Western Canada has the best grain handling and transportation system in the world, but it breaks down because its participants don’t get along, according to Mark Hemmes, president of Quorum Corporation, which monitors the system’s performance for the federal government.
“We probably have, without a doubt, the best country elevator system anywhere,” Hemmes told the Western Canadian Wheat Growers Association’s annual meeting in Winnipeg Jan. 9. “We have a great rail system… and a port terminal operation that’s just great.
“Basically what we have to do is see that the stakeholders in the system play nice together.”
Part of the problem is what’s good for one in the system, isn’t for another. For example, railways are most efficient when movement is divided evenly throughout the year. But the demand to ship grain is seasonal, peaking usually in the fall and winter and then declining.
“I think the biggest problem we’ve got today is we’ve narrowed the planning window to within a couple of weeks,” Hemmes said during an interview later.
Instead of planning grain movement a week out, six weeks would be better.
“If they go to that, the efficiencies that would be driven in the system would be phenomenal,” he said.
The railways used to have surplus resources for when bad weather disrupted operations, but they’ve cut back to reduce costs and make more money, Hemmes said.
“The downside of that is the system starts to fail a lot faster and then it slows down and a lot of people don’t ever recover some of those sales,” he said.
“A lot of shippers are saying ‘we don’t find this acceptable…’”
Hemmes compl imented Canadian Pacific Railway’s efforts to improve communications with grain shippers, including the Canadian Wheat Board (CWB). While some want the CWB removed from grain transportation, Hemmes said it plays an “effective role.”
The system needs a leader and the railways are naturals; “the problem is, most players don’t trust the railways,” he added.
Western Canada’s grain handling and transportation system is “remarkably better” than it was 10 years ago and totally different from 20 years ago, Hemmes said. But it can still do better.
Grain moves faster through the system – an average of 56 days instead of 65 seen 10 years ago.
“Every day we take off that grain spends in the system you’re probably contributing $2 million to the system,” Hemmes said.
And the average car cycle time has dropped from 19 days to 16.
The problem is, there are times when the cycle stretches to 24 days. Combined with the fact there are a third fewer elevators now and the average number of cars in a train has tripled to 75 the chances of inconsistent service are nine times greater than in 1999. That’s why grain companies and farmers are so angry about rail service, Hemmes said.
He described the task of determining what is acceptable rail service as the “Holy Grail” of grain transportation and something that will dominate the federal government’s review of rail service throughout Canada.
In 1999 there were 1,004 elevators in 685 communities; now there are a third as many elevators in 276 communities. Closing elevators has hurt farmers and their towns, but it has made for more efficiency, Hemmes said.
“And I think probably the system, as a whole, has benefited by that efficiency increase.”