Are we going to run into grain shipping problems again this fall and winter or will the two main railways provide good service? While nothing is ever certain, there are positive signs.
Estimates vary on the size of the prairie crop, but the crop is generally much higher yielding in the central and northern grain belt than in the south. That would seem to mean a bigger share for Canadian National Railway versus Canadian Pacific Railway based on where the two companies operate.
While production and carryover are important for estimating total movement, elevator companies will tell you that crunch time happens in the first five or six months after harvest regardless. That’s when world prices are often best and it’s the time for the heaviest shipping programs. The test is whether the railways can meet the demand for movement during that timeframe.
It was during that critical time last year when the system sputtered, reminding everyone of the debacle back in the 2013-14 shipping season. Grain companies sell according to the hopper car supply they expect. When they don’t get the cars, ships wait and customers are disappointed.
Many things have changed since 2013-14. The Transportation Modernization Act (formerly Bill C-49) is now in place and while elements like reciprocal penalties will take time to work out, changes to the maximum revenue entitlement are already paying dividends. The railways now get credit for their specific investments and as a result both are buying new hopper cars.
The new cars are high volume while also being slightly shorter meaning they’ll be able to pack a lot more grain in each train. There’s also a push to move to trains that are 8,500 feet long, a 20 percent increase.
As well, the railways are investing in locomotives and they’ve hired many more employees. Of course, this isn’t just for grain movement, but grain should benefit from the additional capacity.
While the grain industry focusses on its own needs, not enough attention is paid to the other commodities that also rely on rail. There are reports of recent increases in crude oil movement. What’s happening with potash sales? While these other industries don’t compete for hopper cars, they do compete for locomotives, crews and track time.
As for grain movement, the Ag Transport Coalition was formed as a direct result of the dismal service five years ago and the industry now has timely, relevant statistics on railway performance. The number of hopper cars supplied to elevator companies is being measured week by week and compared to the number requested to meet sales objectives.
Problems can now be identified much more quickly and accurately. In the debacle five years ago, it took a great deal of time to get the railways and the federal government to admit there was actually a problem.
Perhaps the biggest advancement of all is the open communication now occurring between producers, elevator companies and the major railways. The railways want to promote their efforts and while some of this is Public Relations 101, they do seem to be listening and discussing more than ever before. Leading up to and during the 2013-14 difficulties, they were all but inaccessible.
Of course, there be grain transportation problems again, but there are more reasons for optimism than ever before. We’ve come a long way in the past five years.