ESSENTIAL NEWS FOR AGRI-RETAILERS
The Communicator

February 2023 Issue – See All

CAAR News

No Concerns with New Pesticides & Ag Plastic in Québec Changes

Canadian ag labour resolution may have a flaw

The interim report developed for the National Workforce Strategic Framework for Agriculture and Food & Beverage Manufacturing is a thing of beauty. But something integral to its success is missing.

The RBC transformative seven

With Canada having to reduce its GHG emissions, the ag industry needs more innovative technologies. So how do we do that?

The Resiliency of Canadian Ag Production

It has been three long years since I last attended an indoor farm show. Yesterday, I travelled to Brandon, Manitoba for the opening day of 2023 Manitoba Ag Days.

Food not feed

What we know about the strange “ban” on Lambda-cyhalothrin insecticide.

Top 3 ways to engage employees in workplace health and safety

Make sure your employees understand the importance of health and safety with these tips.

By The Numbers

2.9 That’s how many billions of dollars Canada’s ag industry lost because it lacked the necessary labour, according to a 2020 survey. See Page 18.

3 The number of quick and easy ways to get your new hire interested in your work-related health and safety. See Page 12.

7 The Royal Bank of Canada says that there are seven things our country can do to turn it into a global leader in agriculture innovation and technology, while also reducing our ag greenhouse gas emissions. See Page 26.

30 The required amount of metric tonnes of GHG emissions Canada needs to annually reduce by 2030. One way to eat at that number is to use more grain oils as vehicle fuel. See Page 14.

100 That’s the percentage of effort CAAR Scholarship Award winner Alice Hehli said she will be able to put into her school work now, no longer having to worry about finances. See Page 36.

449.8 This is the molecular weight of Lambda-cyhalothrin, a compound that was used as the main ingredient in highly effective brands of insecticide. Banned, but not banned in Canada, its loss affects our crops as well as our feed imports. See Page 8.

Member Login
Banner for Growing pains for CN, CP, and Canadian farmers

The Canadian National & and Canadian Pacific railroads have each said they are well-positioned to move Canadian ag products during the 2022-23 winter season. So how are they doing?

By Andrew Joseph, Editor

We could start off with a blaring “Alll Aboaaaard!” but this railroad story isn’t about moving passengers. Rather, it’s about attempts to move the mindset of the Canadian farmer from a place of anxiety to one of serenity.

The railways known as Canadian National (CN) and Canadian Pacific (CP) want the agri-business community of Canada to know that there is no need to be concerned and that they are well-positioned to efficiently move goods from Point A to Point B.

In the CP 2022-2023 Winter Contingency Plan Report, for example, it noted that it continually broke transportation records in the years 2017-18 through 2020-2021, moving more grain products than ever before in the company’s history.

The report blandly noted that no record was set for 2021-2022 because grain volumes were down by 43 percent. That crop year’s carry-in volume for Western Canada is projected to be 6-MMT, the lowest carry-in volume in more than 15 years.

Sure, the monopoly of Canadian rail lines may indeed have moved all the agri-products our industry had over the winter of 2021-22, but did it do so in a timely fashion?

Tyler Bjornson, the Executive Vice President of the Canada Grains Council stated during a summer 2022 roundtable, that the two railways were less than stellar in their performance last winter.

Even though the ag sector had been hit hard by drought the previous summer, and was down by 30 percent of yield, railways were shipping fewer than 50 percent of railcars throughout numerous weeks during the winter as insisted on by the sectors.

Although both CN and CP make their correct claim of moving a lot of grain and ag products across Canada to ports both nationally and internationally, timing is what Canadian ag industries have a real concern with.

“It’s a massive problem that will make Canada seem like an unreliable partner internationally,” said Bjornson. “If we can’t get our products to the customer when they want it, they’ll look to a provider who can.”

During that roundtable, Bjornson added that the railway sector has—unlike the trucking or shipping industries—no demurrage or contract penalties, and each maintains control of its system and can not be held responsible for delays by its customers.

The December 2021 flooding in BC was certainly an acceptable reason for a delay, but the Canada Grains Council said that the two railways lacked workers and locomotive power to effectively play catch-up.

Some of that can be blamed on Covid-19, however, and rail workers not going back to work—a phenomenon seen in virtually all industries across North America—though we suspect that was more prevalent in the US than in Canada. We would like to see data on both countries—in particular within the railway segments and the no-return worker.

Some people opted to retire when the pandemic hit—first taking government-funded assistance, and then considering factors such as age and years of service. However, we suspect that only a small percentage of the population did that. The same could not be said for those aged 25-45 living in cities with a high cost of living who could not afford to retire just yet.

