CN Rail is still struggling to fulfil grain car orders in Western Canada, according to statistics collected by the Ag Transport Coalition (ATC).
A CN spokesperson says the company is committed to meeting grain company needs. To that end CN has ramped up hiring and this quarter will add another 250 new crew members, Kate Fenske said in an email Nov. 3.
“We’re completing delivery of 22 new AC locomotives and are in the process of injecting 100 more locomotives into our fleet that were in long-term storage,” Fenske wrote. “We’ve increased our capital spending for the year by $100 million, including investments in our Edmonton to Jasper corridor.”
Despite setbacks CN shipped 15 per cent more cars out of Manitoba through the first 13 weeks of this crop year compared to last year and is current on all orders, she wrote.
Fenske blamed a number of factors for service problems, including a derailment in Alberta caused by strong winds, reduced unloads at Prince Rupert because the grain terminal is not operating seven days a week, and increased shipments of other commodities.
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“CN continues to see increased demand across several business segments including intermodal, metals, coal and frac sand,” Fenske wrote. “Following more than a year of declining volumes, dating back to 2015, our economy has turned around.”
In week 10 CN fulfilled 83 per cent of the cars grain companies ordered for that week, but percentages fell to 68 and 61 per cent respectively in weeks 11 and 12.
Most weeks this crop year CP Rail delivered 90 per cent of the cars grain companies ordered for that week.
Grain companies and farmers are gun shy after a huge backlog of grain occurred in the 2013-14 crop year, which by one estimate cost farmers more than $5 billion in lower prices over two crop years. Both groups want to nip any potential new backlog in the bud.
“This year I am asking you to let KAP know if there is any late delivery of contracts by railways or grain elevators… and we will follow up… with the Crop Logistics Working Group, the Grain Monitor, the Ag Transport Coalition, the railways, the federal agriculture minister, the transport minister,” Keystone Agricultural Producers president Dan Mazier told delegates Nov. 2 at KAP’s fall advisory council meeting.
“We need to be on this. Time is of the essence if we are seeing any delays.”
In an Oct. 20 interview, Mazier said he was concerned with CN’s performance, especially compared to last crop year when most weeks CN fulfilled 90 per cent or more of car orders.
As of week 10 of 2017-18, CN had cancelled 1,596 car orders, compared to 516 during the same period in 2016-17. As of week 12 the figure had almost doubled to 3,337 cars — the equivalent of almost 8,000 B trains, Mazier said.
According CN’s statistics, in week 13 its network was recovering. Although strong customer demand continued to exceed the sustainable supply chain capacity, all contract orders were accepted and 776 spot orders were rationed, Fenske wrote.
CN says its system can handle 4,000 cars a week in winter, but it shipped 4,482 in week 13.
Since the start of the crop year CN says it shipped 5.2 million tonnes (57,100 cars), plus 8,258 private cars (767,000 tonnes).
Since 2013-14 grain companies have learned not to make grain sales if they fear the railways can’t deliver the cars to fulfil them, Mazier said.
“How does that not quash a free market? They (railways) are the bottleneck in the whole free market,” Mazier said. “We are under this illusion we’re in an open market and we market all we want and then the railways come along and say ‘no, we can’t do that.’”
The Western Grain Elevator Association (WGEA), which represents the West’s major grain companies, is also concerned about CN’s recent performance, but is willing to cut it some slack given its recent challenges and that it’s adding crews and power, executive director Wade Sobkowich said in an interview Nov. 3.
“We feel we need to give them (CN) the opportunity to correct this before we start taking any action with the government or otherwise,” Sobkowich said, alluding to emergency powers invoked by Ottawa in March 2014 ordering both railways to move a minimum volume of grain weekly or be fined.
“CN is trying to manage the issue,” Sobkowich said. “We do recognize that it will probably take them awhile to recover, even if they could bring on power and crews right away. So we’re going to try and work with that.”
Since part of the problem is increasing volumes of non-grain traffic, measures need to be taken to better predict railway demand, Sobkowich said.
“Intermodal is a more competitive industry than the grain industry,” he said, alluding to how containers can more easily move from one railway to another. “Both railways tend to want to put more resources into shipping containers than grain cars and that doesn’t work for us.”