Canada’s two major railways have changed they way they process requests for grain cars in Western Canada.
To deter shippers from ordering more cars than they can handle, both Canadian National and Canadian Pacific are capping the number of outstanding orders a grain shipper can have in their systems.
As of September 14th, the total number of outstanding orders for cars from CN must not exceed twice the car spot capacity for each loading facility. For larger shippers, rather than submitting an unlimited number of car orders, total outstanding orders at all facilities must not exceed two weeks’ worth of “maximum base car allocation.” If these limits are exceeded, the railway says it expects shippers to remove order requests or CN will proceed to remove orders.
CN spokesperson Mark Hallman says without these limits, the number of outstanding orders can serve as an “unreliable and misleading indicator of demand,” noting tens of thousands of “phantom” car requests were cancelled by the end of the 2013-14 crop year.
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CP implemented similar measures in early October, capping orders for smaller shippers at four times the spot capacity of each facility: “For example, a 25 car shipper may have four 25 car orders in the CP system at one time. If a shipper had four elevators, that means CP will accept up to 16 orders at one time,” explains CP’s Jeremy Berry.
For larger shippers, CP has created a “dedicated train” program that provides unit train shippers with a virtual set of cars to cycle between origin and destination points.
Meanwhile, a report published in the Wall Street Journal last week, which said the railways implemented the changes in response to last year’s backlog, was “misleading” and “missed the point,” according to Hallman. He says the intent of CN’s changes was not to manage rail congestion, but to “promote more effective communication of week-to-week priorities among grain shippers, operators of unloading facilities, and to develop a meaningful accountability in the order process.”
As for congestion, Hallman simply says they don’t see that as a problem right now: “There is no congestion in CN’s grain supply chains, which are fully back in sync.”
Both CN and CP have been mandated by the federal government to move over half a million tonnes of grain each week since early March. As it stands, that requirement will expire on Saturday. Jeffrey English, a spokesperson for Agriculture Minister Gerry Ritz, said no decision on renewing the weekly minimums had been made as of Tuesday.