The fleet of government-owned hopper cars that’s used to haul prairie grain to market will likely shrink to half its current size in the next 11 years and will be almost completely eliminated in 20 years.
That is one of the highlights contained in the 2014 Government of Canada Hopper Car Fleet Annual Report, a Transport Canada document that monitors the size, condition and use of Ottawa’s hopper car fleet.
According to the report, Ottawa’s current fleet — which consists of roughly 8,400 cars — will soon reach the end of its useful service life.
As a result, nearly 3,400 cars will be scrapped for salvage value in 2026 or 2027.
Nearly all that remain will be retired between 2032 and 2035, meaning grain shippers and railway carriers will be left to buy replacements or lease cars elsewhere.
Over the past two years, 800 hopper cars have been removed from the federal fleet, including 747 that were retired and 53 that were destroyed in derailments or damaged beyond repair.
“Due to the age of the original Government of Canada hopper car fleet … the next major groupings of cars to reach the end of their useful service life and be bulk retired will occur between 2026 and 2027 — approximately 40 percent of the fleet — (and) between 2032 and 2035 — almost all of the remaining fleet,” the report says.
“By 2044, all of the hopper cars in the Government of Canada fleet will be retired and the fleet will no longer exist.”
Under an operating agreement signed in 2007, Canada’s major railway companies — Canadian National Railway and Canadian Pacific Railway — are required to maintain grain transportation capacity by refurbishing cars, upgrading cars to haul heavier loads, improving car cycle times and replacing some of the retired government cars with so-called jumbo cars that have larger capacity.
As of Dec. 31, 2014, all federal cars had been refurbished, meaning their useful service life had been extended to the maximum 50 years.
The Transport Canada report also shows:
• 2014 revenues of roughly $13 million, paid by the railways to the Government of Canada, for instances where federal hopper cars were used to haul commodities other than grain.
• A six percent decrease in the average number of federal cars that were used to move Canadian grain in regulated corridors as opposed to those that were being used in the United States or on networks owned by Canadian short lines.
• Government revenue of $4 million derived from 2014 salvage operations involving damaged or destroyed cars. The salvage value of a federal car was estimated at roughly $8,000 in 2014.
Between 1972 and 1994, Ottawa bought 13,500 hopper cars to carry western Canadian grain to port.
By the end of last year, 8,410 cars remained in active service.
The federal government provides its cars to CN and CP at no cost to move prairie grain to export terminals in Vancouver, Prince Rupert, Churchill and Thunder Bay.
In return, the railways manage, maintain and operate the cars on a day-to-day basis and are required to ensure sufficient car supply to meet the transportation needs of shippers.
The government also receives monthly alternative use revenue when the railways use the cars to move commodities other than grain.
Officials from Transport Canada declined to be interviewed.