WINNIPEG – What if a television set you were considering buying was advertised as working 80 percent of the time?
When it did work, it would provide you the programs you wanted to watch no later than two weeks after their air date, but it would do so just 90 percent of the time.
Oh, and it wouldn’t even do that all the time, just on average over a 12-week period.
Chances are you wouldn’t buy that TV, Keith Bruch, vice-president of operations for Paterson Grain, told a grain transportation conference last week.
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That imaginary TV is analogous to the situation faced by some grain shippers following a recent decision by the Canadian Transportation Agency, he said.
In that Sept. 25 ruling on a service complaint by a group of smaller shippers, the agency set a number of performance benchmarks for Canadian National Railway.
It said CN must:
- Confirm a minimum of 80 percent of cars requested by grain shippers.
- Deliver 90 percent of those confirmed cars no later than two weeks beyond the agreed delivery date.
- Meet those standards on a 12-week rolling average throughout the crop years.
Bruch, whose company was one of four shippers to which the new benchmarks apply, said that while the principle is good, the standards are too low.
“We can’t do business under those kind of benchmarks,” he said, adding none of Paterson’s customers would ever accept that kind of service from the grain company.
Wayne Atamanchuk, assistant vice-president of bulk commodities for CN, said Bruch’s TV analogy seems persuasive.
But he said CN often receives more requests for cars than can possibly be moved, known in the trade as phantom orders.
For example, during a 10-week period in the fall of 2007, CN received requests from shippers for 7,000 cars a week. That represents about 625,000 tonnes of grain every week for 10 weeks.
In that same 10-week period, all deliveries by farmers in Western Canada totalled about 800,000 a week.
“We like to believe we’re good, but we’re not good enough to move 85 percent of total deliveries in Western Canada over 10 weeks,” Atamanchuk said, adding Canadian Pacific Railway would want more than a 15 percent market share.
The benchmarks talk about confirming 80 percent of shippers’ orders, but Atamanchuk questioned how real that demand is sometimes.
Even when the railway provides prompt and timely service from country to port, he said there are occasions when a vessel has been delayed, the terminal fills up, the cars can’t be unloaded and a backlog develops.
“We are not the only element in the supply chain.”
Bruch also called for more balanced accountability. While grain companies face penalties for failing to meet railway standards, he said, the reverse is not the case.
“We know hauling grain is not easy and our expectation isn’t 100 percent performance, but it is an expectation for better than our historic experience,” he said.
Richard Wansbutter, head of commercial relations for Viterra’s grains group, agreed. He called for a more commercial system including one-to-one contracts between grain companies and railways, with both parties required to meet certain performance standards.
