CP offers assurances for 2016-17 grain handle

Canadian Pacific Railway (CP) says it’s ready and willing to move a bumper Prairie crop in 2016-17.

“Operationally, CP is eager and prepared to move grain this coming crop year,” company CEO Hunter Harrison said in a letter to federal Transport Minister Marc Garneau.

The letter, dated Tuesday, was also circulated to Prairie transportation and agriculture ministers and received by the Manitoba Co-operator.

“As we continue to execute our Scheduled Precision Railroad model, our network has never been in better shape to perform.”

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If Prairie farmers harvest an above-average crop this fall, as some experts predict, the whole supply chain must co-operate rather than finger-point, Harrison wrote, alluding to past criticism that the railways weren’t well enough prepared to move the record crop harvested in 2013.

“Not only is finger-pointing counter-productive, it unfairly tarnishes Canada’s reputation as a world-class supplier, and it distracts us all from the most important task: moving grain to the benefit of Canadian producers and companies,” Harrison wrote.

“Ultimately, that’s how we all win. And that’s what will grow the Canadian economy.”

CP has made record investments in improving its system, he added.

“We have constructed 22 new and extended sidings on our North Line between Edmonton and Winnipeg, four new extended sidings on the Western corridor through B.C., and nine new sidings through the Upper Plains states to Chicago,” he wrote.

“These capacity-enhancing infrastructure investments allow us to move more commodities — including more grain — in an efficient and safe manner. This will improve our service and reliability, and it will accelerate our growth in lock-step with our customers.”

Canada’s grain sector has increasingly relied on exports through Vancouver, which has finite capacity, Harrison wrote. To move more grain, Thunder Bay — which closes in early winter — must remain open longer, he added.

If the forecast for a crop possibly just four or five million tonnes below the 2013 record of 76 million is correct, the grain sector should do all it can to reduce carryover grain stocks, Harrison wrote.

“The grain supply chain in Canada, like all efficient supply chains, is not built to move total annual volumes of a commodity in a short, peak period of time and then sit idle for the rest of the year.”

CP will operate 24/7, 364 days a year, Harrison wrote.

“Operationally, CP is eager and prepared to move grain this coming crop year,” he wrote. “As we continue to execute our Scheduled Precision Railroad model, our network has never been in better shape to perform.

“Case in point: CP’s network train speed this current quarter (Q2 2016) is 30 per cent faster than the same period in 2013 (just before the record 2013-14 crop).”

The company’s Dedicated Train Program program has made grain movement more efficient, he added.

CP on June 21 posted an earnings outlook warning of recent fiscal headwinds such as “lower-than-anticipated volumes in bulk commodities, such as grain and potash,” along with northern Alberta’s disastrous wildfire season and a strengthening loonie.

The company said it expects its actions in the first half of the year, and an “anticipated improvement in commodity volumes,” will still help see it toward its full-year guidance target.

That said, CP warned it now expects revenues in its second fiscal quarter to drop about 12 per cent from the year-earlier period. CP’s Q2 results are scheduled to be made public July 20.

“While we acknowledge the environment remains challenging, additional cost reduction opportunities and the potential for stronger volumes in the back half of the year still lead us to believe that achieving double-digit (earnings per share) growth in 2016 is a possibility,” Harrison said June 21.

Among those cost cuts, CP separately announced temporary layoffs for 500 rail maintenance workers effective Thursday.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter. Includes files from AGCanada.com Network staff.

Click here to read Hunter Harrison’s letter.

 

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