Railway capacity worries exporters

Shippers say the railways have been whittling away at their own capacity for years 
and that’s affecting Canada’s national economic security

As bulk shippers contemplate future growth in their shipments, their concern over whether Canada’s major railways are up to the job is also growing.

Jim Everson, Soy Canada’s executive director, says agriculture and resource sector shippers are concerned CN and CP may not have the capacity to deal with larger volumes.

All the resource-based industries are expecting to increase production in the future, Everson told the Senate agriculture committee.

“To do so, we need to be able to take that to market, and in Canada our way of doing that is by rail,” Everson said. “It’s critical in the future that the rail infrastructure be sufficient to carry ever‑increasing volumes of grain to market.”

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It’s also necessary to develop measures so the railways are under the same type of financial penalties as shippers for failing to meet delivery commitments, he added.

“The government has to play a role because it really isn’t a market‑driven sector,” Everson said. “It has to play a role in ensuring that there is reciprocal performance accountability.”

Everson and Phil de Kemp, the Canadian Barley Council’s executive director, were questioned by the committee on the rail issue. Ontario Senator Lynn Beyak said she hears the same concerns about railway capacity while serving on other Senate committees. She said there are good ideas in the Emerson report on the review of national transportation policy, but doesn’t see any urgency in acting on the problems.

De Kemp said the grain transport backlog during the winter of 2013 and 2014 combined with the Emerson report has put the rail capacity issue in the spotlight.

“The urgency is there,” de Kemp said. “Sure, we have got through this hump right now, as far as the backlog issue on grain, but it could happen again. It is not just if you get an increase in production.”

De Kemp said shippers are dealing with oligopolies that have a lot of power over how shipping flows, something that’s troubling for the export shippers.

“Everything depends on railways to ports for all our exports,” he noted. “That’s why I say that it really is in our national economic security interest, and it is not just for grain.”

De Kemp added the railways have been “whittling down” infrastructure and said one railway in particular — which he stopped short of naming — was widely viewed as a major source of concern by shippers.

“I think everyone knows what I’m referring to,” he said. “If the airlines operated the way the railways did, passengers encountering flight delays caused by weather and other problems would still be sitting in an airport for three months, because they only had so many planes to take everybody.”

He noted the number of Prairie grain elevators has been whittled down from about 3,000 to 300, almost all with 100-car loading spots.

“The efficiency is there,” de Kemp said. “They can turn these things around in 24 hours.”

All those efficiency gains by the grain industry are being squandered by the railways, he said. Shippers can wind up waiting days for full cars to be picked up or find their delivery of empty cars for loading delayed just as long.

De Kemp added the grain industry understands the issues well, and will continue to lobby for changes to address them. He added that other sectors are impressed with the way the grain industry players have pulled together.

“We know where the efficiencies are. We know where the efficiencies aren’t,” de Kemp said. “The grain industry, collectively, has got its act together, all of us, sitting at the table. We know where we need to go. If you get cold weather, you need that power capacity. We have the data right now.”

He said getting it right is important, and he’s puzzled as to why the railways can seem to deliver freight in a very timely manner for other industries.

“They seem to be able to do that for the automotive industry, as far as just‑in‑time deliveries for auto parts,” he said. “We just hope that they could do the same for us.”

He also noted replacing the fleet of grain hopper cars built by the federal government in the 1980s will be a huge issue as the cars reach the end of their useful lifespan.

“To order a new hopper car right now, it is about a three‑year wait,” de Kemp said.

De Kemp also said shippers are able to get better freight rates through the 160-kilometre interswitching limit, instituted by the former government in 2014, and recently extended by the Liberals for another year.

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