For the first time in four years, prairie farmers had to pay demurrage penalties on shipments of Canadian Wheat Board grain last crop year.
The board says most of the blame for the $6,084,377 penalty for poor performance lies with Canadian Pacific Railway.
“The introduction by CP Rail of a new car ordering system on short notice and without consultation affected CWB car supply in November and December of 2000,” the board said in a News release
news.
“This delayed deliveries to customers.”
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Ward Weisensel, the board’s vice-president of transportation and country operations, said CPR told the wheat board in early November 2000 that it was introducing a new car-booking system, but didn’t tell it the booking deadline was the next day.
All the advance booking was immediately taken up by other shippers, leaving the board unable to get grain to export position to fill waiting vessels, Weisensel said.
“We were pretty much shut out.”
During the next three weeks, the board got only 40 percent of the CPR car supply, compared with 65 percent in the preceding eight weeks. That put the wheat board some 1,200 to 1,300 cars behind target, representing roughly 100,000 tonnes of grain.
“By that time our program was sold firm,” Weisensel said.
“It put us behind the eight ball and you can never catch up.”
CPR spokesperson Ian La Couvee said the railway doesn’t accept that its shipping program was responsible for the demurrage bill.
“On the contrary,” he said.
“We introduced the MaxTrax system to fill a void, to increase movement and reduce delivery problems and demurrage, and we think that’s to our credit.”
He acknowledged the program was introduced on short notice but said all grain shippers were free to use the programs in such a way as to avoid demurrage.
CPR brought in MaxTrax in the fall of 2000 at a time when the board, railways and grain companies were in the throes of a bitter struggle over new grain handling and transportation rules.
La Couvee said the program was designed to promote more advance booking of cars and to make the system more efficient, more transparent and more accountable, by including a system of performance-related rewards and penalties.
“MaxTrax increased the flexibility of the system,” he said. “We gave the industry a good picture of what capacity was available and a new method to take it up.”
La Couvee added he was disappointed that the wheat board decided to single out CPR for blame in its demurrage announcement.
“Finger pointing and blaming has never been known to solve problems,” he said. “It’s always unnecessary and it’s something we avoid.”
Weisensel made no apologies, saying the board has an “obligation” to tell people what happened.
The board said the other major factor in the demurrage bill was quality difficulties associated with sprouted grain.
The 2000 harvest produced a significant amount of sprouting due to excessive moisture and below normal temperatures. The sprouted kernels began showing up at export terminals in late winter and early spring 2001.
The industry was forced to introduce special measures to segregate wheat arriving at export terminals, which in turn led to delays in loading export vessels.
The board did not provide a breakdown of how much of the $6 million demurrage bill could be attributed to the CPR program and how much was related to the sprouting.
Weisensel said the two biggest demurrage months were November and December, when the CPR program was having its effect.
This year’s demurrage breaks a three-year stretch when the agency earned what is called despatch, reflecting money paid by shippers to the board for exceeding performance targets.
In 1999-2000 the board earned $5.8 million in despatch for farmers, $6.7 million in 1998-99 and $4.5 million in 1997-98.
The last time the board paid demurrage was in 1996-97, when it faced a $24 million bill. It launched a service complaint against the two national railways that year.