In its report, CP pointed to its recovery capacity following the BC flooding of December 2021 when 32 separate track outages were noted—in some very challenging geography—saying it restored service on the mainline in just eight days.

Are eight days too long? Sure, if one needs to have its goods arrive at a port of departure for an international customer. It is important to note that the timing is pretty good considering the devastation seen in the towns affected by the so-called Pineapple Express weather phenomenon that originated in the Hawaiian Islands.

Bjornson did say that the two railways tend to run at 100 percent capacity, but have little ability to recover when issues happen every year.

And who pays the price when shipment arrival times are delayed? Not the rail carriers—it’s the Canadian farmers and grain shippers.

Even though we are in the midst of our ag shipping season, the harvest is more or less complete as of mid-October—the Ag Transportation Coalition (ATC) already has an opinion about CN and CP’s ability to get the 2022 crops moved on time—especially when the 2021 crop yield was smaller due to the western Canada drought.

The ATC is a coalition of agriculture associations that have funded a five-year Growing Forward 2 initiative to enhance competitiveness within the Canadian ag supply chain. Members include: the Alberta Wheat Commission, Canadian Canola Growers Association, Canadian Oilseed Processors Association, Inland Terminal Association of Canada, Manitoba Pulse & Soybean Growers, Pulse Canada, and the Western Grain Elevator Association. Its opinions are backed by tracked data showing how well CP and CN acted on their promise of getting freight cars to the loading customers on time.

As everyone knows, farmers do not get paid until their crop is delivered. So getting the fruits, vegetables, grains, and pulses delivered to a customer on time is a financial necessity.

But, before we complain about what CP and CN rail did last season, keep in mind that like our ag industry, the railroads are also pawns to the whim of Mother Nature.

Should temperatures drop below -25C, CP, for example, said that a train’s speed, length, and weight must be reduced, which in turn, reduces the shipping capacity. Winter storms also impact railway service, and delays are dogpiled when the railways are forced to deploy additional assets to ensure rail corridors and train yards are clear and safe.

Before we look at the data compiled by ATC, let’s see what each of the two railroads has in mind to avoid a repeat of last season’s issues and a number of dissatisfied rail freight customers. The railroads are presented in alphabetical order.

Canadian National Railway

On October 3, 2022, CN delivered its 2022-2023 Winter Plan—a plan the railroad created to assure customers it had the capacity and resources to respond safely and efficiently to the needs of its customers in the coming winter months.

CN is a Canadian Class I freight railway headquartered in Montreal, Québec. It and its affiliates have been railroading since 1919, serving Canada and the midwestern and southern US. The railway transports over 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year.

It is the only railroad connecting Canada’s eastern and western coasts with the US South through an 30,000 kilometre (16,600 mile) rail network.

Regarding the 2022-2023 Winter Plan, Tracy Robinson, the Chief Executive Officer of CN stated: “Since joining CN in March, I have focused our team on servicing our customers’ needs by getting back to basics. This means running a scheduled operation, aligning capacity with demand, and working closely with our customers and stakeholders to maximize the effectiveness and efficiency of the full supply chain.

“This Plan reflects that focus. It reviews core aspects of CN’s operations: how safety and greater efficiency work together; how we plan with customers to deliver service during winter on a sector-by-sector basis; how we invest to improve productivity; and, how we mobilize people and resources to enhance the resilience of our network. The steps outlined in this plan will help ensure a more efficient and resilient CN network and an increasingly reliable and resilient supply chain.”

As noted, rail customers bemoaning a lack of timely service were told the railways faced a lack of workers as a contributing factor to both CN and CP being unable to deliver hopper cars on time.

Within the Winter Plan, CN said that as of the end of June 2022, it had increased the number of employees by 850, mostly within its operating crew ranks.

The railway said that by the end of 2022, an additional 500 new conductors will graduate from its program. Conductors on freight trains travel with the train helping ensure the safe arrival of the cargo to its endpoint. Some of their big responsibilities include switching cars, making or splitting up trains in yards, or moving cars between yards, sidings, or tracks.

CN said that rail operating managers who are rules-qualified will be available to protect rail traffic movement and support operations during challenging winter operating conditions.

An additional 57 high-horsepower locomotives have been added to the CN fleet, bringing the total number of high- and mid-horsepower locomotives to approximately 1,950 locomotives. It is interesting to note that CN stated “approximately”.

The company said that delivery of 800 new boxcars will happen in early 2023, while 500 high-efficiency hopper cars will be delivered during the 2022–23 crop year.

To be fair to CN (and CP), it takes time to manufacture and deliver freight vehicles, and we suspect that the railway car manufacturing industry has also taken a hit owing to its own labour shortages and supply chain disruptions exacerbated by the pandemic and ensuing global economic shutdowns.

