It was a cold and rainy day — a gloomy but an apt setting for producers and grain industry officials touring the Port of Vancouver and witnessing the backlog of ships anchored in Burrard Inlet.
The ships were barely visible in the fog for tour attendees, delegates to the Canadian Crops Convention held here earlier this month. And they were just a fraction of the dozens anchored in moorage spots along the West Coast — idled because of rail disruptions caused by blockades as well as mudslides and a railway strike earlier this winter, said Doug Mills, the senior account rep for trade development with the Vancouver Fraser Port Authority.
“We have experienced bottlenecks in the past,” he said in an interview. “I can tell you that basically we are at levels that we haven’t seen before. The impacts are not certainly noticeable here — they are noticed off Vancouver Island and the Gulf Islands. Non-traditional spots are being used for anchorages, because we are fuller… We may even have to turn vessels away to open sea and have them come back because there is no place for them to anchor.”
Federal grain monitor Mark Hemmes can provide numbers on the grain backlog — “around 1.2 million to 1.3 million tonnes behind where we were at the same period last year” was his estimate at the start of the month.
“While the blockades were going on, we were calculating (the costs) somewhere around $9 million a day,” Hemmes said in a Feb. 28 interview. “We’re well over $150 million, probably approaching $200 million (that) it’s cost the agricultural industry. That’s comprised of a mix of things from lost sales, to the cost of deferring sales to a period where prices are expected to be lower, plus the whole demurrage costs, which are really ramping up, and contract penalties, which are also mounting.”
Estimating how long it will take to clear that backlog is much harder to quantify.
“I don’t think there’s anybody in the system today who would tell you when things are going to get back to normal,” said Hemmes, president of Quorum Corporation.
“We’re not in great shape right now. The other part is that the elevator network in the country is already getting full because the railways are challenged at every turn. I think we’re talking quite a few weeks before we get back to moving stuff as normal, and then we’ll have quite a backlog to try and catch up with, probably well into the summer.”
Mills was similarly cautious on estimating what the final tally might be.
“I don’t think we can quantify what the damage is,” he said. “We have some measurements such as direct vessels at anchor, such as the number of train time delays at rail cars. But in terms of long-term impacts, I don’t think you can measure it. There’s definitely a component there that is lost sales due to confidence.”
Buyers of Canadian grain have taken notice and some are looking elsewhere for more reliable suppliers, said Tom Steve, general manager of Alberta Wheat and Alberta Barley.
“We’re hearing more about that from Asia, that some of our major customers are talking to the grain companies and the government of Canada about diverting their purchases to other countries,” said Steve.
“I can’t speak for all commodities. But I know in wheat, that’s what we’re hearing from countries like Indonesia, which buys up to 2.5 million tonnes of wheat a year. If they were to start looking to other sources for their wheat, that’s not a good sign for Canadian farmers.”
Of course, it’s not just grain movement that’s been affected — other commodities and container traffic (both inbound and outbound) are also in the growing lineup for rail service.
“We do know that in terms of rail capacity, every day that they are out, it takes three days to recover,” said Mills. “So the numbers of days that we’ve seen impacted are leading us months out. There’s a significant recovery that is going to take place.”
Months is the measure for getting rail and ship schedules back on track. On the reputation front, it could be considerably longer.
“The concern is that the activities that occur here — which include the trade issues, which include the other issues such as the rail strike, such as the yearly issues we run into such as slides, such as derailments,” said Mills. “We had a combination of them in succession and the impacts of those could be felt over a number of years.”
The Prairie grain system has seen major upgrades in recent years with grain companies building fast-loading elevators with continuous-loop tracks and railways buying new larger hopper cars. But that bigger, fatter pipeline only takes you so far, noted Steve.
“We rely on a high-volume, high-velocity system,” he said. “We’re moving grain in 100-plus car trains. If they’re delayed for any amount of time, it just backs up the whole system.”
“Ninety-five per cent or more of our grain has to move by rail, and they’re doing the best they can,” added Hemmes. “It’s got to get back into synch. You have to have a balanced flow of empties and loads between the port and the country and right now, that is totally out of synch.”
But the situation shouldn’t be blamed entirely on the blockades, he said.
“It’s a mixed bag of problems,” he said. “I’ve been doing this for over 40 years and I’ve never seen a stretch of misfortune which we’ve seen this year. This is absolutely an anomaly that has every body in the trade — from the guys running the train to the grain producers to the (grain) companies to the ports, certainly the steamship lines — they’re all ripping their hair out about it.”