Prairie farmers are paying for rail car unloading delays at the West Coast, says a Saskatchewan special crops shipper.
Vicki Dutton, managing partner of Western Grain Cleaning and Processing Ltd., said railway demurrage charges are adding up as cars full of product waiting to be stuffed into marine containers sit idle in Vancouver.
Railways give shippers a two-day grace period to unload their product. After that they begin charging demurrage of $35-$75 per rail car per day, which can lead to a hefty late fee depending on the extent of the delay and the number of rail cars in question.
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“When you heavily penalize the special crops shippers, that unfortunately has to be passed back to the farmers,” said Dutton.
The problem is particularly acute this year due to a shortage of container cars in the system. That is a bad omen for what some special crops traders expect will be a record harvest.
“If we are looking at a big crop it makes me wonder just how we’re going to get it out of this country,” said Dutton.
The majority of special crops are shipped overseas in containers. Some of them are loaded at inland processing plants while others are loaded at the coast by transload companies specializing in stuffing product from hopper cars into marine containers.
Randy Ferraro, who runs a transload facility in Vancouver, agreed that there have been unusually long delays in unloading rail cars this year.
Part of the problem is the shortage of containers caused by a variety of circumstances, including a harsh winter that disrupted railway traffic, a strike by Canadian National Railway workers and China’s increasing demand for containers.
But there has also been a problem with poor rail service.
Ferraro said congestion at the port is making it impossible to unload cars in the allotted two days.
“Three to four days would be reasonable, five would be optimal,” he said.
Dutton also feels unload times should be increased.
But the railways say the demurrage rules are in place for a good reason. The penalties ensure the most efficient turn-around times, which means other shippers can get their hands on available rail cars as soon as possible, said Ed Greenberg, spokesperson for Canadian Pacific Railway.
“We have as much interest as our customers have in unloading these cars as quickly as possible so we can get them back into service for our other customers.”
He said the railways do not control or co-ordinate the supply of container cars. That is a responsibility of the shipping lines.
CN spokesperson Jim Feeny said it’s imperative to keep the system flowing by assessing demurrage so that Dutton’s concern about a possible logjam at harvest doesn’t materialize.
“Rail cars are designed to move product. That’s what they’re intended for. They’re not intended for storage,” he said.
But Dutton said there is also an issue of fairness. Mainline companies don’t face the same demurrage costs as smaller shippers because they can deliver product directly to terminals with 10,000-tonne storage bins instead of waiting for a 20-tonne container to become available.
Feeny said mainline shippers “have invested hugely” in port facilities to avoid that kind of problem and should not be penalized for doing so. That’s why the idea of expanding the grace period is out of the question.
“It would be counterproductive from our point of view to start giving certain classes of shippers special treatment over others,” he said.
