New record set for Prairie grain throughput in 2016-17

This year's crop estimated to be the smallest in four years

Canadian Pacific locomotive
(CPR.ca)

Western Canada’s grain industry moved a record volume of grain in the 2016-17 crop year that ended July 31 and is gearing up to ship this year’s crop, expected to be the smallest in four years.

Export terminals at Vancouver, Prince Rupert and Thunder Bay put through 35.945 million tonnes of grain last crop year, according to the Grain Monitor’s week 52 report, exceeding the 2014-15 record of 35.76 million.

The number doesn’t include domestic or shipments to the U.S.

The final number could change, but a new record is certain, Mark Hemmes, president of Quorum Corporation, the firm hired to monitor Western Canada’s grain handling and transportation system, said in an interview Friday.

“Overall I think it’s the biggest year we’ve seen in tonnes moved,” he said.

Vancouver, Prince Rupert and Thunder Bay terminals unloaded a record 399,203 cars shipped from country elevators versus 384,782 in 2014-15.

The Western Grain Elevators Association (WGEA) is pleased with the rail service its members, which include the West’s major grain companies, received, executive director Wade Sobkowich said in an interview last Wednesday.

“The railways need to remain on their game whereas before (when rail service suffered) we might have said they needed to get on their game,” he said.

Canadian National Railway (CN) did an excellent job moving grain to export all last crop year, while Canadian Pacific Railway (CP) struggled earlier, but picked up the pace the last half the year, he said.

“We would expect the railways to continue servicing the grain industry as they have been,” Sobkowich said. “They have been performing well and we are looking at a crop that it is smaller than it was last year so we have greater confidence that they are going to do that.

“In addition we have C-49, (federal legislation) which we expect to pass in the early fall, hopefully, and then shippers will have more tools to hold the railways to those service standards that they have already been achieving.”

The WGEA estimates Western Canada’s crop at 60 million tonnes, down from last year’s 76 million tonnes — the West’ second biggest crop, behind the 77 million-tonne record set in 2013.

Railway officials said last week they are ready to move the 2017 crop.

“CN is aware of the variance in crop size from the different organizations that forecast this,” Doug MacDonald, CN vice-president of bulk, wrote in an email. “From discussions with our customers, CN expects a similar number of orders on its network as the prior crop. We are ready to move it.”

CP has said it’s also ready.

“At CP, moving grain is embedded in our DNA and has been for more than a century,” the company’s chief marketing officer, John Brooks, said in a news release Monday.

This is the second grain movement record in the last three years and comes just four years after a massive backlog in grain shipped by rail that prompted the federal Conservative government to order the railways to meet weekly shipping targets or face fines.

That unprecedented action, which the railways criticized as draconian, but which was welcomed by farmers and grain companies, was followed up with the Fair Rail for Farmers Act, an early review of the Canadian Transportation Act and C-49, the Grain Modernization Act tabled earlier this year by the current Liberal government.

CN moved a record 21.8 million tonnes of grain in 2016-17 — seven per cent more than the prior three-year-average, beating the one-year record set in 2014-15 by two per cent. And that’s despite more -25 C days and more snow than 2015-16 or the three-year average and a slow start to grain movement due to a wet fall, CN said in a summary of the last crop year.

In addition CN set six new monthly shipping records between the peak months of September and March when grain prices are highest.

CN is calling for federal infrastructure investment for Vancouver’s congested North Shore.

“We gave our customers what they were looking for by significantly expanding our commercial product offering,” MacDonald said. “CN expanded commercial agreements that guarantee car supply in advance to our customers both large and small. This commercially-driven innovation includes reciprocal penalties which drive accountability for both shippers and CN, and allows our customers to make market-based decisions.”

Last crop year, customers secured about 70 per cent of CN’s car supply in advance under commercial agreements subject to car commitment guarantees, he added.

CN credited its record performance to a combination of factors, including investing $3 billion in infrastructure the last five years, having crews, cars and power ready, a fair and predictable car allocation policy, which saw CN communicate a maximum weekly supply chain capacity of 5,500 carloads during the fall and spring, and 4,000 carloads during the winter.

CP moved about the same amount of grain last crop year as in 2014-15 and two per cent more than the five-year average.

CP’s Dedicated Train Program (DTP) has improved grain movement and will be even more important this crop year, accounting for more than 75 per cent of CP’s grain service, Brooks said.

CP is working toward 8,500-foot long trains with a minimum of 134 cars of export grain in Canada, moving 20 per cent than traditional 112-car trains.

“Through infrastructure investment and collaboration with grain companies and port operators, this enhanced train model allows railways, elevators, and ports to increase throughput and better utilize resources,” CP said in a release.

“The end result is more grain transported to market more efficiently than ever before.”

Improved communications and infrastructure investments, contributed to a new grain movement record, Hemmes said.

“Richardson… is almost like a new terminal (in Vancouver),” he said. “Viterra has spent a ton of money on both Cascadia and Pacific.

“The money put into Alliance — and they are putting in more — is really starting to show positive results.

“Prince Rupert… just keeps getting better and moving more and moving it faster. Those kind of efficiencies are just as important as anything and probably more important than what the railways are doing because they are turning cars faster. The grain companies are getting better between co-ordinating between the country and the ports. So things are moving smoother that way. I would attribute it as much to capital investment by the grain companies and communication between all of the stakeholders.”

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter.

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