Maumee, Ohio-based Andersons sold its rail leasing business this week to American Industrial Transport Inc. It also aims to sell its railcar repair business within the next year, Bowe said.

The divestments represent a shift in focus at the 74-year-old company, which was looking to expand its rail business as recently as five years ago as grain trading profits slumped.

Grain trading profits have since rebounded as agribusinesses capitalized on supply chain disruptions during the U.S.-China trade war and the coronavirus pandemic. The Andersons’ larger rivals, including ADM and Cargill, have seen earnings surge this year.

“We’re committed to the ag side of our business… We feel we can make higher returns for our shareholders in those spaces than we were in rail,” Bowe said in an interview with Reuters.

The company will pay down debt, which swelled with its 2018 acquisition of U.S. grain handler Lansing Trade Group.

“We want to get to our normalized 2.5-times debt to adjusted EBITDA ratio. We were on our way to achieve that. Now we’ll achieve it sooner,” Bowe said.

The Andersons — whose Canadian assets so far include the former Thompsons grain business in Ontario, three elevators in northeastern Saskatchewan and one in southern Manitoba — is also eyeing investments to grow its renewable fuels and specialty food businesses, he said.

It also aims to capitalize on growing trends such as sustainable farming, agricultural carbon trading and plant-based protein, he added.

“We’re not going to buy a beef slaughter facility or a soybean crush plant… It’s about everything in the middle.”

Initial moves include supplying more agricultural oils to renewable diesel producers, including The Andersons’ ethanol venture partner Marathon Petroleum Corp., Bowe said.

Other investments will focus on organic fertilizers and plant nutrient products that help crops sequester more carbon in soils, he said.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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Canadian National Railway (CN) reported Monday it had shipped 7.76 million tonnes of grain by rail, and Canadian Pacific Railway (CP) said Friday it had moved 7.72 million tonnes.

For CN that not only marked a Q3 record, but also the seventh-consecutive month of record grain shipments, the company said in a release, including 2.43 million tonnes in August and 2.81 million tonnes in September.

“Grain demand is enabling the return to active employment of many of our people,” CN CEO J.J. Ruest said, also noting the railway’s addition of 1,500 new “locally-built, high-capacity grain cars.”

Rival CP said in achieving its record Q3 grain movements, it transported a record amount of grain in September as well, at 2.8 million tonnes.

“The CP team showed itself ready for this fall’s harvest, supporting customers and their supply chains to get grain moving off the combine and to market,” Joan Hardy, CP’s vice-president of sales and marketing for grain and fertilizers, said in that company’s release Friday.

CP said its 3,200 additional high-capacity rail cars can haul 15 per cent more volume and 10 per cent more weight than previous models, adding that its 8,500-foot trains carry 40 per cent more grain than its previous 7,000-foot trains with the older, smaller cars.

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The Teamsters Canada Rail Conference (TCRC), whose CTY arm represents about 3,000 unionized CN staff, announced late Monday its members would stop work at 12:01 a.m. ET Tuesday.

“Unfortunately, we were unable to reach a deal with CN,” the TCRC said late Monday on its website. “The company remains unwilling to address our members’ heath and safety issues.”

A work stoppage would bring CN’s operations to a halt but would not affect public transportation, the TCRC said Saturday.

Federal Labour Minister Patty Hajdu, in a statement Tuesday morning after the strike began, said she and Transport Minister Marc Garneau were “monitoring the situation closely” and “urge both parties to continue their negotiations.”

At least two Prairie grain grower groups are already calling on Hajdu and Garneau to “be prepared to intervene” in the event of a strike.

Alberta’s wheat and barley grower commissions, in a joint statement Monday, warned that “even a disruption of a few days” in grain traffic “will cause a massive backlog and economic losses that are ultimately borne by farmers.”

CN, the commissions said, delivers up to 5,650 rail cars per week to Canadian elevators, representing over half a million tonnes of grain. “If those cars are not supplied, farmers can’t deliver and are not paid.”

“There are a lot of farmers who already have a significant amount of their income trapped under snow,” Alberta Wheat Commission chair Gary Stanford, who farms at Magrath, south of Lethbridge, said Monday.

