Canadian railways falling short in moving grain - farm coalition

Mon Jan 26, 2015 2:06pm EST
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WINNIPEG, Manitoba Jan 26 (Reuters) - Canada's two big railways are failing to meet demand for moving grain from farms to ports and North American buyers, despite government intervention, a report by a coalition of farmer and industry groups said on Monday.

In November, Ottawa extended the requirement that Canadian National Railway Co and Canadian Pacific Railway Ltd ship a minimum volume of grain per week, but reduced the amount in light of 2014's smaller harvest.

Ottawa imposed larger minimum volumes in March after a record-large 2013 harvest and frigid winter bogged down crop movement.

The new data was compiled from grain companies by QGI Consulting for the Ag Transport Coalition. It showed that, despite Ottawa's moves, the railways failed to supply from Aug. 1 through Dec. 27 11,461 hopper cars ordered, representing 11 percent of demand. The railways also supplied only half of shippers' orders in the week for which the cars were ordered.

"The important conclusion here is the railways have not at any point this year been able to meet shipper demand for capacity," said Greg Cherewyk, chief operating officer of Pulse Canada, one of the coalition's member groups.

The data takes into account shippers' orders cancelled because of capping by the railways of how many they would accept within set time periods.

The data is measured differently than the government's volume thresholds, factoring out certain commodities such as canola oil, said Wade Sobkowich, executive director of the Western Grain Elevator Association, which represents companies including Cargill Ltd and Richardson International.

Spokespersons for CN, CP and Agriculture Minister Gerry Ritz could not be immediately reached for comment. (Reporting by Rod Nickel in Winnipeg, Manitoba. Editing by Andre Grenon)