Saskatoon | Grainews –– Western Canada’s rail network isn’t the only piece of the grain logistics puzzle that needs attention, farmers heard here at Wednesday’s Grain Handling and Transportation Summit.
“If we did solve the rail problem, we have another large problem, and that’s West Coast terminal capacity,” said Richard Gray, a University of Saskatchewan ag economist. If the industry tried to move 40 million tonnes, “people would say, ‘Well, you can’t move that through the West Coast. There’s no way the capacity’s near that.'”
For any shipping point west of Brandon, Man., it’s cheaper to funnel grain through West Coast terminals, for both Asian and European markets — and grain bound for Asian markets from Winnipeg is cheaper to rail west than east, Gray said.
“So West Coast capacity’s really important. If we can’t move it out the West Coast, it’s got to a long way to salt water. And those are costs coming off the cheque going to farmers,” he told the University of Saskatchewan-sponsored summit.
But West Coast terminals haven’t moved more than 22 million tonnes, he said. “If we’re going to export 36 or 40 million tonnes, we’re not going to move it west at this point.”
In a full-page advertisement published March 6 in the Globe and Mail and National Post, Canadian Pacific Railway (CP) CEO Hunter Harrison said, in part, “we can’t return empty cars back to the Prairies if trains are sitting idle waiting for port terminals to unload them.” [Related story]
Any holdups at Vancouver and Prince Rupert have nothing to do with grain workers’ unwillingness to work overtime, Gerry Gault, president of Grain Workers Union Local 333, told delegates at the summit. “You can’t live in the city of Vancouver if you don’t work overtime.”
Grain workers receive triple time for stat holidays, double time for Sundays and time and a half for Saturdays, he said.
In 1997, port terminals were forced to operate continuously. The GWU had fought against the ag industry and railways for years over continuous operation, Gault said, and by 2002, the terminals also wanted out of the continuous schedule.
“To staff the continuous schedule they had to hire 25 per cent more employees. And at that time, the railways and the vessels and the (Canadian) Wheat Board were not delivering enough grain in order to make it work for them,” Gault said.
While the GWU initially fought continuous operations, Gault said it would now be happy for such a boost to membership numbers.
Richardson International today budgets to staff 30 weekends in a crop year at its terminal, Gault said. Alliance budgets for over 35 weekends of union labour and Pacific Elevator has staff dumping cars any time railways deliver, Gault said.
Prince Rupert’s terminal will provide three weekend shifts if railways deliver 1,600 cars a week, he added.
It makes no sense, he said, to have 50 to 60 vessels waiting to load in the winter. He wants to see a “system set up so that the delivery and receipt of product is on a 12-month program rather than trying to cram everything into the first six months of the crop year.”
Shipping east is unlikely to get any cheaper, given growing demand from Asia.
“China is now importing 70 million more tonnes of soybeans per year than (it was) 10 years ago,” said Gray. “You actually see soybeans going down to the Gulf of Mexico, going west through the Panama Canal.”
More West Coast ports would add up to more savings, Gray said, estimating $800 million in transportation savings and perhaps $3 billion in basis savings.
Lower basis would boost productivity and economic growth in Western Canada, Gray said. “Without that, farmers are going to actually face high basis whenever they increase production. That’s going to keep prices down and reduce the incentives to actually grow that.”
“You can’t start with the idea, ‘Well, it’s expensive to build capacity,'” said Gray. “The benefits are huge and the costs of not building that capacity are huge as well.”
Gault wants to see more grain moving as well. His father, also a grain worker, taught Gerry that “if the grain companies don’t make money, we can’t ask for a raise.”
“So if there’s 20 million extra tonnes to be exported, we need to figure out a way to get it to Vancouver because I’d like to be able to retire in a few years and I’d like to make some money before we do it.”
— Lisa Guenther is a field editor for Grainews at Livelong, Sask., reporting from Saskatoon.