The company that monitors grain movement in Canada warns the existing fleet will be off the rails by 2036
Canada’s fleet of rail hopper cars is rolling toward obsolescence.
“By the time we get to 2036, the existing fleet is totally gone,” said Mark Hemmes, president of the Quorum Corp., which monitors the logistics of grain movement in today’s market.
In 1985 the Canadian Wheat Board, federal and provincial government owned a hopper car fleet of 18,200 cars.
In 2016, that shrank to 13,000 cars and more are going to be removed as the fleet continues to age.
“We are starting to hit the downward slide and cars are going to be taken out,” he said at the Western Barley Growers Association convention held in Calgary Feb. 3-4.
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In 2022, more cars, mostly from Alberta will leave the fleet.
“By 2027 if this isn’t addressed we are at crisis stage,” he said.
“Right now, the waiting time to get in line to manufacture cars takes four years,” he said.
The railway companies have bought some and with increased efficiencies the cars are turned around more quickly.
They used to take 21 days to reach a port but due to various efficiencies they are turned around in 14 days so cars return to the system sooner.
“I don’t think we are going to get any more efficient and the only way you are going to replace that capacity is to buy more steel,” Hemmes said.
Aging rolling stock is among many challenges in Canada’s grain transportation system. Volumes have increased substantially and transportation routes have changed. Vessels continue to wait too long at seaports.
Since 1980 grain volumes have increased. The average haulage for the first 10 years between 1980-90 was about 41 million tonnes per year. In the last five years there has been an upward trajectory where production has moved up to 69 million tonnes of cereals, canola and special crops. Most of that comes from the Prairies.
About 73 percent of the grain moves through the western Canadian ports of Vancouver and Prince Rupert for export mostly to Pacific Rim countries.
In 1980, 25 percent of western grain went to the West Coast. The rest went to Thunder Bay. Now that port receives about 25 percent.
“Our methods have shifted dramatically and we continue to see more and more growth to the Asian-Pacific markets,” he said.
Another 7.5 million tonnes moves by rail to United States and 3.2 million tonnes are trucked stateside. In 2011, when the Canadian Wheat Board existed as a single desk marketer, about 1.9 million tonnes were trucked across the border.
Ocean freight has made a big difference in grain movement but has struggled because of challenges like vessels languishing in ports while waiting for grain to come in on rail.
Vessel demurrage is regularly paid and grain companies pass that on to producers.
“When it hit its peak at the end of the 2013-14 crop year we were almost up to 28 days on average for a vessel in port,” Hemmes said.
The average was $6,000 per day for demurrage. The contracts were usually for eight to 10 days so they had to pay for the extra 18 days.
Last year’s total demurrage bill on the West Coast was a record $53 million.
There were also contract penalties and cancelled sales.
To get a weekly perspective on grain movement, visit www.grainmonitor.ca.
barbara.duckworth@producer.com
