Canada’s railways continued to break grain movement records earlier this crop year.
But as welcome as improved rail service has been, those records need to be put into context, says Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA).
For starters grain production has been steadily increasing so setting shipping records has to follow or Canada’s grain industry is in trouble, he said in an interview Dec. 17.
And just because records are being set doesn’t mean there aren’t problems, as there have been for a number of weeks this fall because both railways have been unable to fulfil car orders on time, based on data collected by the Ag Transport Coalition (ATC).
While CP is delivering about 80 per cent of car orders on time as of Week 17, CN was at just 60 per cent, ATC’s Week 17 report said. That led to a 1,000-car backlog.
With grain shipments through Thunder Bay soon to stop for the winter and colder weather, the railways will likely be delivering even fewer cars.
Part of the backlog could be because as the railways moved more grain, grain companies ordered more cars.
“Normally service providers are expected to fill the demand but with the railways we still have car supplies falling short of demand on a week-to-week basis,” Sobkowich said. “There are still problems we need to work out in the future. We’ve got to keep our pedal to the metal on this and iron out some of these issues despite the gains that have been made.”
When the railways for whatever reason fail to fulfil grain company orders that capacity is lost forever and shipping backlog begins to build, Canada’s grain monitor and president of Quorum Corporation Mark Hemmes, said in an interview Dec. 15.
“You can set a record volume for grain (shipping), and good on them (railways) for doing that, but when your capacity offering isn’t meeting what the ongoing increase in demand is then that becomes a new problem,” Hemmes said. “I think what that says to me is we’ve kind of crossed a line. We went from a place where service just wasn’t there. It was a problem for years and decades — and now they have really upped their game. But at the same time as they were upping their game so were the farmers and so were the grain companies. The grain companies spent billions of dollars increasing their infrastructure. And the industry has spent hundreds of millions of dollars in improved agronomics — everything from genetics to the technology applied to how they seed, herbicides and insecticides.
“The whole thing has been marching along. It’s almost like a race. In the 1995 era the issue was that we got to get the railway and the system restructured so it could handle the new era. We’ve gone 25 years and it’s almost at a balance and now we’re back into a new era… and now the railways have to catch up again.”