Prairie grain farmers are paying for this winter’s rail transportation problems.
And a strike at Canadian National Railways could cost them even more.
Problems getting grain to the West Coast have put the Canadian Wheat Board into a demurrage position, says chief executive officer Adrian Measner.
“For two or three weeks we got only about one-third of the program we’d normally get, so there have been some delays at the West Coast,” he said in an interview last week.
As a result, the board has missed some contractual deadlines for loading grain into waiting vessels and incurred financial penalties called demurrage. No financial details were released.
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Measner thinks it is a temporary setback and will be resolved soon.
“The program is starting to pick up and the timing of vessels is such that I think we can work our way out of this fairly quickly and hopefully be back in a despatch position in early March,” he said.
Despatch refers to bonuses paid by customers to the CWB for doing better than the contracted loading deadlines.
Extreme cold and heavy snow in January played havoc with railway operations in Western Canada.
In the four weeks ending Feb. 14, weekly rail car unloads of CWB grains at Vancouver and Prince Rupert averaged 2,250 cars, well below the target of around 4,000 cars.
The board requested 11,577 cars for the three weeks ending March 6, but will get only 6,600.
Milder weather in recent weeks has enabled CP, which was particularly hard hit by the weather, to make some progress in reducing the backlog.
However, the board remains about 500 cars behind where it had wanted to be at this time. Now the grain shipping program has been thrown into doubt as a result of the Feb. 20 strike by about 5,000 employees at CN.
Canadian Auto Workers union officials have said they will try to ensure that grain shipments are not disrupted by the strike, and company spokespeople say they expect to be able to offer “fairly normal” service during the strike.
“We are seeing some delays across the system but nothing of major importance,” said Jim Feeny of CN.
CWB officials say that for the week ending March 6, CN has committed to provide the board with 1,400 rail cars, well below its request for 2,323 cars.
“That would indicate there is going to be an impact on grain movement,” said CWB spokesperson Rheal Cenerini. However, Feeny said that car number reflects “normal pipeline management” and is unrelated to the strike.
An official with Agricore United, the Prairies’ biggest grain shipper, said Feb. 23 that the company hadn’t experienced grain shipping problems in the first four days of the strike.
“If it becomes an extended work action we might expect to have some delays, but so far, so good,” said Radean Carter. “It really is a wait-and-see situation.”
Meanwhile, speaking to a group of farmers in Prince Albert, Sask., last week, Measner said that while bad weather can cause operating problems for the railways, the reduction in car supplies in January and February was more extreme than the weather alone justified.
He said the board disagrees with CP’s decision to use bad weather to invoke force majeure in its shipping contracts on Feb. 4, which voids any penalties arising from poor performance.
Measner said that while the board can’t do anything about the declaration, the grain industry needs to meet with the railways to reach some understanding about when force majeure can be invoked.
