Canadian Pacific Railway is ready to move Western Canada’s bumper 2016 crop, but is disappointed surplus system capacity isn’t being used now.
“We have been idle in terms of cars in service really since about May,” John Brooks, CP’s vice-president of sales and marketing for intermodal and grain said in an interview Aug. 11. “So the network has a lot of unused capacity that has been ‘wasted’ here the last three or four months.”
Railways, grain companies and farmers learned lessons after a record crop backed up on the Prairies in 2013-14, Brooks said. One is to move out as much old crop as possible to make room for the new one.
“I know it may not be optimal prices (for grain)… but use the idle capacity when you can because there is going to come a day probably in the next two weeks that there will not be anymore,” Brooks said. “Unfortunately we have not seen that materialize to the level that we had hoped. But we will see.
“Our biggest issue right now is the delay. It has been a slow start to the harvest because of this moisture. We are ready to get it amped up.”
Equipment coming back
CP is bringing locomotives, cars and staff back into service. It had more than 700 locomotives and 4,000 cars parked.
Brooks acknowledged it’s not unusual for grain movement to drop off at the end of one crop year and start slow in the new one, but with another big crop expected the grain system needs every bit of capacity.
In June the Western Grain Elevator Association (WGEA) estimated Western Canada would produce 63 million to 72 million tonnes of grains, oilseeds and pulse crops. Brooks said one grain company’s latest estimate is 72 million tonnes — not far off the 2013 record of 76 million and well above the five-year average of 61 million tonnes.
CP’s network is better equipped to handle a big crop now than it was three years ago, having added or extended 35 sidings, giving system operators more flexibility.
“The net result of that is we are seeing train speeds 25 to 30 per cent faster than our historical train speeds through these corridors,” Brooks said. “When we look at our network we feel good… coming into this crop year.”
About 80 per cent of CP grain moves is in unit trains of 112 to 134 cars, Brooks said.
Meanwhile, CP’s ‘dedicated train’ program has increased 15 per cent this year. Grain companies book trains for the entire crop year. The companies tell the railways where to spot the cars and where to deliver them. The cars must be loaded in 24 hours and then once delivered unloaded in 24 hours. Brooks said the round trip for a dedicated train is nine to 11 days.
The key to increasing CP’s capacity is faster and longer trains, Brooks said. More grain is getting moved with fewer assets.
Buffer for problems
That’s fine on paper, Wade Sobkowich, executive director of the WGEA has said in previous interviews, but every business needs extra capacity for when things go wrong, as they did in 2013-14. Not only was there a record crop to move, but it was the coldest winter in 100 years. Sobkowich, who speaks for Western Canada’s biggest grain companies, says the railways need capacity for when disaster strikes. He also argues the railways are near monopolies immune from normal market forces that would normally compel a business to have emergency capacity. That’s why the WGEA wants regulations penalizing the railways for failing to meet service
commitments.Brooks said the railways do compete, but it’s unreasonable to expect them to move the entire crop in three or four months during the peak demand.
“Hopefully there is an improved realization that the more we can do to work together to move maximum levels the better, but also be smart about how we move that grain into different corridors, utilizing Thunder Bay and over… a longer portion of the crop year,” Brooks said. “The other component I think is we need everybody disciplined. It (system) has got to be working 24-7 collectively.
However, Brooks is optimistic about prospects for improved movement.
“Based on my discussions with the grain companies I think we all better understand what it is going to take. We have learned lessons.”