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Editorial: On a (rail)road to nowhere

The Port of Churchill and the rail link to the south has been much in the public eye of late, most recently with word a Toronto financial group is partnering with local First Nations groups to buy the line.

The tantalizing promise of Churchill has always been just over the horizon, it would seem. On paper it’s a good trade route, with a far shorter haul to salt water than to either the Pacific coast or the Atlantic via the Great Lakes and St. Lawrence Seaway.

In practice, however, that promise never really materialized. The Canadian Wheat Board used it for limited shipments every year, but a short shipping season, the reluctance of ship owners and insurers and the reality of running a railway over muskeg and permafrost prevented it from truly blossoming.

Originally built by the CNR in the 1920s and 30s, in 1997 the port and the Hudson Bay Railway were spun off as part of a larger program of divestiture of Crown corporations.

In a two-step deal the U.S. firm OmniTRAX, headquartered in Denver, took over both the rail line from CNR and the port from Transport Canada.

It was hoped that a smaller, more nimble, company with a proven track record running short-line railways would turn Churchill into a winner.

There were some early signs of hope. As recently as 2010 the port reported a near-record grain handle of 658,292 tonnes, the second-best shipping season ever recorded for the facility, and OmniTRAX was touting a stated goal of one million tonnes of grain annually.

However, most of those shipments were grains sold through the single desk of the Canadian Wheat Board. Of non-board products, just 43,000 tonnes of canola and 12,000 tonnes of peas were shipped.

The port continued to enjoy some success in the following years. At the end of the 2013 shipping campaign, the 10-year average for Churchill sat at 450,000 tonnes and the total for that year just exceeded 600,000 tonnes, with a shipping season that was two weeks longer as a result of warming global temperatures.

Signs of trouble reappeared the following year however, following the brutal 2013-14 winter that derailed grain shipments on many routes. In an end-of-season report in the Co-operator OmniTRAX reported it typically allocated between $2.5 and $3 million a year to maintain the rail line, but had been forced to spend $10 million that season.

In 2015, shipments plummeted to just 186,000 tonnes, despite a couple of years remaining to run on the Churchill Port Utilization Program that provided up to $5 million annually to subsidize grain shipments in the wake of the end of the Canadian Wheat Board.

When Omnitrax bought the line and port from the federal government, it was under the assumption that the CWB would continue to exist. It made sense for the CWB to use the port. But the advantages it offers by way of shorter distances are outweighed by the fact that the private trade must keep volumes moving through its own port facilities in the West.

The end of the CWB’s single-desk mandate fundamentally altered the landscape for the port and line. Given this government-sanctioned change of a key operating variable, it will be interesting to see how the courts view the federal government’s demands that OmniTRAX fix the line.

Since the disastrous 2015 season, OmniTRAX has been attempting to sell the port and finding few interested buyers. It shuttered operations at the port in 2016, throwing the community into turmoil.

The leading contenders to buy it were local First Nations governments who view the rail line as necessary for the future of their communities.

A deal was announced this spring, but virtually simultaneously the track washed out due to flooding, kicking off a period of protracted and public legal wrangling between the federal government and OmniTRAX over the repairs, throwing the deal in doubt.

There’s little doubt the line is of strategic importance to residents of the North, and the country as a whole. What’s less clear is if it will ever be economically viable.

Just 900 people live in Churchill, and only around 36,000 in the entirety of Nunavut, to the north, an area roughly the size of Mexico. While that’s a small number, it’s important because those citizens are the key to Canada’s claims of sovereignty over this vast area.

In that light it could — and has — been argued this rail line is more like a public utility than a business. Those observers claim it never should have been privatized.

If this transportation link truly is as vital and necessary as many claim, then perhaps the federal government needs to own up to its obligations and run it like a utility or partner with local interests that will.

About the author

Editor

Gord Gilmour is Editor of the Manitoba Co-operator.

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