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Great Western Railway seeks assurance of car supply

Posted on April 21, 2014 by Shaunavon Standard

Great Western Railway has added its voice to the call for more rail cars to meet the needs of Canadian farmers looking to ship a record crop, as the current shortage continues to develop into a major grain crisis for producers.

GWR, the largest short line shipper of producer cars in Canada, is calling on the federal and provincial government to pressure the Class 1 railways (the two major companies being CN & CP) to supply short line railways with an adequate supply of rail cars.

Since the federal government has implemented higher haulage targets on the Class 1 railways, GWR officials say that short lines have been impacted as CN & CP seem to be concentrating on shorter hauls and starving the short lines for cars.

In October of 2013, Great Western Railway was capped by CP at 134 cars per week.

GWR officials say that number was far less than it needed, but that the Southwest based company was promised that minimum every week.

Instead, GWR has received the 134 car target on only four weeks since October. As a result, the company finds itself 2,101 cars behind, and that number is growing each week.

With at least 145 new producer car orders coming in every week, GWR says it can’t even come close to keeping up with its backlog of 2,101 open orders.

At the present pace, there is an extraordinarily large amount of grain still in farmers’ bins heading into this year’s harvest.

“We’re getting more orders than new cars,” said Conrad Johnson, Vice-Chairman of GWR. “We’ll be two years behind before we even start (the new grain season).”

“But no one seems to be willing to sit down and form a concrete plan,” he added.

The crisis is carrying a huge financial cost for Canadian farmers. Millions of dollars have been lost in missed opportunities, missed sales targets and added storage costs. Grain loading facilities in the Southwest are also feeling the pinch as they reach capacity.

The lack of grain movement has prompted a record number of farmers to request advance payments so they can get bills paid and start planning for inputs on next year’s crop.

Johnson also pointed out that some input dealers are reluctant to provide credit due to questions about whether or not the harvested grain can ultimately be transported, not because the producers aren’t good customers.

GWR has also worked hard to develop relationships with new grain companies in the new marketing environment. These relationships have been strained to the breaking point as there is no certainty in grain movement.

“We’ve worked hard to form alliances with new grain companies and building a strong reputation as a reliable supplier,” said Johnson. “It’s going to take a long time to restore that reputation.”

In fact, at one point, GWR had a shipment of grain sitting in Assiniboia for three weeks before it could be moved.

GWR is also frustrated by the lack of communication from CP.

“We’re in the dark – no one knows when the cars might come or how many we’ll get,” said Johnson, adding that the uncertainty is making it impossible for the company to make plans.

Johnson believes that more Saskatchewan producers may look South to move their grain.

Weather issues were a concern this past winter, but just 60 miles south of GWR is the main line of Burlington Northern Sante Fe railroad, which is dealing with the large crop in that region by increasing train runs and increasing staff.

The U.S. railroad has leased hundreds of engines from CP to help with the increased traffic. Johnson points out that those engines would be a huge help to deal with the back log in the Southwest.

Decisions by CP to lay off workers – personnel that could help man additional trains – also has led to more frustration for the shortline operators.

GWR believes that price transparency in the grain market will be non-existent until these transportation issues are resolved.

The basis will remain extremely wide as grain companies aren’t pressed to get grain to their facilities in a timely manner. GWR officials say that long term solutions need to be worked on or Canada’s reputation as a reliable exporter will become more tarnished than it is now.

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