To increase rail capacity and velocity, CN said it has implemented scheduled slots for bulk unit trains in key corridors.

To reduce online failures, acoustic-bearing detectors have been added to five locations across the network. As well, CN’s third-generation automated track inspection program fleet cars were launched in advance of the 2022-23 winter to further reduce rail-related incidents.

Canadian Pacific Railway

CP, headquartered in Calgary, Alberta, owns approximately 20,100 kilometres (12,500 miles) of track in seven provinces of Canada and into the United States, from Montreal to Vancouver, and as far north as Edmonton. It also serves Minneapolis–St. Paul, Milwaukee, Detroit, Chicago, and Albany, New York in the US.

Built between 1881 and 1885, it was Canada’s first transcontinental railway.

CP said that it is about to complete its five-year $500 million investment plan to purchase 5,900 new high-capacity grain hopper cars (a tip of the hat to the ag sector).

These new hopper cars are shorter but wider and lighter, and able to carry more grain than the retiring old cars. Shorter cars allow for more cars per train.

A 7,000-foot grain train will be able to carry 16 percent more with the new grain hopper cars. Per car, it’s an increase of nine tonnes of, for example, wheat—102 tonnes. That grain train equates to 118 cars hauling 12,040 tonnes of wheat. The old cars would only allow a locomotive to haul 112 cars for a total of 10,400 tonnes of wheat.

In the future, CP said it plans to introduce a high-efficiency product (HEP) 8,500-foot train model. This projected system would be able to haul 147 of the current 102-tonne capacity CP hoppers, effectively being able to move 15,000 tonnes of wheat. This would work out to a 40 percent increase over the current CP system.

The railroad said it wants to use high-throughput (HTP) elevators to load the 8,500-foot train clear of the main track in 16 hours or less—which would provide economic incentives to the elevator owners.

For the CP 2022-2023 Grain Service Outlook

Report, Keith Creel, CP President and Chief Executive Officer noted: “Regrettably, the 2021-2022 Western Canadian grain crop was the smallest in more than a decade as a result of severe drought conditions throughout the Prairies in summer 2021.

“Our total volume of Canadian grain and grain products transported during the 2021-2022 crop year is down approximately 43 percent compared to 2020-2021’s record-breaking volume of 30.62 million metric tonnes (MMT). CP had prepared the railway to transport much higher volumes of grain, but unfortunately, there was not more grain to move.”

Creel continued: “On a positive note, working closely with our customers, CP successfully responded to surging demand for the transportation of corn and grain products from the United States into the Canadian Prairies to supply cattle feed this past winter. We delivered more than 35,400 carloads, which represents an increase of 33,200 carloads or 1,600 percent compared to 2020-2021. This required the creation of an entirely new supply chain, demonstrating CP’s ability to be nimble and respond quickly to changing market conditions.”

Unfortunately, it failed to acknowledge the Canadian ag sector’s concern that deliveries were not made in a timely fashion, which hurt its bottom-line and reputation.

Since Creel said that CP is ready for its customer orders, we can report that the 2022-2023 Grain Service Outlook Report stated CP will have approximately 1,100 locomotives and 15,500-grain hopper cars available throughout the 2022-23 crop year to handle the anticipated traffic.

CP said it would supply 6,000-grain hopper cars per week to country elevators, from August through mid-December 2022, and from April to July 2023, depending on demand.

During the winter months when the Port of Thunder Bay is closed, CP said that it will supply 4,350-grain hopper cars each week, subject to market demand.

The railroad also said it plans to hire 3,500 employees this year—including 1,100 operating employees and 500 engineering employees in Canada. There are also over 730 new employees in various stages of training across Canada.

CP said that for the 2022-2023 crop year, it would have some 4,000 to 4,200 operations employees deployed across the network, including approximately 3,000 to 3,200 operations employees in Canada, subject to market demand.

The company added that it also anticipates moving, on average, 1,050 cars of grain products each week in customer-supplied cars.

CP believes it is well-positioned to move grain in the 2022-23 crop year, expecting to move over 25 MMT of grain and grain products, and that it can move more should demand be there.

The Numbers are the Numbers

We should note that per the Ag Transportation Coalition both CN and CP are already faltering in their provision to deliver the ordered number of hopper cars to grain elevator customers.

The week 7 report details the September 11-18 period, covering 90 percent of grain movement originating in Western Canada. [Ed. Note: This article was written in mid-October, and contains the latest available data from the ATC.]

CN supplied 88 percent of the hopper cars ordered for week 7, down from the 98 percent it delivered for week 6. It delivered 4,339 of the 4,936 hopper cars ordered, failing to supply 597 of the cars ordered.

