Grain shipping. It’s a good news-bad news story

The grain-handling system keeps setting records, even as carry-out keeps rising

[UPDATED: June 5, 2020] Despite major setbacks earlier in the shipping season and COVID-19, Canada’s railways are setting grain shipping records.

*Year-to-date movement to Vancouver, Prince Rupert and Thunder Bay is two per cent ahead of last crop year’s (2018-19) pace, which ended with a record of 34.9 million tonnes shipped. Total shipments to all ports and the United. States was a record 54.307 tonnes

The bad news is for the second crop year in a row Canada is expecting a larger-than-desirable grain carry-over, says Canada’s grain monitor, Mark Hemmes, president of Edmonton-based Quorum Corporation.

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Western Canada carried over almost 9.4 million tonnes of grain into the current crop year that began last Aug. 1. It could be that big July 31 when the crop year ends.

“We shouldn’t be carrying forward that much grain,” Hemmes said in an interview May 6.

Why it matters: Moving record volumes of grain is a good news story, but shippers say another big grain carry-over expected July 31 underscores the need for even more railway capacity, especially during peak demand periods.

“I like to think about it in terms of how much (grain) volume was there to move,” Hemmes said. “If we are supposed to be gradually improving things, was the improvement (last crop year) that remarkable? It was only about a per cent higher than it was in our best year (2016-17).”

Moreover, a lot of grain is going to market outside the peak demand period when prices are reduced, Hemmes said.

“If they (railways) aren’t selling and moving the grain in the period when prices are the best, can you count that as a success? We’re moving a lot of grain, but the prices aren’t as good as what we would’ve got in October, November, December, January,” he added.

Grain shipments keep setting new records, but the pace of that rise isn’t matching the productivity growth of the grain sector.
photo: Grains Connect

But the railways encountered lots of delays during that period, most of which were beyond the railways’ control, Hemmes said.

“For four or five weeks everything that could go wrong did go wrong,” he said.

Both railways saw grain movement delayed because of a late harvest. CN’s shipping was interrupted by a strike in November. Washouts later blocked both CN and CP movement to Vancouver. Cold weather slowed both railways in January. In February protesters blocked CN’s line to the Port of Prince Rupert, while mini-blockades around Vancouver slowed trains there.

“If everything stayed the same as week 28 (Feb. 9-15) this would probably be one of the worst years we have ever had (for grain movement),” Hemmes said. “But in that 10-week period of time (since) we’ve seen a remarkable recovery.

“Any way you cut it we’re finally back in a place where things are going very well. The last three weeks we’ve probably seen some of the best periods in over a year. This last crop week (38)… is the best we’ve seen in over a year.”

Thunder Bay to the rescue

The Port of Thunder Bay deserves much of the credit, Hemmes said. Because the railways were stalled moving grain to the West Coast, grain companies started filling their terminals in Thunder Bay.

“The Thunder Bay tonnage is just phenomenal,” he said. “This crop year alone they are 1.1 million tonnes ahead of last year.”

Grain shipments to the lakehead port are up 16 per cent year to date and 12 per cent ahead of the three-year average, Hemmes said.

Thunder Bay has seen a return to prominence this shipping season as it’s picked up an additional 1.1 million tonnes of shipping.
photo: File

Grain companies appreciate how quickly the railways have caught up, Wade Sobkowich, executive director of the Western Grain Elevator Association, said in an interview May 6.

“We are recovering faster than we expected to,” he said, but added, that’s because in the past that hasn’t always been the case.

“We appreciate the service,” Sobkowich said. “It’s something we need. It is the grain sector’s expectation that our demand for rail cars will be met.

“So when they come close to meeting our service requirements it’s important to start from the point that, that is our expectation.”

Both Sobkowich and Hemmes said the railways have extra capacity now because there are fewer other products to ship, including oil and auto parts.

Investments

The railways say their latest grain shipping records are the result of investing billions of dollars in new locomotives, higher-capacity cars, crews and track improvements.

“It’s a testament to how the supply chain working together can move a lot of grain if everyone does their part and our part was to make sure we had locomotives, crews, track capacity and the cars,” Sean Finn, CN Rail’s executive vice-president of corporate services and chief legal officer, said in an interview May 7.

In a news release CP Rail said its fleet of new grain cars, now at more than 2,500, is adding more than 1.1 tonnes of extra grain per rail car compared to the same period last year.

The new cars carry 15 per cent more volume and 10 per cent more weight compared to the older cars.

CN is committed to meeting grain shippers’ growing demand to ship grain, especially when grain prices are their best, Finn said.

“Right now our capacity is exceeding demand,” he said. “But we need to watch it closely. I think Mark (Hemmes) is right — we need to try and stay ahead of the curve as much as we can. That’s our job. We’re confident that our network is going to be resilient for the challenges we have under more difficult operating conditions.”

CP Rail moved a record 2.8 million tonnes of grain in April, the company said in a news release, exceeding the previous record set in November 2019 by more than 100,000 tonnes. CP said it also moved record amounts of grain in January and March and also said it moved 51 per cent of the grain and grain products originating by rail in Canada, six per cent more year to date, and eight per cent more than the previous three-year average.

CP says it moved 54 per cent of grain shipped by rail from the Canadian Prairies this crop year.

In a release CN Rail said it had its second-best January, March and April ever, moving 6.59 million tonnes.

CN said in April it moved a record 2.73 million tonnes, exceeding its previous April record of 2.72 million. Movements also exceeded the three-year average of 2.55 million tonnes for April and March’s record of 2.65 million.

“Despite difficult conditions, CN handled 51 per cent of all Canadian grain rail shipments in the first quarter, including 52 per cent of market share in March,” James Cairns, CN’s senior vice-president for the Rail Centric Supply Chain, said in a release. “We are in great shape and ready to deliver during the final months of the crop year.”

*UPDATE: This article previously stated: ‘Year-to-date movement to export terminals is two per cent ahead of last crop year’s (2018-19) pace, which ended with a record of 34.9 million tonnes shipped.’ In fact, while a record was set, 34.9 million tonnes was shipped to just to three ports — Vancouver, Prince Rupert and Thunder Bay. The railways moved a record 54.0307 million tonnes to all ports and the United States.

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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