Grain & Trains: How Oil is Part of the Solution to Western Canadian Logistic Woes

Farmers are understandably frustrated by slow grain movements out of the Prairies this year, as a giant crop has western ports at a stand-still. The finger is often pointed at oil tankers hogging all the railway tonne-miles as a major part of slow grain movement off the Prairies, but as with any logistical problem, the issue and the solutions are rarely that straight-forward.

I recently attended a lunch and learn meeting put on by the Manitoba Farm Writers & Broadcasters Association, that pegged part of the solution far to the north of us and, believe it or not, listed oil movement as a major factor in improving grain movement. Yes, really.

Our guest was Merv Tweed president of OmniTRAX Canada, a company that owns and operates the Port of Churchill, Manitoba. For more than 16 years, OmniTRAX has been a part of the Churchill community, says Tweed, supporting a variety of industries including grain and petroleum through Hudson’s Bay Railway and the Port of Churchill. “Historically, OmniTRAX has shipped between approximately 420,000 tonnes and 700,000 tonnes of grain.  In 2013, more than 600,000 tonnes of grain and oilseeds moved through the port, accounting for the vast majority of our shipments,” he says.

This year was a particularly strong year for grain shipments, Tweed says. “With the changes to the grain market in the coming years, we are focused on the diversification of our commodity mix through the port to ensure we continue to see strong shipping numbers into the future, to further support the economic growth and development of the communities we serve in Northern Manitoba.”

Tweed made it abundantly clear that while grain shipments are a major part of their business, he uses the analogy of a shopping mall to drive home the importance of diversifying what they ship. Grain is an “anchor tenant” of a shopping mall, let’s say, oil is the other. With both of those in place, all the smaller shops (in this case, products) could fill in and be serviced sustainably. But without more than one anchor tenant, the “mall” flounders. To that end, they’ve got a two-year pilot project in the works with a heavy focus on moving light sweet crude and oil products through northern routes and out of Churchill.

“We have long known that grain alone is not enough to sustain our business in Northern Manitoba, and the recent changes to the grain market have reinforced our need to diversify the commodity mix we ship,” Tweed says.  “Grain will continue to be a mainstay of our business, but we need other commodities to balance out the business through the shipping season.”

Tweed also shared the potential of not just shipping oil products, but also potash, plus it’s an accessible way to bring in urea from Russia, for example. What is interesting is that he says that they’ve got the capacity and, with an ice breaker, they could be shipping grain much longer into the fall and winter. Grain moving north could take at least some of the pressure off of the more traditional routes. But with grain companies owning terminals at other ports, OmniTRAX remains further down the priority list, furthering the incentive for the company to diversify.

The presentation I saw stressed not only the economic value of OmniTRAX in Manitoba and even Saskatchewan (the company is a major employer and service provider to many northern communities), but also its commitment to rail safety. Tweed and OmniTRAX are keenly aware of the increased scrutiny facing railways shipping petroleum, and the company lists safety as a top priority, including the addition of a “safety car” on each 80-car train. This car would carry all the chemicals and products required in the even to of a spill — apparently, when spills happen, the people can get there quickly, but the products can’t. This strategy gets around that problem.

Still, the future of the port and shipping oil out of Churchill is not without controversy. Rail safety is a huge concern, and there are politics at play as well. Recently, the province announced a new port authority for Churchill without including OmniTRAX in the process. (Click here to read more about the Manitoba governments position on shipping oil through the port.)

“(Manitoba) announced its intention to create a new corporation or port authority in Churchill,” Tweed says. “As the owners of the port, and of the railway that feeds the port, we look forward to participating in the development of this new corporation, and to providing our input into the legislative process. While we weren’t a part of the initial discussions about this new legislation, we are pleased that the province has decided to invest resources into marketing and driving investment to the Port, and we are optimistic about the future for our business in Churchill.”

 

Lyndsey Smith

Lyndsey Smith is a field editor for RealAgriculture. A self-proclaimed agnerd, Lyndsey is passionate about all things farming but is especially thrilled by agronomy and livestock production.

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