Canadian National aims to cut grain car cycle times
May 01, 2001
by Emily Wilson
Canadian National Railway's chief executive officer has challenged Canada's grain transportation and handling system to shave 50% off the time it takes to deliver grain to port and return empty grain hopper cars to the Prairies for reloading.
In a recent speech to the Canadian Grains Council, Paul M. Tellier, CN's president and c.e.o., said existing grain car cycles were too long, preventing just-in-time delivery of grain and rapid response to market demand.
Citing the example of Vancouver, which handles more than 60% of Canada's export grains, Tellier said the grain supply chain in 1999 required 21 days to deliver grain to port from the Prairies and to get grain cars back for reloading. CN has since taken 2.5 days out of its cycle — promising, but not good enough, he said. "Twenty-one days is simply not acceptable," Tellier said. "No commodity can remain competitive on world markets with that kind of turnaround time. My goal is to be able to make that trip in 11 days."
A shorter turnaround would reduce inventory and storage costs and permit spot sales of grains that could put more money in farmers' pockets. Moving more grain at peak demand is worth C$10 to C$15 per tonne, representing close to 50% of the average cost of hauling grain, Tellier noted.
A reduced car cycle also would require fewer grain cars — a 10-day improvement in cycle times would permit a significant reduction in the fleet, he said. Car ownership and operating and replacement costs are ultimately reflected in rates, and with fewer cars, CN would have more room to lower rates.