Railway bottleneck puts squeeze on producers

A backlog in rail transport could mean massive losses for farmers and grain companies that can’t move crops off the Prairies.

The agriculture sector is using the crunch to push for tougher federal regulation of railroads; railway companies are blaming their troubles on bad weather.

In the week ending Feb. 10, more than half of all hopper-car orders placed with Canada’s two major railways went unfilled.

That left more than 3,600 orders outstanding, and car rationing at five times the level seen the year before.

Daryl Fransoo, Saskatchewan director for Western Canadian Wheat Growers, said the bottleneck is depressing the market and leaving farmers without money to pay their bills.

“We’re facing conditions that are very similar to 2013, where farmers lost billions of dollars due to the lack of service provided by the railways,” said Fransoo. “It’s pretty grave right now.”

He said the glut has continued for months, and is only getting worse.

Most of the delays are for westbound shipments heading to the Pacific, and Saskatchewan farmers are just as affected as growers in Manitoba and Alberta.

“All farmers are taking a kick here,” he said.

Many face year-end deadlines to repay costs for inputs and equipment, he added.

But with grain elevators filled with stranded product, Fransoo explained, it’s tough to earn cash when those bills come due.

Meanwhile, ships are sitting idle at port, waiting for deliveries.

The cost is passed on to grain companies, and, ultimately, to farmers.

Fransoo also worries that foreign markets might start to think Canadian supplies are unreliable, and demand a lower price.

They put themselves in a position that is now severely harming farmers and ... our economy.

Canadian National is fulfilling only 34 per cent of grain shipping orders it receives, about half the rate at Canadian Pacific. CN’s director of grain transport, David Przednowek, chalks the backlog up to market forces.

“We’ve seen demand exceed what the grain supply chain can deliver,” he said.

That would be true even in ideal conditions, said Przednowek. But chilly weather has stressed the system further, forcing CN to cut the length of its trains.

“We have to run shorter trains to ensure safe operating conditions,” he said. “Until we get a break here, which is hopefully very soon, we are going to see performance levels below where they need to be in terms of meeting overall shipper demand.”

That leaves Fransoo wondering why CN is so far behind its main competitor. He cited past reports that the company is struggling to fill positions after laying off workers during leaner times.

“They put themselves in a position that is now severely harming farmers and, in turn, our economy,” he said.

Further, he points out that grain competes with other commodities for space on the tracks. He fears that other shipments might be edging out a captive grain market, which doesn’t have any other mode of transit.

“They put grain at the back burner, because they know they ’re going to move it at one time or another,” said Fransoo.

Przednowek acknowledged that demand from other commodities has increased in recent years. But he was absolutely clear on one point: the rail companies treat farmers exactly the same as any other customer.

“CN is not prioritizing the movement of other commodities over grain,” he stressed.

As for staffing, Przednowek said that 2017 was a year of “unexpected growth.”

To keep up with renewed demand, CN has brought on 265 more conductors. They plan to train another 400 in the coming months. They’re also buying and leasing more locomotives.

But all that takes time. “You can’t just flick a switch and all of a sudden have a bunch of extra resources,” he said.

Along with other industry groups, Fransoo and the Western Canadian Wheat Growers are hoping that new federal legislation will increase pressure on the rail companies. Bill C-49 would facilitate penalties for carriers that don’t meet certain obligations. It’s currently stalled in the Senate.

Fransoo called for quick action. The livelihood of farmers is at stake, he said, along with a fortune in income for the national economy.

“We need to pass this bill,” he said, “because farmers are literally losing billions of dollars.”