CN Rail’s grain-shipping performance started off poorly early in the crop year and is getting worse.
So say grain companies and farmers, who add their complaints are backed by statistics.
CN blames “bitter cold and heavy snowfall,” for its struggles, while shippers accuse CN of taking resources away from grain shipping to handle an unexpected jump in intermodal and frac sand shipping that, unlike grain, is subject to rail and truck competition.
CN delivered just 54 per cent of the cars shippers ordered in week 27, according to the Ag Transport Coalition’s (ATC) weekly report.
The coalition represents about 90 per cent of the grain shipped from Western Canada.
“They’ve (CN) been in the 50s for a while and it’s not getting better, it’s getting worse,” Western Grain Elevator Association (WGEA) executive Wade Sobkowich, said in an interview Feb. 15. “And CP was at 69 per cent, which also isn’t very good. Further in the report it shows unfulfilled shipper demand (for CN) at about 17,000 rail cars.
“By April 1, 2014 (a year of record backlogs) we were about 35,000 cars behind. So here we are at 17,000 cars behind. And that’s a growing number and we’re not at the beginning of April yet. That should give some order of magnitude to the services issues we are facing as it compares to 2013-14.”
Many Manitoba elevators on CN Rail lines haven’t received cars in weeks, according to Keystone Agricultural Producers (KAP) president Dan Mazier.
“It’s bad. It’s really bad,” he said, in an interview Feb. 15.
When grain companies don’t get cars they offer farmers lower prices, Mazier said.
“Why would he (a grain buyer) bid more? He’s not going to take on the risk because he doesn’t know when the cars are going to show up.”
When the railways do provide cars grain companies decide which elevators receive them.
CN’s poor shipping record underscores the importance of quickly implementing Bill C-49, the Transportation Modernization Act, currently before the Senate, Sobkowich and Mazier said.
“We can’t get this bill passed quick enough so we can start using some of the provisions that it contains, such as a long haul interswitching,” Sobkowich said.
“We hope it’s going to work and take grain from CN lines and move it over to other lines.”
That’s what happened last crop year when CP Rail fell behind and it made a difference, Mazier said.
But extended interswitching and other emergency measures designed to encourage better grain movement introduced by the Conservative government in March 2014 under the Fair Rail for Farmers Act, expired last July 31, despite grain company and farmer requests to extend it until C-49 becomes law.
Last week a number of farm groups and Sobkowich delivered a unified message emphasizing to a Senate committee reviewing the legislation the bill needs to quickly become law, Sobkowich said.
Mazier will testify before the committee Feb. 27.
“Hopefully they (Senate) do their work as quickly as they can and get this bill passed with or without amendments as quickly as possible so we don’t end up in June and the bill isn’t passed yet and we’re breaking for summer recess,” Sobkowich said.
“There’s a risk it could die on the order paper if there’s disagreement between the Senate and the House (of Commons).
“If there is prorogation then we’re starting from scratch again. So we’re worried that there’s a chance this could be slipping away on us.”
By this time a year ago grain companies had requested 120,000 cars from CN and had received 108,000, he said. Car demand is the same this year but CN has delivered just 85,000 cars — 23,000 less.
Last year CN often fulfilled 90 per cent of its car orders and was often praised for its good performance.
CN says the difference in 2018 is the weather.
“So far this year, 75 per cent of days have had cold so severe that we’ve needed to run shorter trains on significant portions of CN’s network to ensure safe operations,” Kate Fenske CN Rail’s manager for media relation in Western Canada said in an email Feb. 16.
CN is buying and leasing more locomotives and hiring and training hundreds of new employees, she added.
“We are also well on our way to deploy a solid infrastructure investment plan for 2018 with our $3.2-billion capital program to address pinch points and add capacity (and will be) ready to go as soon as the weather allows us to do so,” she wrote.
Poor CN service was caused by the company cutting power and staff, Sobkowich and Mazier said.
“So CN is taking capacity earmarked for the grain industry and moved it into these other sectors and so we’re suffering… because we don’t have competitive options to motivate CN — and both railways for that matter — to keep capacity earmarked for grain in grain,” Sobkowich said.
CN admitted it didn’t have the resources to handle the unexpected increase in non-grain traffic, Mazier said.
“There is very little snow, and the cold is not the main reason for the lack of capacity for the grain sector,” Sobkowich said. “CN’s capacity deficiency began around mid-October, well before any cold weather hit, and worsened from there. This is due to a reallocation of locomotives and crews from grain to other sectors. Cold weather is being used as a convenient excuse.”
CN’s performance is also hurting the Port of Prince Rupert, Sobkowich said. The port only served by CN, was supposed to get 1,500 cars last week, but got just 790, he said.
“So Prince Rupert Grain is having to cancel some fobbing contracts as a result of not getting the grain up there in a timely way,” Sobkowich said. “And there are eight vessels waiting in Prince Rupert as of yesterday (Feb. 14).”
As of week 27 CN rail’s shipping performance had declined for the fourth week in a row, the ATC report said.
“Week 27 performance is the second worst of the current grain year surpassed only by 51 per cent order fulfilment success in week 12,” the report states. “It also marks the seventh time in the first 27 weeks of the current grain year where CN has failed to supply at least 60 per cent of hopper cars ordered.
“Orders rationed by CN during the current grain year represent 11 per cent of total shipper demand through the first 27 weeks.”
The statistics are “astounding,” Mazier said.
The railways get a fair return for shipping grain under the maximum revenue entitlement and have a legal obligation to provide adequate service, he said.