There has been a huge surge in Canadian canola seed moving to Mexico by rail.
Year-to-date shipments from Canadian Pacific Railway have soared past 1,000 cars.
“In previous years we had spot moves, so it’s really up dramatically,” said CP spokesperson Ed Greenberg.
With each car capable of carrying 80-100 tonnes of cargo, that’s a pile of product moving by rail.
Canadian National Railway spokesperson Jim Feeny wouldn’t divulge any company data but said CN is also experiencing heightened demand.
“There has been more of it in the last few months and we feel that the (rising) ocean freight (rate) is a major factor in that.”
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Greenberg said there are several other reasons for the increased demand, not the least of which is changing customer preferences.
“They’re wanting shipments of Canadian canola faster and in lots that are easier to handle as opposed to shiploads.”
The railway has cut waiting times at border crossings and closely monitors the status of all shipments headed to Mexico.
CP can offer Mexican crushing plants rail-direct service from any location on the Canadian Prairies within 16-18 days.
That’s incredibly speedy delivery compared to traditional shipping routes, said Dave Hickling, vice-president of canola use at the Canola Council of Canada.
Canola is usually transported by rail to Vancouver and then moved by ship to Manzanillo, Mexico, where it is then distributed to crushing plants in Guadalajara and Mexico City. That process can take more than a month.
With soaring ocean freight rates and improved rail service in Mexico, shipping product via the steel highway has become more competitive. But the traditional routes remain the cheapest transportation alternative.
“The bulk of the business is still going to go by ocean freight,” said Hickling.
He said the reason more seed is moving by rail has more to do with logistics than economics.
“Instead of 500,000-600,000 tonnes of Canadian canola going to Mexico, this year it’s going to be over a million tonnes.”
Mexico has become Canada’s third most important canola destination, behind the United States and Japan. He expects seed exports to approach 1.5 million tonnes in the next couple of years. The country also buys about 100,000 tonnes of oil and a small amount of meal.
Hickling doesn’t know if moving more product by rail helps or hurts a farmer’s bottom line.
“I can’t really say. It’s really hard to know for sure if it’s having a big impact or not. But conceptually you would have to say that it’s got to be helping because it gives you another alternative for shipping.”
Greenberg said if nothing else, shipping by rail can improve customer relations.
“It gives producers more flexibility in terms of responding to a market in Mexico,” he said.
