On July 25, the Saskatchewan government announced it was considering selling the Global Transportation Hub. The hub was just a business the government should never have been involved in, the official explanation went. A profound silence from the agricultural community suggests farmers agree with this assessment.
For agricultural producers, the Global Transportation Hub opportunity was simple and compelling. Canadian Pacific Railway operates a 300-acre intermodal facility next to the hub that can move 250,000 containers every year. If we add to that a freight village providing comprehensive logistics, transportation, warehousing, and distribution services and a cluster of food processors, we would have something remarkable: opportunity to pursue elusive value-added opportunities in the global food market.
To say Saskatchewan agriculture urgently needs a high through-put intermodal facility is an understatement. After more than 100 years of agricultural history on the Prairies, our transportation systems remain stubbornly segmented and un-integrated. Each mode, whether truck, rail or ship, and the companies operating these modes, developed largely independently. Nowhere is this contradiction more apparent than with container traffic.
Since Malcolm McLean developed the concept in the 1950s, the container has transformed the global economy, including the agricultural trade.
Unbelievable opportunities in East Asia exist for small- and medium-sized prairie producers of containerized products. Small- and medium-sized importers want our containers because they don’t have the commercial storage or working capital to deal with massive pipeline inventories.
Yet only about 13 percent of the 24 million tons of Canadian agricultural products shipped out of the Port of Vancouver in 2017 were containerized. Almost 29 percent of the 885,676 containers shipped out of Vancouver last year were empty, despite the fact they meet on the rail empty hopper cars lumbering east. And the revenue cap provides little incentive for railways to further pursue container traffic in Saskatchewan. Trucks are not even designed to haul containers as full as the railroads permit. Filling containers to capacity with one-ton bulk bags of agricultural products is a death-defying act.
In other words, private industry with its focus on proprietary knowledge, dollars-per-ton, and inventory turnovers has little incentive to reform and rationalize a dysfunctional agricultural transportation system.
Imagine this hypothetical scenario: I am a farmer with some shiny beans in my hand. I know there is a 100-million person market for them because last year I sat across the table from someone several time zones away who told me as much. One fall day, the local trucker picks up 43 tons of my beans, including the pods, stones and volunteer mustard. He drives around the bypass and dumps his load within 10 minutes of arriving at the intermodal facility. The beans are cleaned and colour-sorted within a couple hours by a toll processor. Next morning the product is inspected, mechanically bagged and stuffed in a 20-foot container that was stockpiled on-site for this purpose. The container is loaded on a 10,000 foot intermodal train by the end of the week. Private industry alone cannot make this scenario a reality, so let’s stop pretending it might.
What else is there for this province if we can’t make containerization work? What other ways are there to add value to this province? Bryan Richards, president and chief executive officer of the hub, answers the question this way: “Either we shift proteins, pulses and other commodities to value-add processing and move from bulk to containers … or we miss out pretty significantly.”
A polite silence from the agricultural industry about the selloff of the transportation hub means we are either entrenched, scared or risk-averse. In any case, it spells bad news for small- and medium-size farm entrepreneurs.
Paul Sinclair is an associate professor in the University of Regina’s Faculty of Business Administration.