“That means that for the grain we did manage to harvest, we won’t be paid at least until service resumes.”

The Canadian Propane Association on Monday also cautioned that its members have “dealt with wet weather during the fall drying crop seasons and challenging winters that have included backlogs throughout much of the country.”

Farmers in the U.S. Midwest, many of whom also rely on propane to fuel grain dryers and are also facing a cold, wet harvest season, were already facing supply bottlenecks this fall in the weeks before the CN strike began.

“While we are hopeful that this year will be manageable, we once again are facing challenging weather conditions during crop drying season, particularly in Saskatchewan, Alberta and Manitoba,” CPA board chair Dan Kelly said in a letter to Garneau dated Friday.

Further east, Grain Farmers of Ontario on Tuesday also pressed Garneau and Hajdu to “be more proactive in bringing this dispute to an end,” also citing Ontario growers’ reliance on propane to dry grain.

“We are still seeing the majority of corn in the fields and harvest is progressing incredibly slowly,” GFO chair Markus Haerle said in a separate release. “The corn being harvested is very wet and will require extensive drying to be viable, which requires the use of propane and our access is now cut off.”

The government, Haerle said, “must understand that we had already anticipated needing twice as much propane this year as a normal year.”

The option of federal back-to-work legislation — as sought by another farm group, the Western Canadian Wheat Growers, in a separate release Tuesday — wasn’t mentioned in Hajdu’s statement. Rather, she reiterated Tuesday, the government “supports and has faith in the collective bargaining process.”

The government, she said, “understands the importance of the rail industry and its workers to the Canadian economy. While we are concerned about the impact of a work stoppage on Canadians, we remain hopeful (the company and union) will reach an agreement.”

‘One hand’

The TCRC said Saturday wages were “not a major sticking point” in talks with CN, compared to working conditions.

“CN currently requires TCRC members to operate trains alone from outside of the locomotive, hanging on to moving trains with one hand while operating a remotely controlled locomotive with the other,” the union said. “Railroaders are expected to do this in rain and in freezing temperatures, sometimes for distances of up to about 17 miles.”

CN, the Teamsters said, “has refused to come to a satisfactory agreement at the negotiations table to adjust their operating practices in the interest of safety.”

CN, which recently announced significant layoffs in Canada and the U.S., “wants to make it more difficult to take time off and make employees work longer hours, in an attempt to get more work done with fewer people and to reduce staffing levels,” the union said.

The company is also seeking a lifetime cap on prescription drug coverage for union members and their families, the Teamsters said. — Glacier FarmMedia Network

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“That’s largely because the flow of grain is predominantly to the West Coast and Thunder Bay,” said Quorum president Mark Hemmes.

About 80 per cent of Canadian grain is exported through Vancouver and Prince Rupert, B.C. and Thunder Bay, Ont., he said, and “the other 20 is going either to Eastern Canada or down into the United States.”

However, Hemmes acknowledged a possibility that increased oil traffic could adversely affect grain shipments to the U.S.

“The oil is looking to go predominantly to the Gulf Coast, some goes into the Midwest and a little bit goes to the East Coast,” he said.

Should oil shipments begin to turn toward Canada’s West Coast, that could pose problems.

“Right now I don’t think that’s in the cards, but who knows with 7,000 cars added. Given that Alberta oil is trading at a less-than-optimum level, some people may see that as a cheap alternative to buying more expensive product elsewhere. But right now, it’s not a concern.”

As part of the Alberta government’s plan to assist its struggling oil industry, the government is acquiring 7,000 rail cars, along with a sufficient number of locomotives to transport 120,000 barrels of crude oil per day.

Grain shipments have largely been very good so far this winter, Hemmes said, although Canadian Pacific Railway had a couple of delays.

“They had a derailment in the Macdonald tunnel and pretty heavy snowfall through the Rockies and to the Cascades. So they had some delays for about a week,” he said, but noted CP has recovered.

“Other than that, knock on wood, things have been really good this winter.”

Vancouver’s bout with rain of late has slowed the loading of grain onto vessels, but hasn’t posed any major problems, according to Hemmes.

