Canada’s railways do good job: grain monitor

Prairie farmers were frustrated with Canada’s railway companies in the winter of 2013-14.

Producers accused the railways of failing to move grain from inland terminals to port, which clogged elevators across Western Canada and slashed cash prices.

The railways’ performance may have been inadequate, but it doesn’t represent the state of the grain handling system in Western Canada, says the head of Canada’s grain transport monitoring program.

Mark Hemmes, president of Quorom Corp., said 2013-14 was an aberration. The railways and grain companies have actually improved the efficiency and performance of the system over the last 15 years.

“Canada, probably, has the best grain handling and transportation system in the world,” Hemmes told Fields on Wheels, a grain transport conference held in Winnipeg last week.

“(But) given the challenges we’ve got as a country to deliver grain to the global market, if we’re not the best and always getting better, we’re (not) going to be able to compete.”

Hemmes provided a detailed set of data to support his claim that Canada’s grain handling system is performing and progressing:

  • Storage capacity at country elevators over the last five to seven years has increased to 6.5 million tonnes from five million.
  • Producers have invested in grain bins over the last five years, increasing on-farm storage by 15 million tonnes. It now stands at 70.1 million tonnes.
  • In 2000, grain terminals in Vancouver had an average turnover ratio, or number of times unloading their storage capacity, of 13 to 15 turns per year. In the last few years the turnover ratio has approached 30.
  • The major railways are investing in system performance and efficiency in Western Canada. Canadian Pacific Railway committed $1.5 billion and Canadian National Railway $2.3 billion to total capital investment in 2014.
  • Grain car cycles from inland terminal to port and back have decreased from a normal of 20 days to 12 to 13 days.

“Car cycles … in my time with the railway, we thought we were doing really good when we hit 20 days. Into the three major ports, Thunder Bay, Vancouver and Prince Rupert, in the last 12 to 16 months, if it goes over 14 days, we’re looking at it and saying, what went wrong?” said Hemmes, who worked in the rail industry for more than 20 years.

“This is really, really good news. The number of times you turn cars and the lower the car cycle, the capacity of the rail fleet is all that much better.”

As well, grain companies spent $763 million in 2013 and 2014 on new country elevators, elevator expansions and port terminal improvements in Western Canada.

Hemmes said more investment in grain storage in Vancouver is needed because the port has limited capacity, but grain handlers have managed the limitation and enhanced performance.

“Vancouver will move roughly about 500,000 to 600,000 tonnes of grain in a week,” Hemmes said.

“They have about 850,000 tonnes worth of storage. They’re turning their elevators about every week and a half. That’s an impressive number.”

However, vessel line-ups in Vancouver remain a trouble spot.

Wait times are down from peaks in 2013-14 but remain around two weeks on average. Hemmes said more storage in Vancouver will help but won’t solve the problem

“I don’t think it will ever go back to where it was five years ago,” he said.

“But I do think you can start to drive those numbers down if you have all the parties co-ordinate when it’s going to get there.”

The amount of grain moving through the Thunder Bay is also up and players in the eastern grain route are investing in the industry.

Chris Heikkinen, Port of Thunder Bay spokesperson, said grain volumes topped eight million tonnes in 2014, the highest in 15 years. Volumes for 2015 are also up compared to the 10 year average.

Heikkinen said the number of bulk vessels that travel directly from Thunder Bay, through the Great Lakes and to the ocean are on the rise.

Hemmes said the trend of trucking grain to the United States is also gaining traction.

Quorum statistics indicate that 3.2 million tonnes of Canadian grain were trucked across the U.S. border in the 2014-15 crop year, 2.2 million tonnes in 2013-14 and 1.9 million tonnes in 2011-12.

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