CALGARY — The onus for improving grain transportation in Canada is not just on the railways, but will require investment from the “bookends” of the system — the elevators that load the grain and the ports that put it on ships, according to the head of Canadian Pacific Railway Ltd.
“How do we create capacity in the grain franchise where you’re bumping up against bookends that we don’t own and we don’t control?” CEO Keith Creel said at the company’s annual general meeting Thursday.
CP Rail and Canadian National have blamed severe winter weather and a larger-than-expected grain crop for a backlog in grain shipments that have hit their profits and left grain farmers complaining about their service. The federal government has introduced a bill that would impose financial penalties to try to get grain moving again as farmers enter the spring planting season.
CP has since made trains longer to carry more grain, turning the old standard of 112 cars into the “gold standard” of 134 cars in a typical grain train, Creel said.
“In lockstep, we’re working with grain companies to encourage and work with them so they invest in the bookends, so that we have the capacity to unload that 134-car train quickly on the West Coast, quickly in Thunder Bay, and conversely loading quickly out on the Prairies.”
But grain-handling companies aren’t interested in sharing the blame for backlogs on the rails, said Wade Sobkowich, executive director of the Western Grain Elevator Association. Problems with moving grain that came to a head last winter are clearly the responsibility of the railroads, he added.
“It really is an attempt to share the blame among all system participants when really the problem is one of accountability on the part of the railway,” Sobkowich said, adding he’s heard similar comments before from railways.
His association represents 340 elevators that collect grain from farmers as well as unloading facilities at the main exporting ports of Vancouver, Prince Rupert and Thunder Bay.
“In Vancouver, for example, we have the capacity to unload 700,000 tonnes of grain per week — and in the country elevator system we have the capacity to load two million tonnes per week, that’s going in all directions,” he said.
“But the railways don’t provide a combined total of 700,000 tonnes to Vancouver a week.”
He said the elevators face financial penalties if they don’t load or unload trains fast enough but the railways don’t, an issue he said the passage of federal Bill C-49 will help to address.
The sweeping transport bill has been delayed as Parliament considers amendments from the Senate. It would give a federal agency powers to investigate and prevent grain-shipping bottlenecks and allow shippers access to more competitive shipping routes, known as interswitching.
Grain farmers want to have the new rules in place by August so there can be some certainty on the rails at the outset of the next shipping season.
Creel said Thursday he believes the bill will pass and declared that his railway will be ready for it.
He said the grain transport system could experience a 20 to 30 per cent boost in efficiency as long as the railway’s capacity increases are matched by the grain handlers.
Creel didn’t talk about CN’s ongoing union woes.
CP Rail conductors and engineers represented by Teamsters Canada Rail Conference are to vote on the railway’s final offer next week, a vote ordered by the federal labour minister in April to head off a strike.
On Thursday, the union said it had no update on the situation — it has previously advised members to vote against the offer.
CP Rail said early Thursday it is raising its quarterly dividend by 15.5 per cent.
Creel’s comment were made on a webcast from the event. The media was excluded so that the meeting could “focus on shareholders,” a spokeswoman said, adding Creel would not be available for interviews later Thursday.