Full trains and full elevators: Rail movement catching up, but ports waiting on vessels

Even before the COVID-19 pandemic ban began impacting trade flows out — and in — to China and other overseas markets, Canada’s railways were struggling to catch up from a challenging shipping season.

An 8-day strike, closed western lines due to slides, and then the blockades in solidarity with the Wet’suwet’en people of B.C., meant the railway system was behind in moving grain to port. Now, while the COVID-19 economic effects begin to play out, the rail system has caught a break, at least on rail car grain movement.

As Mark Hemmes with Quorum Corporation explains, the grain sector is weathering this latest challenge quite well. Grain companies are still accepting grain, sending cheques, loading railcars, and keeping grain moving; all while observing physical distancing.

Railways, too, were already making up for lost movement, and now a decrease in container traffic and movement of other goods has freed up train space.

Hemmes says that the major constraint right now is the country elevator system is pretty full — as they’re buying as much as they can, not wanting to be caught short. There’s also been a strong delivery trend (almost double week over week) but farmer deliveries are still shy of the more average million tonnes being delivered per week. “As fast as it’s going out the door, it’s also coming back in,” he says.

“I expect country stocks will start to come down a bit,” Hemmes says, as road restrictions kick in in many provinces.

It’s not all positive, of course. Container traffic is down significantly, meaning ag commodities that depend on containers moving inland are waiting, plus there is the larger negative economic impact of a lack of trade.

While vessel movement has started to improve, Hemmes says he is still seeing cancelled container vessels out of China, meaning container traffic is going to take much longer to recover. Even as manufacturing fires back up in China, it’s still a two to three week lag to get ships here, he says. Demand for some of what would come over in those containers is also likely to lag, as the COVID-19 virus takes hold, further slowing down container traffic.

(Editor’s note: Hey, check out our new “in person” format — adapt, innovate, overcome!)

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