Railways are prepared to move a potentially big harvest this fall and winter.
“The railways, CP in particular, has gone on record saying that they’re ready for it and it would not be my place to second guess what they say,” said Mark Hemmes of Quorum Corporation.
The chief executive officer of Canada’s grain monitoring program doesn’t expect a repeat of the problems the industry experienced in 2013-14.
“If we do have problems, it’s going to be of a new nature and it’s anybody’s guess as to what those might be,” he said during the midterm meeting of the Agricultural Producers Association of Saskatchewan in Saskatoon July 18.
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With the growing potential for another bumper crop, Hemmes doesn’t think anybody would expect railways to move more grain than they did in 2013-14 on their best period.
“It’s really not possible for a railway to have that much capacity available on a moment’s notice.”
He said about one-third, or about 8,000 cars, of the total fleet are waiting for the new crop to come in.
“The railways cannot put those immediately into service. I think they’ll have them ready (and) as we move into September and early October they’ll start to come on very quickly,” he said.
The downturn in potash, oil and coal production could also play a role in moving larger volumes this fall, with more locomotives, rail space and staff possibly available.
“Certainly, if you take that demand out of the equation, it can’t hurt the grain industry,” he said.
While U.S. and eastern markets have seen growth the last few years, most Canadian grain will continue to be shipped through the West Coast in Asia-Pacific countries and Central America.
It became apparent during the 2013-14 backlog that better communication between railways and grain companies was needed.
“They’ve gone a long way to improve their discussions. Are they all the way there — maybe not,” he said. “But at an operating level, grain companies and railways are working together really, really well.”
It’s still too early to measure the waiting times for vessels at ports because not enough grain is moving through the system.
“Once we get back into the fall, we’ll see. We’re almost certainly going to see vessel lineups in-crease, waiting times extend be-cause only 15 weeks ago we had 30 vessels waiting in Vancouver.
The stocks in the country diminished and now we’re down to a level that’s probably at some of the lowest points that we’ve seen in the last four years,” he said.
Vessel costs are currently about $5,000 to $6,000 per day but could go higher.
Typically, loading times are contracted at 10 to 12 days. If it takes longer, it costs more.
“At its worst time in 2014, we were seeing vessel wait times averaging 28 days. Those are significant costs and those are the sort of things that everybody wants to avoid,” he said.
Hemmes said it could be well into October before grain monitors can assess how things are going.
“When 2013 came around, we probably had a good idea come about the end of October that it wasn’t quite what it should have been.
“The age-old challenge that we see in Canada is how soon is it going to get cold and how cold? What kind of snowfalls are we going to see?”