Heading into week 8, CN has 511 outstanding orders. It had zero outstanding orders entering week number seven.

CP faired worse, and yet it still managed to show an improvement.

For week 7, CP was able to deliver 77 percent of the hopper cars ordered, but it was still an improvement from the 73 percent of order fulfillment for week 6.

CP delivered 4,353 of the 5,633 cars ordered for week 7, failing to supply the 1,280 cars ordered. CP delivered 5,217 hopper cars during week 7, but that number includes the 1,146 cars it needed to get to customers for outstanding late orders.

Heading into week 8, CP has 1,591 outstanding orders, down from the 1,638 outstanding orders it had entering week 7.

The report said that neither CP nor CN delved into any hopper car rationing for week 7, and suggested none would occur in week 8 either.

Although CP has not partaken of any grain hopper car rationing this year through week 7, CN has—a total of 129 hopper cars. The only good news is that if we compare the same week 7 period to that of 2021-22, CN is doing a much better job, having rationed 1,933 cars last year.

In case you are keeping track, of the 129 rationed cars, Vancouver was rationed by 79, and Eastern Canada by 50. We should note that Eastern Canada only ordered 200 hopper cars for week 7, so there’s an impact, but that corridor’s deficiency did not affect Western Canada and its grain shipments.

CN supplied 84 percent of the cars ordered for the Vancouver Bulk corridor for week 7, which is down from the 98 percent filled in week 6. The US corridor was hit hard, however, as CN only fulfilled 20 percent of the requested hopper car orders on time.

However, the railroad may have reasonably assumed that Canadian customers were a greater priority owing to the Canadian harvest beginning earlier than the majority of the US harvest—but that is just a supposition.

The two important CP corridors of Vancouver Bulk (76 percent) and Thunder Bay (81 percent)—by volume—were delivered on time in week 7. Both numbers were up slightly from week 6, according to the ATC report.

But why are CP’s numbers lower percentage-wise than CN’s?

The answer may be as simple as the recording methods utilized by the Canadian Pacific Railroad, which calculates the demand they accept, rather than the legitimate demand.

Unfulfilled demand must be tracked when only measuring accepted demand and delivery recording.

Terminus

Yes, everyone expects the fulfillment rate for the railway system to be at 100 percent, and in a perfect world, it would be.

CP, as of week 7, is trending upwards and playing the dangerous game of playing catch-up, while CN is making a greater percentage of its deliveries, but is growing its list of outstanding orders.

Even with a duopoly on how Canadian agriculture can ship goods via rail, CN and CP appear to be trying to do the right thing for their customers.

The ATC week 7 report suggested that CN’s performance was generally consistent across individual shippers with 83 percent of shippers receiving 92 percent or more of cars ordered on time.

But CP showed inconsistency on week 7, with two-thirds of shippers receiving 99 percent of the cars ordered arriving on time, while the remaining one-third of shippers receiving fewer than 85 percent of the hopper cars ordered.

Based on its weekly performances, CN’s rate of supply vs. demand is at an acceptable rate, while CP—although moving in a positive direction—is found wanting.

Will CN and CP be able to catch up and get customer goods to their destinations? Probably.

It just may not be able to do it in the timely manner as demanded by the Canadian (and US) ag sector, which has left its customers feeling railroaded.

On October 24, 2022, CN reported its best week for grain movement.

The railroad said that for week 12 (the week of October 16), it moved over 806,000 metric tonnes of grain from western Canada—blowing away its previous record by 50,000 metric tonnes. The report added that this builds upon CN’s second-best September ever for grain movement from western Canada moving a total of 2.64 million metric tonnes.

Noted Doug MacDonald, the Chief Marketing Officer with CN: “This performance shows what can get done when partners collaborate to create supply chain solutions to supply chain challenges. We are very proud to have set a new record for the amount of Western Canadian grain moved in a single week. We are confident that our railroaders will continue delivering results for Canadian farmers and all of our customers.”

Related Articles

  • By The Numbers 2.9 That’s how many billions of dollars Canada’s ag industry lost because it lacked the necessary labour, according to a 2020 survey. See Page 18. 3 The number of quick and easy ways to get your new hire interested...
  • The Resiliency of Canadian Ag Production It has been three long years since I last attended an indoor farm show. Yesterday, I travelled to Brandon, Manitoba for the opening day of 2023 Manitoba Ag Days. It has been three long years since I last attended ...
  • Seven questions an interviewer can be asked In this sellers’ market, candidates want to know if your company is the perfect fit. By AgCareers.com We are currently in the midst of a seller’s market—where there are more companies looking for employees than t...

Join the discussion...

You must be logged in as a CAAR member to comment.