Railways’ mandatory minimum grain handles ending

Canada’s big two railways can resume moving grain at their own pace as the federal government’s order in council setting mandatory minimum grain traffic quotas is set to expire unrenewed.

Agriculture Minister Gerry Ritz and Transport Minister Lisa Raitt announced the federal government won’t renew the mandatory minimums, which are due to expire Saturday.

The order in council, which was launched last March, extended in May, renewed in August and extended in November, “has done its job and can be reinstated if required,” Ritz said in a release Saturday.

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The government, he added, will “continue to monitor performance and encourages the full supply chain to be more collaborative in the long run.”

Since the mandatory minimum weekly requirements were introduced in March last year, the government said, “Canada’s overall grain exports have improved and (Western Canada’s) projected carry-out going into this new crop year is within the average range historically,” at 10 million tonnes.

Specifically, the government said, grain shipments out of Western Canada through ports are 31 per cent higher than last year, and 25 per cent higher than the five-year average.

Canadian National Railway (CN) and Canadian Pacific Railway (CP), during the periods covered by the order in council, moved over 50 million tonnes of grain, exceeding the total mandatory minimums by 5.5 million tonnes, the government added.

The government’s order, Raitt said, “had its intended effect and that the movement of grain by rail is once again running at a rate that contributes to strong economic growth.”

Mandatory minimums will remain an option” if the grain supply chain compromises farmers’ livelihoods, the economy or Canada’s international reputation as a reliable shipper,” the government added.

CP and CN, meanwhile, were urged “to continue to address shipper-specific issues so shippers across Canada can grow and build their businesses.”

The Ag Transport Coalition, with federal backing, continues to report by corridor on weekly rail car supply “to help individual shippers make business decisions,” the government said.

With input from grain industry stakeholders through the Crop Logistics Working Group and Ag Transport Coalition, the government said Saturday it will review its Grain Monitor program before the new crop year, “to determine how more effective data can be collected to find efficiencies in the supply chain.”

Before the end of the year, the government added, its Canada Transportation Act review will bring out recommendations to “help inform long-term supply chain improvements.”

More grain monitoring statistics are now publicly available, the government noted Saturday. A summary of the grain volume shipped by rail from August 2014 to January 2015 is now available on the Grain Monitor’s website, where new weekly and monthly reports will also be posted.

“Missed opportunity”

The Ag Transport Coalition’s weekly reports, which include data covering 90 per cent of grain movement originating in the West, continue to paint a less than rosy picture of grain car deliveries and shipments.

In its latest report, released Wednesday and covering shipping week 30, the coalition said CN and CP supplied 2,302 of the 6,228 hopper cars ordered for delivery that week, plus 4,202 cars filling orders from previous weeks.

In week 30, traffic destined to West Coast bulk terminals got a higher percentage of cars (41 per cent) than traffic destined to other corridors such as Canadian domestic buyers, Vancouver transload sites and delivery points in the U.S. and Mexico, which combined got 26 per cent of cars ordered for delivery.

“Each order not filled in the week it is requested can represent a lost or deferred sale for the shipper, and missed opportunity for a farmer to deliver their grain, which is particularly relevant as spring weight restrictions come into effect,” the coalition warned in Wednesday’s release.

Grain sales deferred or lost due to weekly unfulfilled rail car demand can result in extra costs to the supply chain, the coalition said.

Among those costs, it said, are “higher inventory carrying costs, payment of contract penalties by shippers, payment of container detention fees, payment of demurrage for waiting vessels, risk premiums charged by downstream supply chain partners and ultimately, loss of future sales to customers.”

In the crop year to date, the coalition said, the accumulation of each week’s unfulfilled demand for hopper cars has reached nearly 24,000 cars — representing the total volume of missed and deferred shipper orders. Net unfulfilled demand now sits at 9,539 orders, the coalition added. — AGCanada.com Network

 

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