OTTAWA, ONTARIO, CANADA — Canada’s Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz announced on March 7 measures being taken by the government to move more grain through the transportation system and maintain Canada’s reputation as a supplier to world markets.
Minister Raitt announced an Order in Council (OIC) to take immediate effect, setting out minimum volumes of grain that Canadian National Railway Company and Canadian Pacific Railway Company are each required to move. The Order, under section 47(1) of the Canada Transportation Act, also requires the railways to report to the Minister of Transport on weekly shipments.
“The current grain logistics system is not meeting demand and today our Government is taking concrete action to ensure the livelihoods of farmers and our overall economy,” Ritz said. “By making the Order in Council and working to introduce legislation, our Government continues to act in the best interests of our farmers while ensuring Canada maintains our global reputation as a reliable grain shipper.”
The railways will be required to increase the volumes carried each week, over a period of four weeks, to a combined target of 1,000,000 tonnes per week – more than doubling the volume currently being moved.
The Order creates direct legal obligations on railways and will result in penalties for non-compliance of up to C$100,000 per day.
Ritz announced that the government will introduce legislation when Parliament returns to establish measures to ensure Canada maintains a world-class logistics system that gets agricultural products to market more efficiently.
The government continues to call on all parties in the grain supply chain to play constructive roles to ensure the timely movement of grain, and to continue working together on medium and long-term solutions.
This year’s Western Canadian crop, at 76 million tonnes, is 50% higher than average. This volume is putting significant pressure on Western Canada’s grain handling and transportation system. As the government continues to work with farmers to invest in research and innovation, higher yields will continue to be the new reality across Canada.
The action builds on previous steps the government has taken to improve the performance of the entire rail supply chain in order to help farmers get their crops to market, which include:
• pursuing enhancements to the Grain Monitoring Program to improve the frequency of reporting and to expand the performance data collected;
• investing C$1.5 million, matched by industry, in a Pulse Canada-led multi-sector collaboration project of the pulse, oilseeds and grains industries to improve supply chain efficiency and reliability;
• investing over C$73.6 million in innovation through grain research groups; and,
• implementing marketing freedom for western Canadian wheat and barley growers.
CN responded to the Order, noting that an upper limit of around 5,500 cars per week may be achievable, but only if all members of the supply chain work together closely.
"Our assessment shows that an. This is broadly in line with what was mandated by the government in today's Order in Council,” said Claude Mongeau, CN president and chief executive officer. “But we all have to recognize that the challenge we jointly face is unprecedented, and it will require a new level of collaboration to succeed.
“No supply chain in the world can reasonably be expected to handle a 10 million tonne increase in traffic on such short notice. It takes eight months to on-board and train a crew member, and seven to eight months to acquire cars and locomotives," said Mongeau.
The difficult weather conditions added to the pressure, and caused a shortfall of around 10,000 carloads (around 1 million tonnes) compared to a normal winter grain flow. Given this 100-year grain crop, CN would still have a large backlog of grain to move even if it performed at the best level achieved in its history. Indeed, even after a very slow start in August, when grain elevators decided to ship at least 10,000 carloads less than the available rail capacity, CN has moved approximately 10.5 million tonnes of grain out of prairie Canada so far this crop year. This throughput is on par with the average to-date performance over the last five crop years. CN's grain performance to date benefited from record spotting performance from September to November, until extreme cold weather hit much of North America in December.
CN has indicated to the federal government its intention to ramp up towards 5,500 cars delivered to country elevators each week, as soon as weather conditions permit and a strong Thunder Bay program starts. CN will have the resources - locomotives, cars and crews - in place to support this record weekly spotting level.
"Hard work, joint objectives and a true spirit of collaboration will be essential to the industry being able to meet the very aggressive targets that have been set today by the federal government," said Mongeau.
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