Saskatchewan Wheat Pool wants bigger freight discounts for bigger
trains.
The company is shipping most of its grain in 50 and 100 car unit trains
and reaping the benefits of freight discounts offered by the railways
for multi-car loading.
The freight incentives are $2 a tonne for 25-car trains, $4 a tonne for
50 cars and $6 a tonne for 100 cars.
But Mayo Schmidt, the pool’s chief executive officer, says the company
would like to see even more savings at the high end of the scale.
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“There is still the possibility the railways will continue to widen the
spread and make the cost of loading 100s significantly less than 50s
and thereby drive further efficiencies into the system,” he said during
a teleconference call with market analysts and news media.
“That’s something we certainly intend to push for in the industry.”
The discounts promote efficiencies that benefit everyone in the
industry, he said.
This year, 91 percent of the pool’s shipments qualify for freight
discounts. About 68 percent of its grain has been shipped in 50 or 100
car trains, with another 23 percent loaded in 25-car blocks.
As grain supplies dwindle as the crop year winds down, the pool expects
to ship more 50s and fewer 100s, although it will continue shipping the
bulk of its business in the big trains.
“I don’t think we’re going to fall back to shipping more 25s, because
we will accumulate inventory until we have an opportunity to ship in
bigger blocks,” said Will Hill, vice-president of the pool’s grain
groups.
Schmidt said large unit trains will account for an increasing share of
the business as consolidation in the grain handling industry continues
and more small elevators are closed.
“We see a trend towards loading almost entirely 50 and 100 cars, and
even further down the road this market will move towards specifically
100 car units.”
That bodes well for the pool, he said, which has led the way among
grain handlers in replacing small elevators with large high-throughput
terminals capable of loading big trains.
He said rate discounts help the pool plan its future investments in the
grain collection system.
Schmidt described the rate savings as “free dollars” that are there for
the taking.
“They don’t come at anyone’s expense,” he said. “They are simply free
money based on more efficient movement of products.”
