Canada - CP and CN are promising 6,000 and 7,100 hopper cars a week, respectively, during peak demand to handle requests, but Wade Sobkowich,

Here we go again...

executive director for the Western Grain Elevator Association, said they have seen these promises before and watched as they fell through.
 
"The plans are fine in terms of the numbers the railways put out, the problem is that based on our experience, the railways don't meet the numbers. The issue isn't necessarily the numbers. The issue is, are the railways going to meet those numbers? And if they don't, what's the consequence?" he said.
 
Sobkowich points to last year's crop, which was reduced by about 40 percent due to the drought.
 
In the week ending 13 Feb 2021 elevators called for 1,729 cars from CP and 1,240 cars from CN, respectively, and they only managed 950 and 550, this despite promising 4,350 and 5,350 cars a week.
 
There were complicating factors, including a wave of COVID that hammered the rail workforce, but Tom Steve, general manager for the Alberta Wheat and Barley Commissions, said this is not an isolated incident.
 
They have had four major system fails in the last nine years.
 
The railways have been hit hard by issues largely out of their control in recent years like the pandemic, historic rains that washed out tracks in B.C., wildfires, floods, heavy snow, and protesters blockading infrastructure.
 
They have made efforts to address some of these issues, including CP building three bridges over gullies adjacent to the Thompson River in B.C. where there is an increased risk of debris flow.
 
The railways have also set new targets for boosting their labour force to ensure they have enough people to run the trains.
 
Both railways have made investments in high-efficiency hopper cars in recent years, which will increase the amount of grain they can ship on each train.
 
For CP it has been a $500 million investment which will push their total acquisition of new cars to 7,300 for this year.
 
CN's fleet of the shorter but wider cars will be at 6,000, with a total fleet of 11,600 grain hopper cars focused on Western Canada.
 
"CP is well-positioned to meet the transportation needs of our grain customers and the broader Canadian economy during the 2022–2023 crop year," said the railway in an emailed statement.
 
Previous backlogs led to a requirement in Bill C49 in 2018 for the railways to submit detailed plans for shipping grain by the end of July.
 
They have done this, but Sobkowich said they still lack detail on how they are going to ensure the additional train cars are where they are needed and when.
 
CP is also still in the process of acquiring the Kansas City Southern railway, which will give them access all of the way to ports in the Gulf of Mexico.
 
15 Sep 2022 marked one year since the Calgary-based railway out-duelled CN in the takeover.
 
KCS is currently being held in a trust until the deal is completed, which is expected to be in the first quarter of 2023.
 
It is not just farmers pushing for more out of the infrastructure, with the oil and gas sector's reliance on the railways growing, and increased global trade and e-commerce demand skyrocketing over the last few years.
 
To help address this, the federal government created a Supply Chain Task Force, naming an eight-member team in March.
 
They concluded engagement at the end of July and will provide a report to Ottawa outlining the issues and supplying recommendations this fall.
 
"Global supply chains continue to be under pressure from the COVID pandemic, growing impacts of climate change, and from the Ukraine-Russia conflict, with multiple system shocks having adversely impacted system performance," said a spokesperson for Transport Canada in an email.
 
"In Canada, we are seeing continued improvement in the handling of bottleneck pressures stemming from the pandemic and the extreme weather events in British Columbia. Grain performance is being closely monitored at all points in the supply chain to support timely delivery to markets."
 
The execution of these grain plans is critical, and according to Steve is arguably more important this year than during previous harvests.
 
Many producers barely scraped through the 2021-2022 growing cycle and this year they have been hit with what is widely accepted as the most expensive crop in Canadian history due to the rising cost of inputs like fertilizer, transportation, and fuel.
 
There is also a growing global demand for food, exacerbated by the war in Ukraine and weather events around the world.
 
According to the Canadian Agri-food Trade Alliance, Canada exports 75 percent of the wheat and 90 percent of the canola it grows.
 
If there are backlogs that delay the delivery of grain to port, customers will look to new markets to fulfill their needs.
 
This creates bottlenecks along the entire line, if trains are not picking up grain from elevators, farmers cannot deliver their harvest to the elevators, and no one gets paid, including farm suppliers.
 
There are also penalties if the grain does not show up at port when contracted.
 
In the end, this will lead to a reduced price for the commodity, which is a tough pill for producers to swallow coming off the expense of this year.
 
"If we can't deliver on time, and we make a sale into the new year as opposed to at the time of peak demand, there's likely going to be a lower offer for that grain," said Steve.
 
"Timing is everything in this business because different producing regions in the world have different crops coming to market at different times and ours is that October/November period, and that's when the grain companies are looking to maximize their movement."
 
The most recent Alberta Crop Report from 13 Sep 2022 noted about 59 percent of all crops had been combined, of the five and 10 year averages of 36 percent.
 
Another 17 percent of crops had been swathed while 24 percent was still standing.
 
The south is ahead of the rest of Alberta with 74.2 percent of major crops combined.
 
The quality is also looking good for the region, particularly for wheat and canola coming in at above the five-year average.
 
"Generally, I think farmers are much happier with their prospects this year than they were last year," said Steve.
 
"An early harvest, like the one that we're experiencing, also bodes well for the quality of the crop."
 
Josh Aldrich.