Shipping delays late last year cost grain industry $7.8 million: WGEA

Vancouver — The financial costs of Vancouver-area rail delays and freight embargoes in late 2018 will probably never be known, but the final tally likely won’t small, according to shippers that provided information to a Canada Transportation Agency investigation.

Grain exporters estimated the cost of service disruptions that took place at the Port of Vancouver between late October 2018 and early January 2019 at nearly $8 million.

Wade Sobkowich, executive director of the Western Grain Elevators Association, shared the figure with CTA investigators during two days of oral presentations in Vancouver last week.

“Costs incurred by WGEA members for vessel demurrage, contract extension penalties and railway hold charges in the last part of October, November and December totalled … $7.825 million,” Sobkowich said Jan. 30.

Delivery delays also resulted in lost or reduced export sales, he added.

The WGEA represents the largest grain handling companies in Western Canada. Collectively, its members handle more 90 percent of the bulk grain exports in Western Canada.

Sobkowich told the CTA that WGEA companies began to notice the impacts of Vancouver-area rail service disruptions in late October.

Service ebbed and flowed during the next two months but generally worsened until late December or early January, he added.

“Terminals on the North Shore of Vancouver were out of cars much of the time,” Sobkowich said.

“In many instances, they received only partial trains and were congested with empties (that were) not being lifted in a timely way.”

Sobkowich said some delivery delays were also experienced at the North Shore export terminal, but the impacts there were less damaging.

At the height of the disruptions in December, average ocean vessel wait times at the Port of Vancouver increased to 19.5 days.

With the exception of one other month, that was the highest average wait time recorded since the beginning of the 2014-15 crop year.

Average demurrage costs for a Panamax-sized ship currently sit at around $13,500 per day.

Despite the service delays experienced between late October and late December, Sobkowich said overall grain unloads at Port of Vancouver terminals exceeded unloads during the same period in 2017 by more than 6,000 hopper cars.

Sobkowich said increased throughput can be attributed in part to seven-day-a-week unloading schedules, which are now in place at all Vancouver area grain terminals.

Chris Vervaet, a spokesperson for the Canadian Oilseed Processors Association, did not provide an estimate of the costs his members incurred as a result of late 2018 shipping disruptions.

However, delays encountered in 2017 cost the Canadian crushing industry more than $120 million, a loss the industry cannot continue to absorb, he said.

Western Canadian shipments of canola meal destined for California were among the products delayed when rail car interchange operations in Vancouver were impaired due to railyard congestion.

“Probably the most significant long-term cost … is the risk of losing customers due to the inability to supply products in a consistent and timely manner,” Vervaet said.

“We have heard from members that service in Vancouver is starting to improve … but we also continue to hear concerns about consistency and reliability.”

Railway companies, including Canadian National Railway and Canadian Pacific Railway, did not offer estimates on how much late-2018 rail network congestion in Vancouver cost their operations due to lost productivity.

However, railway executives said the failure of some shippers to match inbound traffic volumes with west coast terminal unload capacities continues to have a negative impact on overall network fluidity.

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