So far this winter, grain shipments have been moving steadily to the west coast, albeit not at a record pace. That’s important to note as this year could see the second largest cereals and oilseeds movement in history.
But there is a looming concern as shipments to Prince Rupert are down by 200 cars per week, and ships awaiting loading in Vancouver have increased to 20 from the usual dozen -that’s an ominous development. All it takes is a spell of severe weather to throw the system into significant delay. Canadian Pacific reports that shipments are generally on schedule. However, Canadian National is only at 56% in allocating cars for orders, that’s worrisome. They are hiring more staff and leasing more locomotives but that will take time. One development that has all the signs of delaying grain shipments is the increase in oil tanker car shipments. That was part of the problem during the last grain shipping crisis, but has moderated over the last couple of years as energy companies cut back on rail shipments due to a collapse in oil prices. Now that oil prices have almost doubled, oil shipping by rail car has risen dramatically as that option becomes more economic to oil companies. It’s not that grain and oil shipping actually get much in the way of each other, as they generally use different shipping directions, it’s the allocation of locomotives and staff that seems to favour oil shipping over grain shipments. The suspicion is that railway companies can make more money with oil shipping, one reason being that the turnaround time is much quicker. That’s a point that grain shipping companies are trying to resolve – but it’s a slow process.
At present the turnaround time for a grain hopper car is 21 days. That’s remained static for years but is being lowered with adjustments to infrastructure and logistics. Loading and un-loading times of hopper cars is improving with the installation of loop tracks that can load and unload 100 plus unit trains almost continuously. Automated handling is also reducing the human element in the mechanical process of loading/unloading hopper cars. At ports, improvements are also speeding up the process, although some of them are agonizingly slow. One improvement involved the loading of ships during rainfalls. In the past, most ships were loaded with open cargo covers which allowed moisture in if it was raining. Ships captains and owners usually stopped the loading process in order to avoid liability for spoiled, moisture-laden grain. In rain-prone Vancouver and Prince Rupert that meant many weeks when no loading could be done due to the invariable rain delays. There was a way to avoid that by using a closed hatch and tube loading process, but there were problems with getting unionized longshoreman to work with that system. This is slowly being resolved and more loading is being done with the closed system.
Grain companies, anticipating more grain shipping, are also building new high-throughput grain terminals in Vancouver. That’s progressive, but the hold-up still remains in rail shipments. Even with improved loading logistics and infrastructure at prairie grain elevators, capacity needs to almost double to keep up with expanding production and shipping. An answer has come to increase rail shipping capacity by at least 20% and it involves the grain hopper car itself. The existing hopper car fleet is made up of a couple similar designs that are a familiar sight across western Canada. Those cars are nearing the end of their mechanical life. New hopper cars are in the works that are shorter but taller and can hold either the same tonnage per car or more. The improvement comes in the ability of railways to haul more cars with a total of more tonnage in 150-car grain unit trains. Add into that continuous loading/unloading with loop tracks and one can foresee that along with increased tonnage, turnaround times could be reduced to less than 2 weeks. That would be a significant boost to grain volumes being shipped to the coast.
But, and there is a but – the total grain hopper car fleet is not expected to be fully replaced until the late 2020’s and then there is the question of who will finance that replacement – I expect grain growers will pay one way or another. Yes, improvements are coming to grain shipping, but it will be incremental and frustratingly slow. With the improved yields of hybrid wheat on the horizon any increased grain shipping will be just in time.