‘It’s a dire situation’: Grain industry sounds alarm over shipment backlog
Grain shippers and producers are raising concerns about a growing backlog of rail shipments that they say is leading to lost sales and unreliable exports.
“It’s not getting better, it’s getting worse,” said Wade Sobkowich, executive director of the Western Grain Elevator Association that represents major grain shipping companies.
The latest figures from the Ag Transport Coalition, which represents several grain associations, said that car order fulfilments from Canada’s two major railways was 38 per cent during the week of Feb. 12.
The numbers show Canadian Pacific Railway Ltd. delivered 66 per cent of the rail cars that grain shippers ordered, while Canadian National Railway Co. deliveries dropped for the sixth consecutive week to 17 per cent.
“It’s a dire situation. What we’re seeing is not enough rail cars, not even close to enough empty rail cars being placed at grain elevators for loading,” said Sobkowich.
The backlog means grain elevators filling up at the farm, and emptying silos at ports leading to penalties for delayed shipments, he said.
The situation threatens to be a repeat of the 2013-14 grain shipping crisis where a bumper crop and harsh winter led to major delays on the system, said Grain Growers of Canada president Jeff Nielsen in a release.
“Once again railways are proving that they can’t be trusted to move our grain and proving why the grain industry needs tools to be able to hold the railways to account.”
Grain producers say passage of Bill C-49 would be an important step in solving the problem by creating penalties for delayed railway shipments as well as allowing more competition on the rail lines.
The rail companies have blamed a harsh winter for the delays, with CP Rail chief executive Keith Creel saying at a conference last week that the company saw more snow on its lines in the first 10 days of January than it saw in the entire month last year.
CN chief financial officer Ghislain Houle said at the same conference that the cold and snow have restricted operations and forced it to cut train lengths by more than half, but that recently improving weather has helped boost speeds.
The Montreal-based railway has also faced criticism from the oil and gas sector, with the head of energy services firm Halliburton complaining about slow deliveries for frac sand disrupting its operations.
Analyst Walter Spracklin of RBC Capital Markets said service at CN Rail had deteriorated to the point where clients were switching their cargo to its Calgary rival CP Rail.
Houle said the company was working to increase capacity, including hiring 350 to 400 conductors this quarter and adding locomotives as part of its $3.2 billion infrastructure spending this year.