An expanded western rail network will mean increased grain shipping capacity, says a spokesperson for Canadian Pacific Railway.
“We are prepared to handle more grain,” said CPR spokesperson Len Cocolicchio.
However, he said it’s not yet possible to say how much of the increased capacity will be devoted to grain relative to other commodities.
The $160 million expansion program announced by the rail company April 18 will result in a 12 percent increase in capacity, or about 400 additional freight cars per day.
“That is a very substantial increase,” said Cocolicchio. “What it means is we’ll be able to move all the freight we see coming at us.”
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The work announced is described by the railway as the first step in a possible $500 million system expansion, mostly in Western Canada, with the timing of further work dependent on customer demand.
Work is already under way on the project, which involves 25 separate track expansion projects between Moose Jaw and Vancouver, including double-tracking and siding extension. It is scheduled for completion by the fall.
CPR said the expansion is designed to meet increasing Asian demand for shipments of western Canadian resource-based commodities.
In the News release
news announcing the project, CPR highlighted a recently signed five-year contract with Elk Valley Coal Corp. providing for increased shipments and freight rates through 2009 and planned increases in production by three major potash producers.
Grain was lumped in with other commodities, such as sulfur and fertilizer.
Cocolicchio said he couldn’t specify how the additional 146,000 freight cars per year would be divided among the various commodities, saying that will be determined by market forces and customer demand.
However, he added the railway’s policy is that all commodities receive equitable treatment.
Canadian Wheat Board spokesperson Louise Waldman said while the board is happy to see expansion in the western rail system, it doesn’t know how much of the additional capacity will be dedicated to grain.
“Right now it’s premature to speculate what impact it’s going to have on the wheat board because we just don’t know,” she said. “We are looking forward to discussing this with CPR in the coming weeks.”
Agricore United welcomed the CPR announcement, calling it a positive step toward addressing capacity constraints that could impede Canada’s ability to supply grain to overseas markets.
“Our industry has recently expressed concerns about rail system capacity,” said AU chair Wayne Drul. “CP’s announcement shows they are taking the concerns of their customers seriously.”
Both railways have in recent weeks been criticized by prairie grain handling companies for poor performance, with the companies complaining that the railways consistently failed to spot empty cars at country elevators as scheduled.
Barry Prentice, director of the Transport Institute at the University of Manitoba, said the $160 million announcement reflects a “very cautious” approach, given that it has identified up to $500 million worth of potential expansion work.
He said a lot of the additional capacity will be devoted to intermodal traffic, which is booming as a result of big increases in container shipments of manufactured goods from Asia, in particular China.
The amount of additional capacity available to grain will depend on crop size and export demand, he said.
In its announcement, CPR said the expansion should boost the company’s earnings per share by 25-40 cents in the first full year of use, prompting Waldman to call on the railway to carry on with more expansion in the interests of its shareholders.
“Given this healthy return, we would encourage them to expand rail service even more,” she said.