“(It’s) been quite a few years since any terminal in Vancouver has gotten so full of grain that they could not unload rail cars,” he said.

— Glen Hallick writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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The added capacity and dedicated service would also ensure grain and other agricultural products “would not be affected by having to compete for space on existing trains,” the province said in a release.

Notley, who says the cars are needed to help deal with stranded oil that has slashed the price of Alberta oil, told a business audience she was disappointed that the federal government was not helping fund the purchase.

Reuters revealed last week that Alberta had proposed a joint purchase of two unit trains and estimated the one-time capital cost at about $350 million. Federal officials are cool to the idea, saying by the time the cars come on line late next year the supply problems will have eased.

The 120,000 bpd of rail capacity is nearly equal to the current amount of stranded supply.

“Alberta will buy the rail cars ourselves to move this oil… we have already engaged a third-party to negotiate and work is well underway. We anticipate conclusion of the deal within weeks,” Notley said in the prepared text of her speech.

The province said Wednesday it can’t release financial details of the rail investment “while negotiations are underway.” The first rail cars from the deal are expected to start moving oil in late 2019.

Notley said last week that the province was willing to buy the train by itself if Ottawa doesn’t back the province’s proposal to split the costs.

Notley, who reiterated her demand for more pipeline capacity, said the cost of buying the cars would be fully recouped through royalties and the selling of shipping capacity.

The Alberta premier said there was “no excuse” for Ottawa not helping and castigated the government of Prime Minister Justin Trudeau for proposing tougher environmental standards she said would make it harder than ever to build pipelines.

The glut “is happening because Canada willfully holds Alberta’s economy and Canada’s economy hostage,” she said, estimating the losses at $80 million a day.

Ottawa denies it is being unhelpful, noting that earlier this year it bought the Trans Mountain pipeline.

Several Canadian crude producers have curtailed production and asked Alberta to mandate cuts for other producers. Notley did not mention this idea in her speech.

Last week Finance Minister Bill Morneau said businesses would be allowed to write off additional capital investments, a measure he said oil industry executives had pressed for.

— David Ljunggren is Reuters’ political correspondent in Ottawa. Includes files from Glacier FarmMedia staff.

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Representatives from the Canadian Federation of Agriculture, Grain Growers of Canada, Keystone Agricultural Producers, Agricultural Producers Association of Saskatchewan, Alberta Federation of Agriculture and B.C. Agriculture Council went public with a “unified message” for “urgent action” by Parliament to pass Bill C-49.

Introduced in the Commons last May by Transport Minister Marc Garneau, C-49, the Transportation Modernization Act, passed third reading in the Commons in November and has been parked at second reading in the Senate since December, when it was referred to the Senate standing committee on transport.

The bill imposes data-reporting requirements on railways, sets up rules for long-haul interswitching between railways and allows shippers to seek “reciprocal” financial penalties in their service agreements with railways.

The groups warned Thursday that the major railways’ shipping performance has been “steadily deteriorating over the winter months,” noting Canadian National Railway (CN), during the week of Feb. 11, “only supplied 17 per cent of rail cars ordered by grain companies.”

The GGC, in a separate release Monday, cited data from the Ag Transport Coalition, showing CN and Canadian Pacific Railway’s (CP) car order fulfillment at 38 per cent of demand during grain week 29, the week of Feb. 12.

“The majority of farmers are restricted to only one available rail company for shipments, leaving them no options other than to watch while their grain sits unsold,” the groups said Thursday.

“Despite assurances that they were prepared, railways seem to be caught off guard by cold weather,” GGC president Jeff Nielsen said Monday.

“Once again railways are proving that they can’t be trusted to move our grain and proving why the grain industry needs tools to be able to hold the railways to account, or at least to be able to take our business to another railway.”

Extended interswitching, introduced in 2013, allows shippers to get a competing railway to haul their load if it’s within 160 km of an interchange with that railway. C-49’s provisions for “long-haul” interswitching would allow for distances up to 1,200 km, or 50 per cent of the total haul in Canada, whichever is greater.

“No other sector would stand for the poor service that the grain industry receives,” Art Enns, GGC’s vice-president, said Monday. “But no other sector is at the mercy of the railways the way the grain industry is.

