If there was ever a product suited to bulk shipping, it’s grain. But for years, Barry Prentice has promoted containers as an alternative. And the idea seems to be catching on.
Ten years ago one or two per cent of Canada’s grain was exported in a container versus bulk, now containers account for 14 to 16 per cent, Mark Hemmes, president of Quorum Corporation told the 14th annual Fields on Wheels conference organized by the University of Manitoba’s Transport Institute, Dec. 2 in Winnipeg.
And it’s not just special crops and pulses; canola meal and even wheat are moving in containers, he said.
In 1997, during the second annual Fields on Wheels conference, Prentice, then the Transport Institutes’ director, pointed to containers, which are less regulated than railway hoppers, as an example of the benefits of deregulation. Since then Prentice, now a professor of supply chain management at the university, has argued containers could be used as granaries on wheels for on-farm storage and transportation, as well as a way to identity preserve (IP) crops – earning farmers more money.
Hemmes, whose company has monitored the performance of Canada’s grain handling and transportation system for almost 10 years, said container business peaked a couple of years ago when bulk ocean freight rates were sky high. They’ve fallen since, but some
“You see a strong market push today for smaller lot sizes.”
– MaRK HEMMEs
Canadian grain buyers are still taking delivery in containers because they prefer it.
“You see a strong market push today for smaller lot sizes,” Hemmes said. “That’s just-in-time inventory, to IP, to just the amount of money that they’ve got to spend.”
That said, Hemmes predicted a large portion of Canadian crops will continue to be shipped in the bulk handling system. And while the proportion of container movement has increased, the size of bulk grain shipments is increasing, Rick Wansbutter, vice-president of government and commercial relations for Viterra said Nov. 25 at a Canada Grains Council meeting in Ottawa.
Ten or 15 years ago it was the norm to ship 20,000 tonnes of canola in a ship; now it’s typically 60,000 tonnes, he said. Years ago, peas were considered a “special crop” and shipped in small volumes, now shipments are typically 40,000 to 50,000 tonnes.
“I think you’re seeing an increase on both ends of the spectrum (bulk and container),” Wansbutter said.
Eight years ago Hemmes bet Prentice that in 20 years, containers would account for 20 per cent of the movement; Prentice bet they would make up 80 per cent.
One reason Hemmes is less optimistic than Prentice is grain companies and railways have an estimated $15 billion invested in the current bulk handling system. Most of that money was used to replace smaller, less efficient wooden elevators, with large and high-throughput facilities.
It’s unlikely containers will be filled on-farm because container owners are reluctant to ship them inland, preferring to stuff them at port for quicker turnaround, Hemmes said.
Loading on-farm would also prevent elevator companies from blending grain, which contributes to the consistency and high quality of Canadian wheat, he said.
“The blending process that occurs, particularly in the country elevator system, is probably some of the most sophisticated around,” Hemmes said. “It provides huge amounts of profit for the grain companies, but at the same time it allows for the elimination of some bad stuff and it allows producers to continue to make money at times when the product they’re delivering may not be the absolute high standard they require.”
Prentice said there are single malts and blended scotch whiskeys and the single malt commands a higher price. Unblended wheat might be the same.
“Some farmyards are pretty sophisticated,” he said. “I’m not sure it’s that complicated to load a container with a designated product IP’d and send it through the system.”
Prentice told reporters later container shipping companies will be easier for farmers to work with once they run out of new markets.
“Now they may be arrogant and say they’ll only take it at the port, but I don’t know if that’s going to last,” he said. [email protected]