SASKATOON — Anyone who wants to ship grain to the United States this year would be well-advised to get their own rail cars.
The Canadian Wheat Board has already responded to the looming car supply crunch by leasing about 600 cars to service customers south of the border and other grain shippers are actively checking the lease market.
A new temporary car allocation system proposed for the 1994-95 crop year puts U.S. shipments at the bottom of the priority list for dividing up the 28,500 cars supplied by the railways to haul grain.
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Meeting the demand for Canadian domestic movement is the first priority, followed by West Coast ports, then Thunder Bay, then the U.S.
“The word is that if you want to move product into the U.S., everyone would be advised to be looking for some sort of lease arrangement with Canadian carriers to move product into the U.S.,” said Tom Cascisa, transportation manager for Cargill Ltd.
He said his company has already begun looking for cars and while they’re not easy to get a hold of, it’s not impossible. “They’re out there. It’s just a matter of when do you want to book them, at what price and that type of thing.”
Lorne Hehn, chief commissioner of the wheat board, said the board is watching the car supply situation closely and may try to get more cars.
“But we have to be careful that we don’t lease more than what our commercial sales are because these will only be used in commercial movement,” he said. The railways are required by the Western Grain Transportation Act to provide enough cars to ship WGTA grains to Canadian ports.
Benefits outweigh cost
Hehn declined to say how much the lease arrangement will cost the board and farmers, but said the benefits make it worthwhile.
“I don’t know if this is going to end up costing farmers any more money, but now we have assurance we can service the customer once we sign the contract.”
Board officials don’t like all the publicity about car shortages, saying it drives up rental rates. Hehn said leasing costs jumped considerably after United Grain Growers Ltd. issued a press release Aug. 8 warning of a car crisis this fall.
Last year’s car shortage was exacerbated by the diversion of thousands of rail cars from their usual east-west routes to U.S. destinations. Turnaround times were substantially longer south of the border.
Bruce McFadden, executive director of operations for the Grain Transportation Agency, said the agency is still assessing how many cars will be available during this fall’s peak demand period, but it appears with the dedicated fleet all of the U.S. movement would not be met.
Richard Wansbutter, director of marketing and transportation services for Saskatchewan Wheat Pool, said it appears CN Rail will have enough cars to meet the demand for shipments to domestic destinations and Canadian ports, but not for shipments to the U.S.
McFadden said shippers will be allowed to bring their own cars into the system only if they increase total fleet capacity, and not simply replace existing rail resources.