Farmers are likely to see bulk grain shipments increase considerably over the next few weeks as railroading conditions improve, but available space in Western Canada’s country elevator system remains extremely tight.
Canada’s largest railway companies are continuing to work through stockpiles of grain waiting to be delivered to port facilities in Vancouver, Prince Rupert and Thunder Bay.
Mark Hemmes, grain transportation analyst with Edmonton-based Quorum Corp., said grain stocks in the country elevator system as of March 17 stood at more than 4.6 million tonnes, or roughly 91 percent of working capacity.
Grain stocks on hand at export terminals are also increasing, with Vancouver at 82 percent of working capacity and Thunder Bay approaching 80 percent.
Space constraints in the country elevator system and at export terminals are limiting farmer deliveries in many parts of Western Canada as railway companies recover from freight backlogs caused by rail blockades and other factors.
Local road bans are also taking effect across the West, meaning some deliveries are likely to be delayed further.
However, Hemmes said farmers are likely to see movement in bulk grain shipments over the next few weeks as railroading conditions improve.
Unlike containerized grain shipments, which are experiencing significant disruptions due to the COVID-19 pandemic, bulk grain movements have not been noticeably affected, Hemmes added.
“I don’t think the bulk system has really been affected by any of this,” Hemmes said.
“Everyone is still loading grain cars and they’re still loading ships. Right now, we’re not seeing anything unusual, but we are expecting rail volumes to ramp up before the end of the month.”
Wade Sobkowich, executive director with the Western Grain Elevators Association (WGEA), said although bulk grain deliveries faced unexpected disruptions this winter, the bulk grain supply chain is still functioning normally and has not been impacted so far by COVID-19 pandemic.
“It’s a fluid situation and it’s changing by the day but so far, (bulk) grain movements have continued … without noticeable disruptions due to the COVID situation,” Sobkowich said.
“The railways are operating. The grain companies are operating. The longshoremen are continuing… to load vessels. Vessels are still berthing and farmers are still delivering, so we still have a supply chain that is functional.”
Sobkowich said grain companies and terminal operations are still feeling the effects of recent rail blockades that threw a wrench into shipping efforts this winter.
As of late last week, a total of 48 grain ships were waiting to be loaded on Canada’s West Coast, including 37 in Vancouver and 11 in Prince Rupert.
Delivery delays have resulted in higher-than-expected vessel demurrage costs and contract extension penalties, but grain companies are anticipating that West Coast vessel numbers over the coming weeks will continue to decrease to more normal levels.
Additionally, COVID-19-related disruptions in the flow of other goods and commodities, including crude oil, containerized products and automobiles, could mean that additional rail capacity will be available to the Canadian grain sector, a potential silver-lining in an otherwise bleak situation.
“We never want to talk about a reduction in shipping… for other sectors as being a good thing… but it does stand to reason that the railways have a finite service pie that they can provide, and if other sectors aren’t shipping as much, that allows the grain sector to use more of that capacity on a week-to-week basis,” Sobkowich said.
“These days, we’ll take as much rail capacity as we can get.”
Last week, media reports suggested that import/export facilities in some overseas marine ports would be temporarily suspending operations in an effort to control the spread of the COVID-19.
In Canada, Sobkowich said there have been no discussions that he’s aware of suggesting that commercial shipping activities should be restricted.
Instead, Ottawa’s approach so far seems to be aimed at minimizing the impact of COVID-19 on essential supply chains and commercial transportation.
“We’re encouraged by the language that we’ve seen out of the federal government to keep essential services intact and supply chains intact….”
As of late last week, Western Producer efforts to speak with port officials in Vancouver were unsuccessful.
Farmers and truckers may see minor operational changes at some country elevator locations, Sobkowich added.
For example, some WGEA members may ask truckers to remain in their vehicles during unloading. In some cases, access to administrative offices may also be limited.