Port owner OmniTrax Canada suspended shipments from the northern port and a new investor has not been found
The Hudson Bay Route Association says it has given up hope of resurrecting the 2016 grain shipping season at the Port of Churchill.
President Elden Boon said there is virtually no chance that any grain will be shipped through the port this year, the first time that’s happened since the port’s grain terminal opened.
HBRA had hoped the shipping season could be salvaged despite a surprise announcement in July by port owner OmniTrax Canada confirming that grain shipping activities had been suspended.
“We were hoping to get the 2016 shipping season back on track here to some degree, but it doesn’t look like that’s going to happen,” Boon said last week.
“We’re going into the last month of shipping pretty soon and there’s really nothing concrete happening. We’re running out of time and nothing’s going to happen until an ownership change … becomes clear. The general consensus among our association is that the 2016 shipping season is not going to happen.”
OmniTrax Canada has offered few comments about the reasons behind the suspension since it announced it in late July.
It is widely assumed that declining grain volumes and low ocean freight rates at other export locations were the main factors behind the decision.
OmniTrax has been seeking a buyer for the port and for the Hudson Bay Railway that serves it since last year.
Discussions between OmniTrax and a group of potential First Nations investors began last year and are still ongoing, but few details are available.
In the meantime, HBR service between The Pas and Churchill has been reduced to one train a week.
Philip Proulx, press secretary for Navdeep Bains, the federal minister of innovation, science and economic development, said the lines of communication are open be-tween Ottawa and local stakeholders.
“On Churchill, our government, led by Minister Bains, is in ongoing discussions with cabinet colleagues and local leaders as we monitor the situation closely and evaluate different options,” Proulx wrote in an email.
“Officials from our office continue to work closely with these local leaders on a weekly basis.”
Historically, Churchill’s annual grain volumes have been relatively small.
Annual shipments usually amount to roughly one percent of Canada’s total grain and oilseed exports.
The port, which used to be owned by the federal government, was acquired by Denver-based OmniTrax in the late 1990s. The sale was facilitated by the Liberal government led by Jean Chretien.
A subsequent decision by former Conservative Prime Minister Stephen Harper to end the Canadian Wheat Board’s single-desk marketing powers served another blow to the port’s viability.
Before the elimination of single desk grain marketing in 2012, the wheat board was easily the port’s most consistent shipping customer, accounting for 80 to 90 percent of annual volumes.
Until recently, Richardson International was also a significant shipper, but the expansion of Richardson’s export facilities in Vancouver led the company to curtail its ex-port program through Churchill.
The port remained a viable shipping alternative for grain growers located in northeastern Saskatchewan and northwestern Manitoba, even after the elimination of single-desk marketing.
Loaded producer cars had been scheduled to make the trip from The Pas to Churchill earlier this year, but Boon said he didn’t know if those cars had been rerouted.
Ryan McKnight, a grain merchant with Linear Grain, said the suspension of Churchill’s grain operations will affect his business.
Linear operates a grain elevator in Arborfield, Sask., and has used the Hudson Bay route on numerous occasions over the past few years.
“It (the suspension) has affected our business quite a bit. For us, we struggle with export access through bulk terminals … so we’ve shipped lots of wheat cars up there (since 2012),” McKnight said.
“It’s a lot cheaper freight, so we’re able to get quite aggressive in originating wheat and make pretty good margin on that wheat.”
McKnight said Churchill was by far Linear’s best shipping route, based on proximity to port and price.
Linear’s competitive position vis-à-vis larger line companies has diminished since the suspension of Churchill’s grain program, and the company has been forced to work harder to find alternative shipping routes.
“From a business perspective, we benefitted greatly from Churchill,” McKnight said.
“So yes, we are displeased … but being the free enterprise guy that I am, I realize that it’s probably not an economically viable location.”
According to Quorum Corp., which runs the federal Grain Monitoring Program, nearly 30,000 tonnes of grain are still in storage at the port. It is unclear who owns the grain or what will happen with it.
“You can’t find any information out about the sale or the shipping program … so it’s been really frustrating for our group,” Boon said.
“Our feeling now is that the 2016 shipping season is probably not going to happen … but we definitely don’t need to … (miss) two seasons.”