ADDRESSING recent government requirements to improve grain transportation, Canadian Pacific (CP) chief executive officer E. Hunter Harrison is calling for face-to-face, fact-based discussions to make progress on strengthening Canada's grain handling and transportation system.
A record harvest, harsh winter and competition from oil companies made grain transportation a nightmare this past winter, after which the U.S. and Canadian governments established requirements that the railway companies complete a certain amount of shipments every week. The railroad companies responded by calling for a broader look at logistics beyond just their specific area.
"We need constructive dialogue instead of the ongoing back and forth that is happening in the media among various parties," Harrison said. "CP has reached out to customers and other stakeholders, including the Western Grain Elevator Assn. (WGEA), and looks forward to further constructive dialogue in person rather than through the media. This way, stakeholders like WGEA would have a better understanding of supply chain realities and everything CP is doing to continue to move record amounts of grain."
Harrison noted that CP continues to meet or exceed the government of Canada's order-in-council that directed railways to move about 5,500 cars per week. He said CP had committed to this level of service in its open letter March 6, before the federal government order.
Additionally, Harrison said versus a five-year average, CP has moved 15% more grain from September through April. CP grain volumes from September 2013 through April 2014 were also up 10% compared to the same period last year.
After the extreme weather lifted, CP said volumes from March to April were up 11% compared to last year and were up 14% over the five-year average. Added capacity from Winnipeg, Man., to Chicago, Ill., this spring has also been supporting strong demand for Canadian grain in the U.S.
In response to suggestions that grain should have moved to the U.S. during the periods of extreme winter weather, Harrison noted that sending grain cars to a congested terminal like Chicago during this past winter would have significantly affected the supply chain's ability to move grain to the benefit of Canadian farmers.
Last year produced a record crop for the grain supply chain, and Harrison said at close to 80 million metric tons, this crop was 27% above the previous 2008-09 record and 37% above the five-year average. This amounted to an incremental 22 mmt of grain that needed to be moved to an export position, in addition to the 33-34 mmt that normally moves.
"The reality is that Canada's grain handling system is just not built to handle this record amount of grain, and CP is moving all the grain the supply chain can currently handle," Harrison said. "CP is moving grain in all available lanes, but we need to move grain to fluid outlets with strong cycle times to move as much grain as possible as quickly as possible."
Harrison added, "This is a capacity problem, and the Canadian supply chain needs to be searching for a capacity solution. Rail is only one element of the supply chain."