Churchill port hit by new grain realities

The Port of Churchill in northern Manitoba should be returned to federal government control to ensure it remains open to serve the shippers and northern communities that depend on it, says the top official with the Hudson Bay Route Association.

“We need ownership … that wants to do business,” said HBRA president Elden Boon.“We really feel that the port itself needs to be under national control again.”

Last week, port owner OmniTrax Canada issued layoff notices to about 70 Port of Churchill employees and confirmed that the port’s grain terminal would cease operations effective Aug. 8.

News of the layoffs came just days before the kickoff of the 2016-17 crop year.

“It came as a complete surprise to each and every one of us,” Boon said.“Everyone was completely blindsided….”

The terminal’s closure has prompted a variety of responses.

Runaround on Port of Churchill closure strange but true

Last week, Manitoba Premier Brian Pallister suggested the pending closure was an attempt by Denver-based OmniTrax to coax more money out of the province.

Pallister said Manitoba’s former NDP government agreed to a one-year deal in 2015 that saw the Manitoba treasury subsidize OmniTrax’s Canadian operations to the tune of nearly $1 million.

“The agreement that the province entered into last year was nothing more (than) a subsidy bailout done as a consequence of a threat, and now that threat is being repeated this year,” Pallister said June 28.

“I want to be very, very clear that I don’t respond ever to threats.”

The closure comes as prairie farmers are projected to harvest an unusually large crop this fall, possibly in the range of 65 to 75 million tonnes.

Many growers have clear memories of the grain handling challenges that occurred in 2013-14, when transportation channels were plugged and grain export programs were delayed by months.

Boon acknowledged that Churchill is not a large player in terms of volumes handled.

Despite a federal subsidy that pays grain shippers roughly $12 a tonne to move grain through Churchill, the port exported fewer than 200,000 tonnes of grain in 2015-16, down from about 500,000 tonnes in a normal year.

Churchill accounted for less than one percent of Canada’s total grain and oilseed exports in 2015.

Nonetheless, Boon said Churchill offers a valuable alternative route for growers situated along remote branch lines, where grain movement is often slowest.

It also has potential to serve smaller exporters who lack port capacity in Vancouver, Prince Rupert or Thunder Bay.

Until recently, Richardson International was Churchill’s biggest shipper.

The Winnipeg grain handler moved about 250,000 tonnes through the port in 2012-13 but those volumes have steadily declined.

“We have definitely used Churchill for shipments in the past, when it has made commercial sense,” said Richardson spokesperson Tracey Shelton.

“There are a number of factors that have come into play more recently. Ocean freight rates are at an all-time low, so that certainly makes other ports attractive….”

As well, he said Richardson prefers to move grain through its own terminals when possible.

Saskatchewan MP and former Conservative federal Agriculture Minister Gerry Ritz said the OmniTrax decision is unfortunate but not completely unexpected.

With capacity added to Vancouver and Thunder Bay over the last few years, the economics of shipping grain have changed, he said.

OmniTrax showed no inclination to upgrade its Manitoba assets, despite federal programs that offered investment incentives of more than $30 million, he added.

“OmniTrax had to spend money in order to trigger government money but that never happened,” said Ritz.

Ritz said it will be difficult to find a new owner willing to upgrade the port and the railway line that serves it.

“It’s going to be tough to put it back together again, there’s no doubt in my mind,” he said.

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