The grain / all commodities transportation backlog and rhetoric continues at all fronts. Many have suggested solutions, others are getting into the mix because it is the thing to do, and then there’s Ag Minister Gerry Ritz, who for all intents and purposes, is the go-to-guy, who can do something about it.
Yes, I know, there are those who think if the old paranoid Wheat Board monopoly was still around, the temperatures would be warmer, the snow melt quicker, and the grain would slide uphill to the waiting vessels at the Port of Vancouver, next to the empty grain terminals. The English Bay, where the ships normally wait to get in line to load their waiting cargo.
Curt Vossen, president of Richardson International in a candid interview tells me their country elevators are 95 per cent full, the terminals about 15 per cent, and the ships waiting back up through the English Bay to Vancouver Island. Every time a vessel waits past the scheduled pickup time, it can cost the company between 15,000 and 25,000 per day per vessel. If the company needs to extend the contract with a buyer who is waiting for that grain, it costs the company one per cent per value of that contract, per week.
The next question you may have is does that come out of the farmers’ pockets? I’m told about half of the demurrage charges and contract deferral charges will come out of the farmers’ pockets.
That isn’t the biggest issue in this matter, the big issue is grain sits on farmers yards, in plugged elevators on the Prairies, while ships wait near Vancouver to load grain that doesn’t arrive. The customer, either starts looking for other sources, Canada’s reputation as a reliable supplier taints a little more, and everyone in the farming business including the grain companies lose.
When Jim Feeny, director of public and government affairs tells me it is the fault of the cold winter, if they are to meet the 5,500 weekly car numbers mandated by the Feds, grain companies will have to do their part, Vossen isn’t amused.
“Is he saying then by implication they could have by this point in time moved the grain and it had nothing to do with weather, but people not cooperating with them,” asks Vossen. “Is he saying it never had to do with the weather?”
The J.I. president tells me it is real simple. I have elevators in the country full of grain, about 90 per cent full, general across the board for all grain companies. We have vessels waiting knee deep out in Vancouver; some waiting for well over two weeks, some moored out as far away as Vancouver Island because they are stacked up in English Bay beyond the capacity of English Bay.
Then we have terminal elevators, normally under the good old days of the CWB, would be plugged with grain right now, and probably the wrong type of grain, at 15 per cent capacity in Vancouver.
“What does that say to you? It says farmers wanting to deliver in the country, elevators in the country full, vessels waiting, terminals with unused capacity – sounds to me the problem is somewhere in the middle,” says the president of Richardson International. “Should the wheat board still be around, everything would appear to be fine because people would be so used to not shipping grain, it would be situation normal. People today, under the new system, expect the grain to move. In the old days farmers would get a three bushel an acre quota, happy when it went up to six halfway through the winter.
The CWB couldn’t put on any more influence on the railways than us. We own the facilities, we always handled the grain, we always loaded the cars, unloaded the cars, nothing has changed except the wheat board doesn’t get in between.
Before, during the CWB era, the terminals were always the bottleneck. Why, because the board would order out the grain, plug the terminals, the vessels would come in but not necessarily the sequence that matched the grain in the terminals. Today the terminals are empty, no bottleneck whatsoever.
“The problem today is these railways have made significant cutbacks to capacity, leaving no recovery capacity. They have reduced railcars, crews, and power, with the idea we (railways) want to get our operating ratios down, we want consistent movement of grain, but no surge in any of the commodities we handle,” he said.
“We want 12 months set amount of grain per month, and if we have to cut back capacity to force that consistency, that is what we’ll do, and that is what they’ve done,” said Vossen. You layer on to that a hard winter, harder than normal, no one is denying that, and you start to slip in terms of your operating capabilities, you have nothing to make up that a extra capacity.
Each railway started out last fall with a promise of 5,000 cars a week at the beginning of harvest to be able to meet the demands of the system. That lasted maybe two weeks.
It’s time Ritz and the feds move on this one, and make those railways take some responsibility and start moving more grain. •