The Port of Vancouver’s largest grain terminal, Cascadia, recently underwent a massive reconfiguration and is now waiting for sufficient grain volumes to fully test its improved throughput capacity.
Unfortunately, with grain and oilseed production in Western Canada seriously cut back because of this summer’s drought, it may be awhile before Cascadia — one of the largest grain terminals in the world capable of cleaning, drying and blending grain — will be able to flex its muscles.
"Basically, we haven’t been challenged," said Gerry Dickie, terminal manager. "If anything, we’ve got excess capacity that we haven’t used."
Last crop year, the terminal on the south shore of Burrard Inlet handled about 4.6 million tonnes of grain, compared with an estimated handling capacity of roughly 6 million tonnes.
However, Dickie points out that while production in Western Canada is down this year, the quality of the wheat crop is excellent.
"Right now we’re budgeted for a little bit more than last year at 4.8 million tonnes, but it’s debatable whether we’ll hit that," he said.
In addition to undergoing a complete reconfiguration of its systems, the terminal is also involved in the proposed merger of two of Western Canada’s largest grain companies, Agricorp and United Grain Growers, into a new publicly traded company to be called Agricorp United.
If the merger receives approval from Canada’s Competition Bureau, the combined grain company will control 172 primary country elevators in Western Canada, with a combined storage capacity of 1.86 million tonnes, and export terminals located in Vancouver, Thunder Bay and Prince Rupert, British Columbia.
In announcing the merger, the companies estimated that earnings for Agricorp United, before interest, taxes, depreciation and amortization, could reach C$145 million (U.S.$92 million) based on grain handlings of 12.5 million tonnes and farm supply sales of C$775 million (U.S.$490 million).
If the merger is approved, Archer Daniels Midland Co., Decatur, Illinois, U.S., a major shareholder of United Grain Growers, will own 19% of the new company, with a 20-day option to buy up to 25% of the shares in the new company.
ADM presently owns 41% equity in UGG, with a provision allowing an increase in its holding to 45% at any time.
The merger will result in the Cascadia Terminal, which was previously owned jointly by Agricore (Alberta Wheat Pool) and Cargill Ltd., being owned jointly by Agricore United and Cargill.
Since United Grain Growers already owns a major grain terminal on the north shore of Burrard Inlet, it is not known what special arrangements, if any, will be made between the two terminals and a third specialty crop terminal in Vancouver, Pacific Elevators.
"Everyone’s doing what they can to source business," Dickie said. "The United Grain Growers terminal is a fully utilized terminal. Pacific Elevators has gone into a specialty crop program and they’ve recently been approved by Anheuser-Busch."
This approval by Anheuser-Busch, the world’s largest brewer, gives Pacific Elevators the opportunity to supply malt to the company’s breweries worldwide, Dickie noted.
"They’re going to stay alive, not at the levels they once were, but they will be much more specialized," he added.
One of the advantages Cascadia Terminal has over its competition is its ability to load Panamax-sized vessels without having to reposition the ship to complete the loading process. For this reason, Dickie has been requesting the larger ships and with some degree of success.
"We’re getting a fair number of them," he said. "We have a fair amount of business to Iran right now, and those are all Panamax. Right now we’re as busy as we’ve ever been."
With the merger on the horizon, the terminal may soon be able to draw product from inland grain terminals in Alberta and Manitoba, as well as Cargill and United Grain Growers facilities scattered throughout the Prairie region and into the Peace River.
‘REMARKABLE’ PROJECT. The remarkable thing about Cascadia’s reconfiguration was that the new systems and capital construction projects were put in place while the terminal continued its around-the-clock operations. Without having taken this approach, Dickie said it would have been necessary to shut Cascadia down during construction, and this would have made the project prohibitively expensive.
One of the key elements of the Cascadia reconfiguration was the introduction of surge bins to receive grain after it has been unloaded from arriving grain hopper cars. Once the terminal was equipped with this surge capacity, it was immediately able to unload 110-car unit trains of grain in a single eight-hour period — an unloading rate that more than doubled Cascadia’s previous capacity to receive grains.
In effect, the surge bins were put in place to add a buffer between the terminal’s grain cleaning operations and the car unloading facility, and to provide flexibility in handling the numerous grain and oilseed products and grades that are an inherent part of Canada’s grading system.
The Canadian grading system for export grains and oilseeds makes it necessary for a terminal to have the ability to segregate agricultural products according to variety, protein levels and grade and, when necessary, to preserve the identity of the product.
