January 26, 2015 / 10:14 PM / 3 years ago

UPDATE 1-Canadian railways falling short in moving grain -farm coalition

(Adds comments from CN, CP and agriculture minister, paragraphs 7-9)

By Rod Nickel

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 a frigid winter bogged down crop shipments.

The new data was compiled from grain companies by QGI Consulting for the Ag Transport Coalition. It showed that, despite Ottawa’s moves, from Aug. 1 through Dec. 27 the railways failed to supply 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 canceled because of capping by the railways of how many they would accept within set time periods.

Canadian National is moving grain at a record pace in the 2014/15 crop marketing year, spotting 16 percent more grain hopper cars in Western Canada to date than it did at the same time in the previous year, said spokesman Mark Hallman. Spotting means placing a rail car in position for loading or unloading.

In the weeks leading up to Dec. 27, the grain supply chain was affected by space issues at Port Metro Vancouver, delayed vessels and adverse weather, said CP spokesman Jeremy Berry.

Although grain is moving ahead of last year’s pace, improvements are needed through the supply chain, said Agriculture Minister Gerry Ritz. The government launched an arms-length review last year of its transportation policies and regulations.

The coalition’s 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. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Andre Grenon and Jonathan Oatis)

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