“What’s worse is that the railways continue to penalize the grain industry when there is a slippage in performance, but there is nothing we can do when the railways only show up a third of the time they’re needed.”

The groups noted the Senate is now “considering amendments to the bill that will make it more meaningful,” but said farmers now “need the Senate to complete this review quickly so that the legislation can be moved through the House and implemented before spring seeding begins.”

The current lack of grain movement, they said, “is putting hard working farm families in a position where seed, fuel and fertilizer bills must go unpaid and where they do not know if they can make rent and mortgage payments.”

“We have to get this legislation,” APAS president Todd Lewis told the Senate transport committee on Feb. 14. “Sure, it has some wrinkles and some warts to it, but overall we need to see this bill passed so that we can get on with negotiations and try to get a better system.”

APAS members, he said, “are saying, ‘Let’s get on with it so we can start negotiating with grain companies, see how these new measures are going to affect our service and hope it improves.'” — AGCanada.com Network

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“Spring is coming up, farmers need cash flow and we don’t get cash flow if your grain is sitting in a bin waiting for a train to show up,” said Todd Lewis, president of the Agricultural Producers Association of Saskatchewan.

According to the Ag Transport Coalition, Canadian National Railway (CN) delivered just 17 per cent of the rail cars that shippers ordered during the week of Feb. 12. CN and Canadian Pacific Railway together fulfilled 38 per cent of demand during the same week.

Many Saskatchewan producers have had disappointing rail service the whole crop season and have been forced to look for bridge financing to pay the bills, Lewis said.

In an emailed response, CN said it had the second highest volume of grain movement for the month of January on record. The company added it can move 4,000 cars of Canadian grain per week. Through this winter, CN said it was averaging 3,973; in February, its average was 3,016.

Grain Growers of Canada president Jeff Nielsen said he wants to see better mechanisms in place to hold the railways accountable.

The passing of Bill C-49, the Transportation Modernization Act, which would allow grain shippers to impose reciprocal penalties, would be a good start, he said.

“We haul the grain and get it into place and then the train doesn’t show up,” he said. “It backlogs the grain handler when they’re expecting to have a train on time so they can ship it out and meet their grain demands on the West Coast.”

The timing is especially poor because now is when producers need to start getting their inputs in place, Lewis said.

“Even if you can find a spot to sell it, you might not be able to deliver it for a number of weeks because of the lack of capacity of the railroads; elevators are full in the countryside,” he explained.

Many farmers forward contract their grain, he added, which means it has to be picked up in a timely fashion.

He expected the situation will improve by April or May, but points out that is when farmers are busy trying to get a crop into the ground.

“Winter time is the most efficient time to move it.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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“I think there’s a real shift happening from low efficiency to the higher-efficiency facilities,” Karl Gerrand, CEO of G3, said Wednesday during the What will the Canadian grain industry look like in 10 years? panel.

Almost 3,000 elevators dotted the Prairies in the 1980s, compared to just under 350 today, as elevators become larger and more efficient.

According to Gerrand, facilities being built in Canada are now large loop systems that can handle more train cars.

“The loop tracks that we’re putting on our new facilities will load grain actually in about just under eight hours, a full 134-car train,” he said.

Some older facilities can only handle under 100 cars and don’t feature loop systems, which make for longer loading times.

It’s not just the size of elevators that have increased, he said, but also the amount of on-farm storage space.

Canadian farmers have added 15 million tonnes to their storage, he said, “bringing it to about 70 million metric tonnes. Commercial storage, on the other hand, is in that seven- to eight-million-metric-tonne range.”

The rail cars used to transport grain are also changing. Out of about 23,000 hopper cars in Canada, 10,000 are owned by the federal government and are reaching the end of their life expectancies.

According to David Przednowek, director of grain marketing for CN, the government cars will be out of use by 2025-26 and aren’t expected to be replaced.

“The model is very efficient in terms of private cars but there are definitely (changes) that we’re going to see over time and the proportion of private cars in western Canada will increase,” he said.

The type of grain cars we see travelling on the tracks will also change; according to Przednowek, hopper cars of the future will be higher in capacity, shorter in length.

