MONTREAL – Canadian National Railway says it is making progress to meet the government’s target of increased grain shipments, but the railway drew a rebuke from Western Canadian grain elevator companies after calling on them to “step up” their own performances.
“The fact that CN is making this comment is just an attempt to deflect attention from the real issue,” said Wade Sobkowich, executive director of the Western Grain Elevator Association.
He said the main problems are getting enough cars from the railways at scheduled times and meeting contracts with customers in all four of the country’s four grain delivery corridors — Western Canada, Thunder Bay, the United States and Eastern Canada, not just the main West Coast and the Great Lakes terminal in Ontario.
“It doesn’t make sense that they’re asking us to do a better job when we’re already performing,” he said in an interview.
CN argues the grain must be moved to the most efficient and fastest transit-time corridors to free up space for farmers to deliver grain to Prairie elevators and ensure they receive the cash they are owned by grain elevator companies as soon as possible.
It finds it “disconcerting” that the elevator association has said the railways want to move too many grain loads to the two main export centres, yet the West Coast is where there are many vessels waiting to be loaded and the shipping season at the Thunder Bay port is about to open.
“Having wrongly singled-out railways and unrealistically called for a near-doubling of rail car capacity since last fall, it is now time for grain elevators companies to step up to the capacity they claim to have, and do so in the corridors that will benefit Canadian farmers the most,” Mongeau said in a news release Monday.
The country’s largest railway (TSX:CNR) said it provided 5,102 hopper cars for loading last week, the most in its history at this point of the season.
It marked the fourth week in a row the railway has delivered more than 4,000 cars. The average of 4,550 cars per week is 21 per cent greater than CN’s average March performance for the last decade.
Calgary-based Canadian Pacific (TSX:CP) said it is not disclosing the weekly grain car numbers it has been reporting to federal officials. However, CP spokesman Ed Greenberg also said the results “show the railway is continuing to move record amounts of grain.”
The federal government passed an order-in-council on March 7 that imposes a daily fines of up to $100,000 on CN and rival CP should they fail to double the volume of grain shipments.
Both CP and CN have blamed abnormally cold weather for much of the slowdown in shipments. For safety reasons, the railways reduced the number of cars their locomotives pull in winter to 70 per cent of what they move during warmer months.
Mongeau said it continues to make “significant progress” to reach its goal of transporting close to 5,550 gain cars per week, but can only meet its commitment “if other key players in the supply chain are equally held to account for their performance.”
But Sobkowich said grain companies are already held accountable for their performance by tariffs which allow the railways to penalize them if they are unable to load or unload rail cars within a specific time.
Sobkowich said what’s needed now is for railways to be subjected to fines payable to grain companies and passed on to farmers if they can’t deliver rail cars on the days they promise.
Last week, CP’s chief executive decried the speed and lack of consultation before the government changed the rail transportation system, that could result in “unintended consequences.”
“Instead we should all focus on commercial solutions to maximize overall capacity in the grain supply chain,” stated Hunter Harrison, especially if larger crops become the new normal.
“If this is true, a system grounded in commercial principles, not regulation, is required to address the capacity constraints and the significant investments required, including replacing Canada’s aging grain hopper fleet.”
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