(Adds comments by elevator group, CP, transport expert; CN on
By Rod Nickel
WINNIPEG, Manitoba, April 9 Canadian National
Railway Co, the country's biggest railroad, this week
will reach the minimum weekly grain volume ordered by the
government, easing a massive crop jam, Chief Executive Claude
Mongeau said on Wednesday.
Mongeau, speaking to reporters after addressing a business
audience in Winnipeg, said the company will move 500,000 tonnes
of grain this week as required by a government order. The order
also requires rival Canadian Pacific Railway Limited to
move 500,000 tonnes this week.
Transport Canada spokeswoman Ashley Kelahear confirmed the
railways were on course to reaching their targets as of March
29, the most recent data available.
The grain backlog is due to extreme circumstances, Mongeau
said, such as a record 76 million tonne Western Canada crop and
the most severe winter in decades.
"I'm sorry that we failed our customers, all of them, not
just grain, (by) not being able to meet all their demands,"
Mongeau said. "But I don't control the weather."
Millions of tonnes of grain, worth up to C$20 billion ($18.3
billion), are sitting in country elevators and farm bins, with
the railways behind on tens of thousands of car orders from
But the situation is improving.
The two railways boosted weekly port unloadings to 6,971
grain cars as of March 30, up nearly 15 percent from the
previous week, said Mark Hemmes, president of Quorum Corp, a
company that monitors Canada's grain transportation system for
the federal government. That's the highest level since October.
"(The railways) are cranking it up," Hemmes said in an
interview. "They're moving in the right direction."
The number of outstanding grain car orders by the two
railways dropped 12 percent from the previous week to 68,802
cars as of Sunday, according to railway data, Hemmes said.
That backlog still represents some 6.15 million tonnes of
crop that didn't move in the timing requested by grain handlers.
Part of the problem, Mongeau said, is grain handlers at
times ordered far more cars than railways can realistically
CN shares eased slightly in Toronto on Wednesday.
Canadian Pacific spokesman Ed Greenberg said the company
would not disclose its grain volumes to media, but that they
comply with the government order.
Canadian government legislation moving through the House of
Commons would give it authority to set minimum weekly levels of
grain movement in coming years. The bill comes on the heels of
government's order on March 7 that the railways ramp up to
moving a combined 1 million tonnes of grain per week on up to
Railways have taken the brunt of criticism from politicians
and farmers, but Mongeau said grain handlers also bear
They ordered too few grain cars during the first weeks of
August as the big crop matured and too many later on, he said.
While CN delivered fewer than average grain cars for loading
during the harsh winter, it reached record-high levels at times
in autumn and spring, Mongeau said.
The harvest was later than normal, and farmers were not
focused on delivering their crops to elevators until early
September, said Wade Sobkowich, executive director of the
Western Grain Elevator Association.
Mongeau said once this crop gets moved, CN would consider
increasing capacity, but only if grain handlers do the same.
"Even if we had more assets, the grain elevator companies
would have difficulty unloading it," he said.
Mongeau said further regulation would damage Canada's
economy, but he said if Ottawa is going to impose it on
railroads and grain, it should also further regulate grain
handling companies and even other commodities.
Currently, potash, coal and lumber are not being hurt by the
mandate to move grain, but that could change in the case of a
flood or other disruption, Mongeau said.