“The more capacity for the more tonnes that we can ship by using individual trains (makes for) a lot more efficient supply chain,” he said.

According to Gerrand those trains will be able to cut down shipping time for more efficiencies. Trains will be in the 134- to 150-car range and will haul 20 per cent more grain.

The cycle time from farm to elevator to port and back “has typically been in that 20-day range and that’s back in 2015. Of late we’ve been moving more towards the 14-day range.”

G3 is also now building a new Vancouver port terminal which, according to Gerrand, will allow it to cut that cycle time to seven days.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.

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The province, in its March budget, announced a request for offer (RFO) for the Saskatchewan Grain Car Corporation’s (SGCC) fleet of rail cars as it winds down that operation.

The province said it would give “first priority” to Saskatchewan’s 13 commercial shortline railways and has since accepted three offers.

Regina-based Big Sky Railway — which operates 402 km of track from Saskatoon out to Laporte, Sask., southwest of Kindersley — will get 663 of SGCC’s 898 remaining cars, the province said Wednesday.

Shaunavon-based Great Western Railway, which operates almost 500 km of track in the province’s southwest, will buy 150 cars, while Leader-based Great Sandhills Railway, which operates almost 200 km of track in the same region, will buy 85 cars.

Terms of the deals for each of the buyers weren’t disclosed Wednesday, though the province said it would sell the cars for a total of $9.7 million, or $10,800 per car on average.

The deals are expected to close in the next two to three months, the province said in a release Wednesday.

An evaluation committee, with members from SGCC and the provincial highways ministry along with a consultant, “fairness advisor” and legal counsel, reviewed all offers, the province noted.

SGCC was set up as a provincial Crown corporation to manage a fleet of 1,000 hopper cars for which the province paid $55 million as a “strategic investment” in 1981.

In fiscal 2015-16, SGCC reported $2.66 million in revenue, which it billed as a new record for the corporation. Of its 900 cars at the time, 485 had been leased to Canadian Pacific Railway and 415 to Last Mountain Railway, an affiliate of Big Sky Railway.

About 100 of the original fleet’s 1,000 cars have been deemed damaged beyond economic repair and destroyed, SGCC said. In 2015-16, it ran 85 random mechanical inspections on cars from its fleet, finding 20 in “good” condition, 58 rated “average” and three “poor.”

Under Association of American Railroads rules, the province said in March, rail cars can be interchanged between railways for up to 50 years, meaning SGCC’s cars have about 14 years of service life left.

Given the cars’ remaining service life, “the fleet still has value in the industry,” Dave Marit, the provincial minister for SGCC, said in Wednesday’s release.

“Selling the cars to our shortlines means they will continue to move commodities grown by Saskatchewan producers.”

The replacement cost for SGCC’s original fleet of 1,000 cars was estimated in March to run around $100 million. — AGCanada.com Network

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For the moment, however, Prairie grain movement has dropped to seasonal lows.

This year’s pulse area will likely be the largest on record, according to early estimates from Agriculture and Agri-Food Canada.

Special crop-seeded area is expected to see a marginal increase from year-ago levels, according to Statistics Canada data.

Generally, pulse and special crops move early in the year, said Greg Northey, director of industry relations at Pulse Canada.

Pulses and special crops are usually exported around September to December, especially as the transportation industry expects strong forward-contract and new-crop sales.

“We’re very curious to see how the railway sets its capacity for what is projected to be quite a large demand for those pulses and special crops,” Northey said.

Grain production projections are as high as 70 million or 75 million tonnes, said Wade Sobkowich, executive director at the Western Grain Elevator Association, while carryout is estimated in the six million- to eight million-tonne range.

“We’re looking at a large crop, if everything goes well, and we’re going to have to make sure we’re ready for it,” he said.

Communication about the size of production is key to making sure the season goes smoothly, he said.

The current seasonal low in grain handling is seen as likely to continue throughout June, July and August as car orders from the industry decrease and stocks move lower.

The most recent report from the Ag Transport Coalition — of which Pulse Canada is a member — shows weaker grain car demand, down by about 1,000 cars compared with the previous week.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

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