Glacier FarmMedia – At the midway point of the 2023–24 shipping year, grain shipments are moving at a good clip.
“In the last 12 to 18 months, we’ve seen some really good performance from both of the railroads,” said Mark Hemmes, president of Quorum Corporation, Canada’s grain monitor. “The exception was the last four or five weeks, and that was largely driven by the huge cold spell that came in right after the new year.”
It was especially frosty in Saskatchewan and Alberta, where the cold spell lasted a full two weeks and temperatures dipped as low as -50 C.
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“The railways have a really hard time moving traffic when it comes to cold weather,” said Hemmes.
But while that cold snap had a temporary effect on the movement of grain, Hemmes said the railways did a solid job of dealing with it.
“It was a really good recovery. We were thinking that it was going to take them a month to get back into shape. But it was maybe two or three weeks, and they were back up to running in pretty good fashion.”
Hemmes said the railways have made improvements in recent years, but the smooth sailing this year is largely attributable to a smaller crop. According to Quorum’s January report, primary-elevator shipments were 24.6 million tonnes in the first half of the 2023–24 crop year, 8.2 per cent less than in the previous year. Wheat and canola at 71.6 per cent continued to make up most of that total.
“It’s a little easier on the railways, I think. That’s been really helpful to them to be able to move things as well as they have, even during that extreme cold weather,” said Hemmes.
Little hiccups
Wade Sobkowich, executive director of the Western Grain Elevator Association, had a similar assessment of the railways’ performance.
“It’s been going relatively smoothly. At a high level, we’ve been getting the capacity, and sometimes more than the capacity, than we’ve needed.”
This was despite the fact that the overall hopper car fleet declined slightly to an average of 21,867 cars through the first half of the crop year, 0.6 per cent less than in 2022–23.
“We had a period of time where service at the North Shore of Vancouver was problematic, but it doesn’t seem to be as bad now as it was maybe a month ago,” said Sobkowich. “There have been little hiccups here and there that you always see, but nothing newsworthy whatsoever.”
Hemmes said he has been asked if volumes were light because producers were holding back in hopes that grain prices would improve, but he hasn’t seen evidence of that.
At the end of December, the railways had moved about 35 per cent of the crop, compared to a norm of about 38 per cent. But Hemmes attributed that to rate increases by both railways between August and October 2023.
While it may not have affected volumes, it’s a reality that when prices are down, farmers will hold out for higher prices.
“That’s just the marketplace,” said Sobkowich. “It’s allowing the marketplace to do what it’s supposed to do. And it’s interesting to see how, when we do get good rail service in a year like this, basis levels narrow, and that’s good for farmers.”
That means grain companies will more aggressively try to attract grain to their facilities because they don’t have to worry that insufficient rail capacity will hold back shipping.
“They know that they’re likely going to be able to ship that grain. So, they’re able to compete with each other in an unfettered way,” said Sobkowich.
And of course, when it comes to supply chains, whether things run smoothly or not, everything cascades through the system.
“The grain companies are enjoying a very good year from a movement point of view, and we’re seeing the consequences of that,” said Sobkowich. “Grain elevators have available capacity; the number of vessels at anchor is at a lower level than what we see normally this time of year. It’s having positive effects elsewhere in the supply chain.”
Repairing reputation
It’s a far cry from two years ago when a perfect storm hit the grain-shipping industry. An atmospheric river took out bridges in B.C.’s Fraser Valley, a lengthy polar vortex settled over the Prairies and COVID reduced railway staff and disrupted the entire global supply chain.
Those cascading effects damaged Canada’s reputation with international customers. Sobkowich said that’s one reason a good year like this is so important.
“We begin to mend our reputation as a reliable supplier with our customers globally. We’ve had enough happen to us in the last decade, whether it’s avalanches, fires or labour stoppages. We, as a country, have started to migrate into a reputation of unreliability.
“When you get a year like this, when you’re able to actually deliver on your commitments within the proper time windows, it goes a long way to enhance your reputation as a reliable supplier.”
There are other positive effects as well.
“You don’t pay vessel demurrage because you’re not waiting for grain to arrive at the port. You don’t have vessel congestion in the Port of Vancouver. Farmers have the ability to deliver into the elevator system because elevators aren’t plugged full of grain. All of those things are our positive secondary and tertiary aspects of good rail service.”
