Unintended Consequences of Government Mandates
VANCOUVER Feb 17/15 - SNS -- The biggest issue facing exporters is the unwillingness of Canadian railways to supply cars for movement to the United States and Mexico, according to data contained in the latest transportation review by the Ag Transport Coalition.
The problem stems from the decision by the Canadian government to mandate that Canada's two railways handle a minimum number of cars of grain per week or face fines. When the movement mandates were created in March of 2014, STAT noted, "The order more than doubles the volume of grain currently being moved, but does not address the overall logistics of export grain movement."
Among the unintended consequences has been neglect of small shippers and disinterest in servicing markets in the United States and Mexico. Similarly, the railways have shown less interest in giving cars for container loading facilities in Vancouver.
This is not surprising given that it is easier for railways to meet minimum movement targets by focusing attention on shippers capable of handling 100 car spots destined for a single export grain terminal in Vancouver or Thunder Bay.
Since the start of the marketing year the railways have supplied 91% of all cars ordered for movement to Vancouver and 96% of cars ordered for movement to Thunder Bay. By contrast, the railways have only supplied 74% of all cars requested for shipment to the United States and Mexico and 57% of all cars requested for movement to transloading facilities in Vancouver. Canadian domestic markets have been better serviced, with the railways supplying 91% of all cars ordered.
It is important to note that unfulfilled shipper demand includes "orders that have been denied or cancelled by the railways based on car ordering rules imposed on shippers during the current grain year," says the Ag Transport Coalition. "Supply of railcars reflects total cars supplied excluding cars rejected by shippers as unsuitable for loading due to mechanical or sanitary reasons."
Movement Through Week 25
So far during the 2014-15 marketing year, Canada's two major railways -- CN and CP -- have supplied 44% of customer orders in the week for which cars were ordered, with CN supplying 57%, and CP 31%.
Through the first 25 weeks of the current crop year, railways have failed to supply 18,403 hopper cars ordered by shippers, or roughly 10% of all cars ordered by grain, oilseed and specialty crop shippers. Significantly, more than 6,400 customer orders have been outstanding for four weeks or longer.
For the week ending January 25, the two railways only supplied 31%, or 2,352 of the 7,588 hopper cars ordered for delivery.
Canada's railways are emphasizing movement to port terminals, with the result shipments to the United States, Mexico, Vancouver transloading facilities and Canadian domestic customers are falling further behind. During week 25, CN fulfilled approximately 56% of orders in these non-bulk corridors and CP supplied 6%.
The Ag Transport Coalition report also looked at how long it takes to load and unload railcars. So far this marketing year, 34% of all bulk grain shipments have waited for more than 48 hours at origin for pick up by the railways after being released by shippers for movement to destination. Roughly 29% of shipments were picked up within 24 hours.
During the week under review, CN's loaded dwell times for multicar block traffic at country origin locations averaged 32 hours while CP's loaded dwell times averaged 65 hours. CN's loaded dwell time is well below its average of 40 hours this crop year. CP's loaded dwell time in Grain Week 24 is longer than their average of 60 hours for the crop year to date.
In the ports, CN saw dwell times of 42 hours at Thunder Bay, 19 at Vancouver bulk terminals, and 22 hours at transload/local facilities in Vancouver. CP experienced dwell times of 29 hours in Thunder Bay, 20 at bulk terminals in Vancouver, and 50 hours at transload/local facilities.
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