Grain handling sector confirms that repeated shipping interruptions have hurt Canada’s reputation as a reliable supplier
Canada’s unreliable railway system continues to be a drag on the country’s reputation with crop buyers.
“The regular service (of Canadian National Railway) and (Canadian Pacific Railway) has become a big problem,” said Jorge Sanchez Lanzilotti, the chief financial officer of major Mexican oat buyer Grupo Vida International.
“From the raw materials to processed products, (shipments) do not arrive to us on time and (there are) sometimes weeks of delay.”
Lanzilotti revealed the problem during the oat meeting at CropConnect while discussing the golden potential for increased oat product consumption around the world.
Grupo Vida likes Canadian oats, but it is a big problem for a manufacturer to not know when shipments will arrive.
Wade Sobkowich, executive director of the Western Grain Elevator Association, said he’s not shocked to hear Lanzilotti’s views.
“We hear that all the time,” said Sobkowich.
Especially in the past 10 years Canada’s reputation as a supplier has suffered as repeated interruptions have forced buyers to accept late deliveries.
“It’s something we have struggled with for the last decade,” he said.
The 2013-14 problems, which became both an industry crisis and a national political issue, did a lot of damage to Canada’s reputation.
“Customers haven’t forgotten about that,” said Sobkowich.
In other years, labour disputes have knocked shipments back for weeks.
Then there are the unpredictable impacts of avalanches and rock slides.
However, Sobkowich believes Canada is too complacent in fixing what can be fixed.
“We haven’t done a very good job as a country in controlling the things we can control to repair and preserve our reputation as a reliable supplier,” said Sobkowich.
That includes labour disputes and under-preparing for winter. Now those have been joined by anti-pipeline blockades during the current unrest.
The blockades are exacerbating an already bad situation caused by the late harvest and winter situations.
“We’re paying demurrage and we’re paying contract extension penalties big time right now,” he said.
It leaves Canadian grain being discounted and neglected in the marketplace.
“Normally it’s banana republic type countries and developing countries or places with political unrest that trigger those (delay) clauses,” said Sobkowich.
The situation is frustrating for Grupo Vida, a major miller and exporter of oat products from Mexico. The railways have recommended the company consider leasing its own hopper cars to improve delivery, but after investigating the idea, the company felt that would not guarantee an improvement.
Freight from Canada is already expensive, but the unreliability of service makes things worse.
“The distance of the producing areas to arrive at our (facilities) represents a high cost to compete with other countries, which means costs are a strong logistical disadvantage,” said Lanzilotti.