Will there be enough cars to haul grain to port in 10 years?

Almost 50 years ago, the federal government got into the railway business buying 13,500 grain hopper cars to move grain.

According to the railways, statutory freight rates were too low to make grain car investment by railways worthwhile. The railways conned or convinced the feds into buying the large cars.

Over the years, the government-owned fleet grew to around 20,000. The Canadian Wheat Board acquired 4,000 cars and the Alberta and Saskatchewan governments each acquired 1,000 cars.

The federal cars now number around 7,800, down from 8,400 two years ago. G3, the grain company rising out of the wheat board ashes, owns 3,200 left from that fleet. Saskatchewan sold its cars to three shortline railways. Alberta is assessing its policy on the future of the 900-car fleet.

CN and CP Rail have announced investment in 1,000 grain hopper cars. Under the Maximum Revenue Entitlement grain freight rate program, investment by railways in grain cars offers a positive return.

The question is: will there be sufficient hopper cars to haul the grain by 2027 when more than 3,000 federal cars will be phased out of action?

Steve Pratte, a policy analyst with the Canadian Canola Growers Association, recently told a farm conference that action is needed.

He said the industry needs to make sure enough cars are on hand to meet future needs as volume of grain production continues to increase. He outlined several possible options and their likelihood to restore and ensure adequate grain hopper car supply. Government is not going to restore fleet numbers; individual grain companies might do some investment. Shippers are unlikely to renew the fleet, although many major freight shippers in other industries do own or lease a fleet of rail cars.

Most likely solution, he said, is a pool of hopper cars available to all grain companies. The cars would be owned by pension funds and leased to shippers. The U.S. grain industry uses that model.

Pratte said the hopper car fleet doesn’t need to be as large as 40 years ago. Since the 1990s, turnaround time to port and back has been cut from 14 days to six days, requiring fewer cars.

The federal grain hopper car fleet shrunk recently with sale of 440 cars manufactured before 1975. The refurbished cars were sold to the railways for just under $6,000 each.

Scrap value of cars sold in 2017 was about $15,000. Transport Canada told The Western Producer the price to railways reflected the railway investment in refurbishment.

Ron Walter can be reached at ronjoy@sasktel.net