Grain shippers are competing hard for rail cars as the busy fall shipping season heats up.
Prairie farmers delivered 4.9 million tonnes of the major grains, oilseeds and pulse crops to primary elevators in the first eight weeks of the crop year ending Sept. 24. That’s up from 4.2 million tonnes a year ago.
Export shipments during the same period totalled 4.6 million tonnes, up from 3.3 million a year ago.
Grain industry officials say shippers, including the big and small grain companies and the Canadian Wheat Board, are scrambling to lock up cars on both a long- and short-term basis.
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That’s true to some degree every fall, but an official with Canada’s largest grain company says it’s more pronounced this year.
“One difference this year is that they’ve put more cars into the bidding category and less into the general allocation category, which is forcing shippers, us included, to bid up for those cars in order to execute our programs,” said Bill James, Agricore United’s director of transportation and logistics.
General allocation refers to rail cars available to all shippers that are distributed on the basis of formulas that take into account market share and past performance.
Canadian National Railway is offering 1,500 cars a week for movement to Vancouver, of which 700 are general allocations and 800 are available under various special programs. That includes about 200 doled out through cash bids from shippers.
Canadian Pacific Railway is offering 2,150 cars a week to Vancouver, of which 660 are distributed through the general allocation system and the remainder through the company’s prebooking programs. New this year for CPR is a weekly bidding process for about 100 cars.
Ed Greenberg of CPR said the bidding program was introduced in response to requests from shippers.
He said all of the company’s programs are designed to increase flexibility for shippers in meeting their short, medium and long-term needs, while at the same time improving railway efficiency.
He added CPR has increased its total rail car supply for grain this year and expects to meet all of its shipping commitments.
Mark Hallman of CN said the company has made more cars available for bidding this year.
“We have increased the offering this year to enable shippers who really want or need to ship grain for a spot opportunity to obtain the cars they need,” he said.
While the details of each railway’s programs vary, the basic idea is to have shippers make a commitment to ship unit trains of 100 or 50 cars from single origins throughout the crop year.
James said AU has “bought” 3,000 cars from CN so far this year and expects to buy about 7,500 by year end. Last year it bought 5,735.
The bought cars, for which shippers pay a premium above the regular freight rate, get first priority in the event of operational problems.
“If they run into a shortfall, the first cars to get whacked are the general allocations cars, which is why as a shipper I can’t rely on the general allocation,” said James. “I have to buy them to make sure I get them.”
While the railways describe their various programs as offering more flexibility for shippers, an official with the Canadian Wheat Board said the emphasis on booking and shipping 100-car trains decreases flexibility.
Mark Dyck, manager of rail logistics for the Canadian Wheat Board, said in non-peak times of the year, when grain isn’t coming into the elevator system, shippers can be stuck with 100-car trains to be loaded at one origin and not enough grain to fill them.
“If you can’t source the product you need, you either pay the railway a penalty or you move grain to port you don’t really need and cause congestion.”
