Dedicated trains empower elevators

Canadian Pacific Railway’s dedicated train service has proven to be a hit with grain companies.

Most grain shipped on CP tracks now moves on dedicated trains, a system the railway introduced in 2014.

“Seventy-five percent of our grain is moved by the dedicated trains,” said Jeff Edwards, CP assistant vice-president of service design and car management.

“(It’s) a contracted agreement between us and our customers, where the customer essentially has access (and) controls a set number of trains for the crop year.”

Edwards, who spoke at Fields On Wheels, a grain transportation conference held recently in Winnipeg, said the service is aimed at large shippers.

“They are our much bigger customers that have control of X number of trains, each,” he said. “(For example) once the train is unloaded at the Port of Metro Vancouver, that customer will tell us where it is going to next…. They will make that decision.”

Dedicated trains have shifted control from CP to grain companies, but shippers don’t have absolute control, said a spokesperson for Canada’ grain monitor.

“If you talk to the guys at the grain companies, they like it,” said Mark Hemmes, president of Quorum Corp, a watchdog for grain handling and transport on the Prairies.

“It gives greater control to the shipper … over the routing of the train and some small amount of control over the timing, which they really didn’t have before.”

CP introduced the service following the 2013-14 crop year, which was horrific for grain transportation in Western Canada because of the massive harvest and a cold, snowy winter.

Hemmes said another detrimental factor in 2013-14 was prioritization, as the railways mostly controlled where trains went and when.

“This (dedicated trains) kind of puts the prioritization power back in the control of the shipper,” he said.

However, grain companies don’t call all the shots.

“They put in their request and sometimes it happens; sometimes it doesn’t,” he said.

Wade Sobkowich, Western Grain Elevator Association executive director, concurred that shippers now have more control.

“The shipper does have flexibility in picking origins. Under the program service is not dictated, however, keep in mind we are no longer running many branch or secondary lines,” he said. “Overall, this program has had a positive impact on forward planning and supply chain efficiencies. Those who have signed up would say it is a step in the right direction.”

As an example, if a company makes a sale of wheat and a vessel is coming to Vancouver to load the wheat, the company can prioritize shipments from country elevators with ample supplies of wheat.

“That’s the way it’s supposed to work,” Hemmes said.

At Canadian National Railway there are changes, too.

“This crop year, CN introduced new products and service options to meet grain customers’ transportation needs,” a CN spokesperson said. “All customers were offered the opportunity to sign commercial agreements with respect to car supply that include provisions for reciprocal penalties. We expect the majority of the grain CN will ship this crop year to move under these agreements.”

Dedicated trains may be popular with larger companies but they don’t solve broader problems in the grain handling system, such as lack of capacity at peak periods.

“Stated another way, it does not grow the pie,” Sobkowich said. “But for those who use DTP (dedicated train program), it allows them to be more precise with the slice they have.”

Another issue is the impact on small shippers.

“The DTP only applies to 112-car unit trains. If a shipper needs a 50-car spot, they have to do so under general allocation,” Sobkowich said. “The general allocation service has dropped with the introduction of the DTP.”

As well, elevators off the beaten track will still struggle to get cars.

“Sometimes a grain company will say we want to originate (a shipment) at Assiniboia, as an example. CP may say, ‘well, we might not be able to get there for a couple of weeks,’ ”Hemmes said.

“The railways are always going to be looking for the most efficient routing for them. And that’s perfectly understandable. They’re running a business.”

Are dedicated trains really dedicated?

The phrase “dedicated train” provokes a certain mental image: a single train providing a dedicated service, such as hauling grain between southern Alberta and Vancouver.

That’s not necessarily the case, said Wade Sobkowich of the Western Grain Elevators Association.

“(It) implies the physical train is dedicated to a single company for back and forth movements from country elevators to port,” he said.

“The train may, in fact, get spotted at the elevator of a different company or get broken up and re-assembled a different way the next time around…. The exact cars a grain company ships as a unit train off the Prairies and unloads at (a) terminal in Vancouver, for example, might not be the exact empty set that returns to that company, or back to the Prairies.”

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