The grain sector is buoyant about news that Port Metro Vancouver is likely getting a new grain terminal, although some wonder how much impact it will have on exports through the port.
“For farmers we’re pretty excited about it,” said Gary Stanford, president of Grain Growers of Canada.
“It’s just another outlet to get our grain on ships. I hate seeing all the ships sit there in the winter time with demurrage.”
News broke last week that there will likely be an announcement before the end of 2015 that a major player in the Canadian grain industry will build a new export terminal.
Stanford has heard it will be built by G3 Global Grain Group, the company owned by Bunge and the Saudi Agricultural and Livestock Investment Company (SALIC), which recently acquired a majority interest in CWB.
He said the scuttlebutt is that the new facility will have a loop track unloading system that will expedite rail car turnaround.
“For us as grain producers to get the cars back out here to the country quicker would be a real benefit for us,” said Stanford.
Wade Sobkowich, executive director of the Western Grain Elevator Association, said competition is always welcome with one important caveat.
“As long as it is done by a company without government assistance then it’s fair game,” he said.
Sobkowich doubts a new export terminal will result in any more grain moving through the system unless other changes take place.
“Rail service and rail capacity is really the bottleneck,” he said.
West coast terminals have the working capacity to unload 686,615 tonnes of grain per week but have been unloading closer to 450,000 tonnes per week on average.
“Throughout the year, the terminals fluctuate from being between 30 and 70 percent full and are out of cars between 20 and 30 percent of the time,” he said.
“The issue isn’t the capacity on the West Coast, it is how to get the grain to utilize that capacity. That’s where we need to focus our efforts.”
Mark Hallman, spokesperson for CN Rail, pointed the finger in the other direction.
“CN would welcome a new grain terminal being built at Port Metro Vancouver,” he said in an e-mail.
“The company also believes there are substantial efficiency gains that waterfront grain terminals have yet to fully exploit to increase capacity and throughput, such as operating 24/7 as railways do.”
Hallman said that as of week 39 western port unloads were 16 percent higher than the same period last year and that terminals were operating at 80 percent of their working capacity.
Jeremy Berry, spokesperson for CP Rail, had a similar response.
“Any improvements at the Port of Vancouver that properly address the throughput capability, especially during peak periods, of Canada’s export grain supply chain would go a long way in reducing bottlenecks across the supply chain,” he said in an e-mail.
“CP has stressed and will continue to stress that the Canadian grain supply chain must operate on a 24/7 basis to support balanced pipelines, reduce congestion and drive velocity.”
Mark Hemmes, president of Quorum Corporation, welcomed news of a potential new grain terminal.
“It’s nice to talk about something that is a little more positive than all of the negative stuff that has been going on,” said Canada’s grain monitor.
He was blindsided by the news and has more questions than answers, including who will build the terminal, where they will source their grain, where it will be located at the port and what kind of infrastructure it will have.
“I’ve got so many questions that I couldn’t even form an opinion,” said Hemmes.
Stanford hopes the facility will be able to accommodate post-Panamax ships capable of carrying 75,000 tonnes of grain through the Panama Canal’s third lane of wider locks, which is set to open in 2016.
He believes a west coast terminal would make the CWB a major competitor in Canada’s grain industry because it would no longer be reliant on leasing terminal space from competitors.
Stanford has heard rumours the CWB may be making upgrades to its Thunder Bay terminal as well.
He thinks that makes sense given that SALIC, a Saudi Arabian government agency, is now one of the owners of the company and is likely looking to import feed grains into Saudi Arabia for its livestock business.
Saudi Arabia has announced it is shutting down its wheat production and will become totally reliant on imports starting in 2016.
The kingdom’s wheat imports have already been on a steep incline. Saudi Arabia imported 3.5 million tonnes of the crop in 2014, up from 75,000 tonnes in 2007 when it was produced 2.56 million tonnes of its own irrigated wheat.