As well as giving Cascadia increased capacity to meet the requirements of the Canadian Grain Commission grading system, the surge bins, with their ability to temporarily store grain at the pre-cleaning stage, made it possible for the terminal to move grain directly to the ship loaders — performing what, in Canada, is referred to as a "direct hit."
Often the commodity being loaded in a direct hit has been previously cleaned at an inland terminal or cleaning plant, making it unnecessary to pass the product through the terminal’s processing system.
Dickie said with the advent of large inland grain terminals on the Canadian Prairies and the capacity to clean grains and oilseeds to export standards, the need for direct hit facilities such as Cascadia will increase significantly over the next decade. However, while direct rail-to-ship transfers will increase, the requirement for Canadian export terminals to segregate grains, oilseeds and specialty crops such as peas and lentils is also increasing.
Canada’s large grain markets, Russia and China (and at one time Britain), have evaporated, causing agricultural commodity marketers, including the Canadian Wheat Board, to target smaller niche export markets. This move to a myriad of smaller markets, coupled with the development of new varieties and the advent of genetically modified grains and oilseeds are pushing Canadian terminals into a new and more complex grain processing arena.
NEW LEVEL OF COMPLEXITY. The recent end to "car pooling" at the Port of Vancouver has also added to the level of complexity at the terminals. Prior to the change, grain cars entering the port were "pooled" and distributed to terminals at the port on an "as required" basis, without immediately considering the shipper or the commodity’s point of origin.
At the end of the month an accounting was then carried out to determine which companies had contributed grains and oilseeds to the pooling process.
This process removed much of the need to preserve the identity of grains, oilseeds and pulse crops. However, with an end to the pooling process by Canada’s two major railways, shippers are now required to consign grain to a specific terminal at the port.
This change, among others, that have been put in place to, on one end, increase productivity and efficiency for the railways and, on the other end, give Western Canada the ability to service highly specific niche markets, has made life difficult for terminal operators.
In fact, Dickie said that in the past the terminals struggled to adapt to changes in the system on a weekly basis. "Now," he said, "there are changes coming at us almost daily."
Receiving and unloading grain hoppers cars at the reconfigured Cascadia Terminal is clearly the part of the reworked operation that will have the most impact on grain shippers in Western Canada.
Previously, the terminal had the capacity to unload a 110-car train of grain in 12 hours. After being reconfigured, the terminal’s two receiving tracks are now capable of unloading a full train in six hours.
By doubling the terminal’s ability to unload grain cars, and by matching more closely to the grain cleaning and ship loading capacity, Dickie said Cascadia Terminal has now become a more "balanced" operation, capable of handling 6 million tonnes of grain annually.
To accommodate the growing need for identity preservation, the new configuration included separators, or floors, within the terminal’s grain silos to preserve the identity of each carload of grain. Just as importantly, it also included a complete upgrade of the terminal’s distribution control systems to move grain within the terminal and track that movement for future audits.
The new system utilizes about 8,000 input/output points throughout the terminal and includes a supervisory computer control capacity that calls on the computer to select the most efficient conveyor routes, storage bins and cleaning equipment.
While the installation of new control systems was a complex undertaking, the fact that the terminal could not be shut down during the installation process made the job even more complex.
With all of the increased handling ability and flexibility to handle a variety of crops and grades, Dickie said he was excited about the terminal’s improved capacity to clean and blend grain — which goes directly to an improved bottom line.
In the reworked terminal, grain is first processed by a series of rotary cleaners that operate on a closed circuit aspirator system, which uses less air and makes the cleaning operation more energy efficient and more environmentally friendly than the previous technology.
From the rotary cleaners, the grain moves to cylinder cleaners where wild oats, wheat heads and some chaff is removed and sent to the reclaim area. It is here, Dickie said, that the upgraded cleaning operation pays for itself by returning grain that would have otherwise been sold as a lower valued feed product to the original grain stream.
The more efficient cleaners, together with the ability to more closely control the cleaning process, are key elements in making the terminal a profitable operation in an era of low commodity prices.
Another key to Cascadia’s profitability is the improved productivity that has come with reconfiguration process, significantly reducing labor costs.
The reconfiguration plan, while a complex project and a decade in the making, couldn’t come at a better time for Western Canada’s grain industry, which is increasingly being forced to compete on the basis of quality, variety and reliability against some very tough competition worldwide.
While it remains to be seen how successful Western Canadian farmers and the Canadian Wheat Board will be in capturing new markets, it seems obvious that the Cascadia Terminal will play a major role in any expansion and can be expected to increase its 40% share of the Port of Vancouver’s grain business significantly in coming years.