Grain shippers might be forgiven for hoping the economic downturn continues.
During the past year, the recession resulted in reduced sales and shipments of most bulk commodities, freeing up railway capacity.
The grain industry has taken advantage of that, resulting in trouble-free, efficient rail movement of grain for the past 18 months.
Whether that will continue in 2010-11 is a big question mark for shippers like the Canadian Wheat Board as they look ahead to next year.
“It will remain strong for the rest of this crop year but beyond that it’s hard to say,” said Mark Thibeault, senior manager of supply optimization and logistics for the CWB.
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“It’s hard to forecast this far out how well the economy will rebound from the recession but things definitely could tighten up.”
Thibeault said the railways have introduced some efficiencies that have contributed to the strong movement, but the biggest factor is clearly the gains in rail capacity from the downturn in movement of other commodities.
He said the board has a large sales program lined up for January and February and is hoping there are no delays from avalanches in the mountains, heavy rains at Vancouver or disruptions to regular activities arising from the Olympics.
The CWB recently increased its 2009-10 export target by two million tonnes over mid-summer forecasts and is now projecting exports of wheat, durum and barley will total 18.7 million tonnes, the highest total in 10 years.
Thibeault said the totals could be even higher.
Figures recently released by the two national railways confirmed that while freight revenues from most commodities are down so far this year, reflecting the impact of the recession, grain has held steady or increased.
As of Oct. 1, Canadian Pacific Railway had earned revenue of $838 million from hauling grain in 2009, an increase of 11.6 percent from the previous year’s $750.7 million.
Grain revenue accounted for 27 percent of CPR’s total freight revenue of $3.08 billion, up from 20 percent during the same nine-month period last year.
At Canadian National Railway, the story was much the same. Revenue from grain and fertilizer (lumped together for reporting purposes) was $985 million in the first nine months of the year, accounting for 20 percent of CN’s total freight revenue of $4.9 billion.
