CN Rail boss Claude Mongeau testily defended his company’s grain service record before MPs last week, but was often contradicted by Canada’s grain monitor, Mark Hemmes of Quorum Corporation.
Hemmes, when pushed to identify who was to blame for the unprecedented grain backlog said, “I think the railways carry the brunt of it… (but) it’s not a simple issue just to point your finger at one stakeholder and say ‘it’s all your fault.’ I think we’d be remiss in this process if we are to do that.”
Nineteen witnesses, including Mongeau, appeared before the House of Commons agriculture committee in Ottawa April 1 and 2 to comment on the proposed Fair Rail for Grain Farmers Act.
Farm groups and grain shippers support the legislation, but many said it is only a first step to permanently fixing poor rail service.
MPs were told repeatedly shippers need a clearer definition of “adequate and suitable” rail service under the Canada Transportation Act. Armed with that shippers said they can then get meaningful level-of-service agreements with the railways, but only if they include penalties following poor rail service.
There were lots of calls for better communication and co-operation throughout the system, but also recognition there’s much acrimony between participants.
A sometimes indignant Mongeau stressed moving grain is a team sport,” and said CN “performed reasonably well” given the harshest winter in 50 or 60 years. The “key reason” for the backlog was a big crop, he told the committee.
Not according to Hemmes.
“(T)his year’s bumper crop has not yet been one of the fundamental problems that we’ve seen in the grain-handling and transportation system,” he told the committee. The massive 2013 crop will “start to challenge the system” nearer to this year’s harvest, he added.
Hemmes said the railway unloads are down five per cent versus last year and the average. Total Canadian grain exports year to date are down six per cent.
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Mongeau claimed nobody knew there was a record crop until November. Hemmes said the industry knew there was a bumper crop coming in August. When the railways were informed they told grain companies they would ship 5,000 cars a week — about the same as last crop year, Hemmes said.
“The bottom line is they (railways) have committed a certain level (of service) and they’ve fallen below it and as a consequence we’ve seen this dreadful falling down of the ability to load vessels at both the ports of Vancouver and Prince Rupert,” he said.
CN is 35,000 cars behind — a shortfall of about 1,000 a week. But according to Mongeau 28,000 of those cars are because grain companies overbooked. Based on Mongeau’s numbers CN is only 7,000 cars behind or short only 200 cars a week.
Grain companies lacked co-ordination in the new open market, he said.
“In week seven and beyond they (grain companies) started to order far more… than the supply chain was ever able to move,” Mongeau told the committee. “In fact they were ordering on CN close to 7,000 orders every week.
“Of course we never did anything close to that.”
Mongeau told the committee the system will be lucky to handle the 11,000 cars a week required by a federal government order issued last month.
“We are at capacity as we speak in Prince Rupert,” he said. “We are a whisker from being excess of what they can unload at Vancouver.
“We will have to prove the hard way where the true supply chain capability is.”
But Hemmes said he doesn’t see any immediate problem at the West Coast. There are 29 ships in Vancouver and 1.8 million tonnes of terminal space, he said.
“It’s going to take a long time to fill that,” he said, adding more ships are arriving daily.
Keith Creel, president and CEO of CP Rail criticized most West Coast terminal operators for not operating continuously, as the railways do.
“The railway is not the bottleneck…,” he told the committee.
Mongeau alleged that the grain companies are “oligopolies” — an allusion to the wide margins they are said by some to be earning.
C-30 will set the grain industry back and it’s undermining industry collaboration, Mongeau said.
“There is no amount of regulation that can move grain.”