Blank believes the Canola Council of Canada’s production goal of 52 bushels per acre by 2025 is impressive, he told delegates at the council’s recent conference in Banff, Alta.

“But there’s an 800 pound gorilla in there that we haven’t talked much about,” said Blank, an expert on North American transportation infrastructure.

“That’s moving stuff from supply to demand. The physical infrastructure of grain transportation.”

In the 1980s and early 1990s, North America’s transportation infrastructure met demand, Blank told delegates, because of excess capacity and new technology. A completed interstate system and consolidation in rail and trucking also helped, he added. But the picture is much different for 2015.

“Decades of chronic underinvestment have left our systems incapable of keeping up with routine maintenance, let alone increasing capacity to accommodate forecasted growth,” said Blank.

Today’s transportation infrastructure problems started to show in the 1990s, when congestion increased. New value chains were emerging and there wasn’t any more extra capacity, Blank said. Over the decades, governments delayed maintenance and put in new environmental restraints. The terrorist attacks on September 11 meant more security measures at borders and ports, Blank added. Deficit reduction strategies in Canada and Mexico took precedence over infrastructure spending, he said.

The sum of all this is more congestion on North America’s rails, roads, and in waterways and ports.

There’s also been a crucial shift in how Canadian and U.S. governments view infrastructure and spending in general, Blank told delegates. “The discussions among leaders in our countries have shifted from how to develop integrated national or continental grain transportation systems to how to reduce government spending and taxation.”

Leaders have a hard time distinguishing between consumption and investment, Blank said. Infrastructure is usually grouped into general expenditures, he told delegates.

And when they do spend on infrastructure, they don’t look at the whole network, he added. Often the focus is on satisfying local taxpayers, and so more money goes to fill potholes than fix big problems, he said.

“The other side of this, is dear God, it’s expensive,” Blank added.

Every four years American Society of Civil Engineers grades U.S. infrastructure and calculates funding gaps. U.S. infrastructure currently rates a D+ overall, according to the civil engineers. To bring it up to a B by 2020, the U.S. government would need to throw in over $3.6 trillion.

Canada’s situation isn’t any rosier. Canada needs to pony up $66 billion to maintain urban roads and bridges by 2023, Blank told delegates. Those numbers come from the McKinsey Global Institute.

There are no shortages of problems in North America’s transportation infrastructure, Blank said. Railroads are near capacity, he said, and there are only so many miles of track. It takes nearly as long to dray across Chicago, the major railway hub, as to run freight from Winnipeg, he added.

Waterways are “a disaster,” Blank said. “More than a decade ago 50 per cent were declared functionally obsolete.”

Ports have their issues, too. The port at New Orleans is “enormously vulnerable.” to climate change, Blank said. The port of Los Angeles-Long Beach lives “on a knife-edge” because of growing citizen reaction to conditions and congestion, he added.

“Infrastructure’s become more contentious in many communities,” Blank said. The not-in-my-backyard attitude towards projects has morphed into BANANA — Build Absolutely Nothing Anywhere Near Anything, he told delegates.

North Americans are clever people, he said, who will “make do and mend.” But if we push off major infrastructure investments for a decade or so, what will that do to our competitive position in the world, he asked.

Three scenarios

Blank presented three possible scenarios for how North American governments would tackle infrastructure investment. Blanked described them as images of plausible alternative futures. He cautioned the scenarios aren’t meant as forecasts or predictions, but as processes that need to be revised.

The first scenario was a make do and mend mindset. Short-term fixes would predominate, Blank said. Governments would fix the most pressing infrastructure problems that provide relieve to the largest number of users, and also create jobs. Governments would keep spending as low as possible.

The danger is that without a broader vision, enormous sums could be spent on local and regional projects without advancing a more integrated national or continental system, he said.

In the second scenario, government would shift responsibility to the private sector. “In this scenario, government deficits are seen as the primary threat to national well-being, not the decaying infrastructure,” said Blank.

Proponents of privatization would put forth three positive effects:

  1. Cut costs and eliminate inefficiencies.
  2. Introduce services and make investments that are responsive to users’ preferences.
  3. Develop new innovations and expedite the implementation of current advances in technology.

The concern with this scenario is that private firms would be able to set excessive prices and cut services because they face no competition, Blank said.

Blank also outlined a third scenario — reconstruction. Leaders would invest in continent-wide efforts to rebuild freight infrastructure, he explained. They would see national freight systems as elements of a North American freight transportation system for decades to come. Decisions would be more centralized. Research and collaboration would cross borders and be shared by governments.

But this scenario would rest on a substantial shift in leaders’ perceptions around infrastructure, he said. “How could this happen? Well, perhaps (as) the response to a major catastrophe.”

Canola industry’s role

Blank suggested the Canola Council think about how it could influence which scenario will emerge.

“Someone has to say something,” Blank said. The Canola Council of Canada represents “an enormously successful” North American industry, he added.

The industry should be thinking about how it can leverage rising global demand for canola to improve transportation infrastructure, he added.

He asked whether canola growers can push government leaders to look at the economic and budgetary implications of long-term investment in infrastructure. He also posed the question of reaching out to other exporters.

“Is it impossible to think of a North American Commission on Freight Transportation?” Blank asked.

But as he wrapped up his presentation, Blank didn’t seem overly optimistic about the future of North America’s infrastructure.

“I’m worried as hell. I don’t see an easy light at the end of the tunnel.”

About the author

Field Editor

Lisa Guenther

Lisa Guenther is field editor for Grainews based at Livelong, Sask. You can follow her on Twitter @LtoG.

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