Railway performance may seem like the same old problem resurfacing, but in many ways, it’s different this time.
In the horrible grain backlog of 2013-14, the problem wasn’t universally recognized until the situation was well advanced. The ugliness started early in the winter, but wasn’t fully acknowledged until mid-winter. By then, it was a full-blown crisis.
This time, we have an early-warning system. In the aftermath of the backlog four years ago, the grain industry established the Ag Transport Coalition, funded by producer groups, grain shippers and governments.
The railways can always provide statistics to make their service look adequate as compared to previous years. However, the Ag Transport Coalition analyzes railway performance on an ongoing basis with weekly reports highlighting how many rail cars are supplied to shippers versus how many are requested.
This provides a much truer picture of performance relative to demand and has enabled the grain industry to identify performance shortfalls that became acute this February.
Without the Ag Transport Coalition information, we might still be debating with the railways whether or not there’s a significant problem.
To their credit, the two major railways are much more open and co-operative than they were during the last backlog. Canadian National Railway replaced its chief executive officer and apologized. Both railways have vowed to do better. While they still point at winter weather and unexpected volumes of grain and other commodities, they also acknowledge not having adequate crews and locomotives.
In 2013-14, basis levels at country elevators skyrocketed. The grain handling system used deep price discounts as a way to discourage deliveries. This time, basis levels have not become extreme. Elevator companies have pulled their bids and cut down on purchases rather than using basis as a message to discourage grain coming into the system.
And we’ve learned from 2013-14. There isn’t any big push for the federal government to impose minimum weekly grain movement targets on the railways. That seemed like a reasonable action last time, but it had the unintended effect of encouraging the railways to cherry pick the closest grain situated on mainlines to meet the mandated targets.
On the other hand, the industry is feeling the loss of inter-switching provisions imposed by the government during the last crisis. Just the threat of being able to switch grain to a different railway at an interchange point helped spur performance.
There have been demurrage fees on waiting ships and we’ve disappointed customers yet again, but not to the magnitude of last time. The system will take time to fully recover, perhaps until the end of crop year, so the hurt isn’t entirely over.
As Bill C-49, the new transportation legislation inches its way through the parliamentary system, amendments are needed to the inter-switching provisions so they can be effective.
In many ways, Bill C-49 is the result of the backlog four years ago. This recent performance problem is providing a push to get that bill right and to get it passed.