How do you measure the efficiency of Canada’s grain transportation system? As a reporter recently noted, one highly-visible yardstick is the number of ships waiting for grain at B.C. ports.
Waiting ships are more than an embarrassment. If the ships can’t be loaded on schedule, the wheat board has to pay demurrage costs that could amount to thousands of dollars for each day a ship waits.
With rail car movement for December and January at only 62 percent of the targeted volume, two dozen ships were waiting in Vancouver harbor early this month. Board officials say demurrage payments for the year will likely exceed $15 million.
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Then there are lost sales opportunities – notably 1.5 million tonnes of grain that were planned to be shipped in December-January, but had to be deferred. The grain will still get sold eventually, but the board estimates its price pools will get $50 million less than if the grain could have been shipped when prices were stronger.
All this money, unfortunately, comes out of farmers’ pockets. For the 120,000 or so board permit-book holders, that $65 million amounts to an average cost of $540 each.
If the two railways had jointly mailed each farmer an invoice for $540 to cover the cost of transportation problems, there would have been shouts of protest. Yet, because the costs are paid before farmers get what remains of the sales price for their grain, many will never realize the penalties they pay.
To be fair, the railways say they have had to cope with unusually bad weather, including storms or slides that blocked lines. The CPR also says it has been operating the most hopper cars it has ever had in grain service.
But there are still suspicions that the railways have not given high enough overall priority to grain service. And there are periodic stories of cars being misplaced or temporarily forgotten.
It’s interesting to note that the situation would not have been any better if farmers collectively owned thousands of hopper cars. If anything, that would have meant even less incentive for the railways to make efficient use of those cars, since it would not be their own invested capital being unproductive.
As representatives of some farm organizations have long argued, farmers have a much bigger stake in transportation issues than simply deciding whether to purchase the federal government’s hopper fleet. Unresolved issues include how to ensure the railways meet performance standards and how to get producers a share in the benefits of any improved efficiency.
If these issues aren’t resolved, farmers will keep paying the price.
