Canada’s grain monitor says railway performance in Canada has returned to normal and is setting new records for volumes of grain moved to port.
Mark Hemmes, president of Quorum Corp., said Canada’s major railways moved record amounts of grain to port position in the 2013-14 crop year and are on pace to set another record this year.
“The volumes have gone to incredible levels,” said Hemmes, who spoke to grain growers and industry stakeholders at CropSphere in Saskatoon last week.
“I will tell you right now that in this crop year, the amount of tonnes that have been loaded onto vessels in the four western ports is 27 percent higher than the five-year average, so whatever happened, what ever was done, it worked.”
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Despite a horrendous winter shipping season last year, Hemmes said Canadian National Railway and Canadian Pacific Railway set all-time records for grain movement in 2013-14.
Together, the two railways moved nearly 20 percent more western Canadian grain to port last year than in any other crop year.
As well, the railways’ record setting pace has continued into the 2014-15 crop year, which he attributed to the weekly grain targets imposed by Ottawa on the country’s railway industry.
“It worked. We’ve moved a lot of grain,” Hemmes said, whose company is charged with monitoring Canada’s grain handling and transportation systems.
“But I can tell you also that it (the federal order) wasn’t without its unintended consequences. Anybody who’s a small-block shipper, anyone who’s on a short line, those people are not benefitting from this.”
Record amounts of grain are flowing to export terminals, but small block shippers, producer car loaders and short-line railway operators are having a tough time moving smaller volumes of grain, particularly to domestic and U.S. buyers.
In Saskatchewan, shippers of oats, malting barley and other smaller volume crops have been struggling to fill contracts and meet sales commitments
Jason Skotheim, a director with the Saskatchewan Barley Development Commission, said the lack of reliable rail service, particularly the lack of producer car placements, has had a huge impact on province’s malting barley industry.
“It was a major concern for us last year,” Skotheim said.
“A lot of malt barley goes into the U.S. on producer cars, and producer car deliveries were falling well behind the other movements of grain.”
Skotheim said the commission has raised its concerns over poor producer car service with a panel that is currently reviewing the Canada Transportation Act.
Skotheim said the CTA review process must consider the needs of grain shippers who don’t sell into large-volume overseas markets.
“Under the federal order in council, the railways were required to meet targets for rail car movement, so obviously they went after the low-hanging fruit … moving wheat and canola directly out to Vancouver,” he said.
“The biggest issue that we saw was that producer cars were left essentially unserviced…. We wanted to reiterate (to the CTA panel) … the importance that producer cars play for barley growers and the fact that they does give us another option … as far as serving that U.S. market is concerned.”
Hemmes said increased productivity on Western Canada’s grain farms will continue to put additional stress on Canada’s railway infrastructure.
Average crop production in Western Canada was estimated at roughly 46 million tonnes per year 30 years ago.
The current five-year average, not including the bin-busting harvest of 2013, is 58 million tonnes.
Hemmes said total supplies of western Canadian grain in the 2014-15 crop year, including carryout from last year and new crop supplies harvested last fall, will be second largest in history.
brian.cross@producer.com
