Frustrated rail shippers look for other options

The general manager of an alfalfa processing company in Saskatchewan says railways are picking winners and losers

Concerns about unreliable rail service haven’t disappeared since the passage of the Transportation Modernization Act in early 2018.

In fact, for some small-block shippers, frustrations have grown since the law was passed last May, considering that service from Canada’s Class 1 rail carriers has shown no signs of improvement and the costs of securing an arbitrated service level agreement have come into sharper focus.

“They (the big railway companies) are basically picking winners and losers across the country,” said Garnet Ferguson, a small-block shipper from northeastern Saskatchewan. Shippers who normally transport using smaller blocks of rail cars at a time are considered small-block shippers.

“Our company has an opportunity to almost triple its business, if poor rail service hasn’t killed us already,” Ferguson said.

“Right now, we don’t have a service level agreement with our main-line carrier so there’s really no repercussions for them if they don’t perform….

“We’re talking to the Canadian Transportation Agency and we’re talking to Transport Canada (about an arbitrated agreement) but we’ve got to come up with the money if we want to take them (Canadian National Railway) to arbitration.”

Legal costs could run as high as $50,000, he said.

Ferguson is the general manager at CanPro Ingredients, an alfalfa-processing company based at Arborfield, Sask., about 250 kilometres northeast of Saskatoon.

The company sources locally grown alfalfa, which is dehydrated, pelletized and shipped to markets in Canada, the United States and Japan.

The company is the largest employer in Arborfield, with a full-time summer staff of more than 30 people and a winter workforce of about a dozen.

In the fall of 2018, the company’s biggest buyer in Japan said it would like to increase imports of CanPro’s pelletized alfalfa to as many as 400 rail cars annually, nearly tripling their current contract.

But after rail delays hampered contracted deliveries in November and December, the Japanese company got back to Ferguson and said they were reconsidering.

“They said they were unhappy with our ability to get our products to market in a timely fashion,” Ferguson explained.

“They’ve got some unhappy customers in Japan that they deal with, so we’re running into a big problem here.”

CanPro typically ships alfalfa pellets as a bulk commodity.

When they arrive at the West Coast, the pellets are unloaded and containerized for shipment overseas.

A typical bulk shipment from CanPro’s production facility in Arborfield will involve 25 rail cars.

But shipping delays in the latter part of 2018 have forced CanPro to look for other transportation options.

One bulk shipment that left Arborfield on Nov. 9 was moved by rail to Melfort, Sask., about 100 kilometres away and then sat idle for nearly two weeks, Ferguson said.

The cars were then transported to Humboldt, Sask., — another 100 km away — where they sat for another week.

The shipment then moved 100 km east, to Saskatoon, before completing the final leg of the journey to Prince Rupert, B.C.

According to Ferguson, 22 of the 25 cars were unloaded at the Ray-Mont container terminal in Prince Rupert on Dec. 5. Three other cars that got separated en route arrived at Ray Mont a few days later, about four and a half weeks after they were released by CanPro.

“CN’s story is that it’s always Prince Rupert’s fault. The terminal is always plugged or broken down. It’s always someone else’s fault,” Ferguson said.

“I’d like someone to look at how many 112-car grain trains … passed my block of 25 cars.”

“How many trains that were loaded after me passed me on the way to Prince Rupert?” CanPro has since begun sourcing its own containers, which are trucked into Arborfield, packed on site and then trucked to a main-line rail location in Saskatoon.

The work-around is costing CanPro an extra $30 to $40 per tonne but it has allowed the company to expedite its shipments by avoiding some parts of the CN network.

On occasion, CanPro has shipped its products by rail to a BNSF interchange at Noyes, Minnesota, located near the Canada-United States border near Emerson, Man.

Ferguson said products shipped from Arborfield, Sask., via Noyes to destinations in Texas travel the first third of their haul on CN’s network, and the final two-thirds on BNSF’s American network.

“In three years, our increase in tariffs (on the Canadian side) went up 105 percent, “ he said.

“During the same period, our tariff on BNSF tariff went up six percent.”

Officials at the Western Canadian Shortline Railway Association (WCSRA) said other small-block shippers face similar problems.

Allison Field, director of communications and government relations at the WCSRA, said some shippers in northeastern Saskatchewan are transporting their goods by truck to mainline locations to avoid shipping delays.

Others are trucking their U.S.-bound commodities hundreds of kilometres south to the BNSF railhead at Northgate, Sask., completely avoiding the Canadian rail network.

Field said small-block shippers are often reluctant to raise their concerns publicly, fearing service from Canada’s mainline carriers will deteriorate even further,

For Ferguson and CanPro, that’s no longer a concern.

“CN’s service just irks me to no end,” he said.

“At this point, we just don’t see what the downside is. They can’t do anything more to us than they’ve already done.”

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