Some people in the special crops industry say rail transportation problems are approaching catastrophic levels on the West Coast but not all grain industry executives share those concerns.
Brian Clancey, publisher of the Stat Publishing special crops newsletter, has spoken to shippers who are so frustrated they are contemplating getting out of the bulk grain export business.
“Vessels are arriving and they are going on demurrage because the product isn’t moving,” he said.
Clancey knows of one large special crops exporter, whom he refused to identify, that received a $125,000 US demurrage bill earlier this year because it couldn’t get the rail cars to port on time.
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“They’re getting one in five cars and he’s never had it that bad,” Clancey said.
Railway companies won’t allow exporters to ship grain into storage in advance of sales and they won’t provide the cars when requested.
“It becomes a horror story,” he said.
But according to the country’s two main railway companies and the largest grain shipper on the Prairies, nothing is out of the ordinary for this time of year.
“It has been a normal fall shipping season to this point,” said Canadian Pacific Railway spokesperson Ed Greenberg.
Canadian National Railway spokesperson Jim Feeny concurred.
“From CN’s point of view, there is nothing unusual this fall. This is an annual concern from the special crops industry.”
He pointed out there is only so much product that can move through the transportation pipeline and wheat and canola are generating a lot of demand this fall.
The Canadian Wheat Board is only a few weeks into its big sales program but so far it has been smooth sailing.
“At this point what I’m hearing is that things are going relatively well,” said CWB spokesperson Maureen Fitzhenry.
There are no huge lineups at the port, she added, and while rail car availability is always an issue, there are no indications the system is close to falling apart.
“I think that would be wildly overstating it at this point to start calling it catastrophic.”
According to the Canadian Grain Commission, exports for the first 10 weeks of the 2005-06 shipping season are up 147,300 tonnes over the same time last year.
However, Clancey said the people he talks to, including buyers of special crops, say Canada’s transportation system is bad and getting worse. He noted there appears to be more traffic flowing through U.S. ports.
“Something is wrong. Something is happening to the car supply. Maybe it is going into the States,” he said.
Other special crops analysts share Clancey’s gloomy outlook. In its weekly newsletter, CGF Brokerage & Consulting said the port of Vancouver is seriously handicapped by a backlog of grain that is directly affecting markets.
“Those bottlenecks have contributed to the periods of ‘no bid’ that have already showed up and we have no doubt will continue to show up throughout the year,” the company said.
In its Sept. 30 marketing commentary, Saskatchewan Wheat Pool noted it costs nearly $17 US per tonne or 50 cents per bushel more to ship peas to Europe through Thunder Bay compared to Vancouver, an imbalance that is contributing to a railway backlog at the west coast port.
Francois Catellier, executive director of the Canadian Special Crops Association, said there are always capacity issues at this time of year, which become especially transparent when there’s a big crop. However, he isn’t pointing fingers at the railways.
“That seems to be the easy way to make friends these days is to bash the transportation service providers, but this association believes in trying to work out solutions with them as opposed to hitting them over the head.”
