By Rod Nickel
WINNIPEG, Manitoba, March 18 Canadian grain
shipments by rail have picked up since earlier this month when
Ottawa ordered Canadian National Railway Co and
Canadian Pacific Railway Limited to improve service, CN
and a grain-handling group said on Tuesday.
Transportation bottlenecks have left crops landlocked after
a record-smashing harvest and frigid winter in Canada, the
world's biggest canola exporter and No. 2 wheat shipper.
Grain handlers have seen "a slight improvement" in railway
service during the past week and a half, helped by milder
weather, said Wade Sobkowich, executive director of Western
Grain Elevator Association, whose members include Cargill Ltd
, Richardson International and Viterra.
CN, the biggest Canadian railway, spotted an average of
4,320 grain hopper cars per week at country elevators for the
the past two weeks, up from an average of 2,964 cars per week in
February, said CN spokesman Mark Hallman.
The railway is in process of adding 500 more hopper cars,
and intends to continue spotting more than 4,000 cars per week
until Port of Thunder Bay, Ontario opens in early April, Hallman
said. After that, it can move closer to the government-ordered
target of 5,500 cars per week, provided there is strong
collaboration from grain companies, he said.
Orders for tens of thousands of grain cars have gone
unfilled in the requested time since August. Each hopper car
contains about 90 tonnes of grain.
Canadian Pacific spokesman Ed Greenberg declined to disclose
the number of cars it has recently deployed, but said the
railway company is moving a record volume of Canadian grain.
Estimates of the number of hopper cars available last week
vary by grain company, but last week may have been the busiest
in 2014 so far, Sobkowich said.
Canadian Agriculture Minister Gerry Ritz wasn't satisfied.
"The facts show that the current rail service being provided
to farmers is not keeping pace with demand," Ritz said in an
email to Reuters.
The Canadian government ordered CN and CP on March 7 to
collectively double weekly grain shipments to 1 million tonnes
or the equivalent of 11,000 cars, and gave them four weeks to
work up to that pace.
Railways should be able to meet those targets, Transport
Minister Lisa Raitt told reporters in Toronto.
"You can't push the (supply) chain so hard that it breaks,
but you can certainly push it to make sure that they understand
the importance we have put on moving the grain out of the
country right now," she said.
Through January, Canada exported 18.8 million tonnes of
crops during the 2013/14 crop marketing year, up 3 percent from
a year earlier, according to the Canadian Grain Commission.
It's too early to tell if better rail service has led to
handlers raising cash bids for crops, Sobkowich said. With rail
orders backed up, grain handlers stopped accepting some crops at
certain times, leaving farmers with tight cash flow.
ICE Canada May canola futures have gained about 2
percent since the March 7 government order.
CP Chief Executive Hunter Harrison has aggressively
downsized the railway company since taking over in June, 2012.
The railway has cut about 4,850 jobs, or one-quarter of its
workforce and reduced its locomotive fleet.
Those cuts are not a factor in the backlog, Greenberg said.
"This is a combination of an extraordinary crop with periods
of extreme winter weather," he said.
CN has added 5 percent more train operating crews and
increased its locomotive fleet by 10 percent during the current
first quarter, Hallman said.
Ottawa plans to introduce draft legislation in the next
parliamentary session, which begins Monday, to ensure Canadian
shippers could get their products to market in a more
predictable and timely way.
The government of Alberta urged Ottawa on Monday to include
penalties for poor service that are payable to customers who are
adversely affected, and to allow railways greater flexibility to
use each other's track. Saskatchewan made similar requests,
along with raising railways' targets to 13,000 grain cars
combined per week.