Asked about near-term volumes — specifically grain — during a Nov. 30 presentation at the Credit Suisse 4th Annual Industrial Conference in Palm Beach, Florida, U.S., Keith Creel, president and COO of Canadian Pacific said the company is “gaining momentum.”
|Keith Creel, president and COO of Canadian Pacific|
“For the past three years, since 2013, every year, CP has set a new record for the amount of grain we move,” Creel told conference attendees. “So there’s a new record, a new record, new record. So from a comp standpoint, very strong comps we’re going against last year.”
Creel said the crop has not changed, and remains approximately 70 million tonnes. What CP has had to deal with, though, is weather.
“(In) October, though, when things start to ramp up, we had a tremendous amount of moisture on the West coast,” he explained. “So whether it’s a Northwest Portland coast on the U.S. side or if you go up to Canada, Vancouver. I was out there in the end of October, beginning of November. (It was the) single largest, wettest month on record in October. They had as much rain in October as they had the previous four months.”
Too much rain may cause challenges for the longshoreman who is responsible for loading grain from the railcar to the ship, Creel said.
“So that slowed some things down, but as we’ve ramped up, and obviously we had a late harvest as well because of some of the same wet weather, the farmers had a tough time getting the crop into the elevators in the prairie,” he said. “And then also they had to mix the grain.”
Despite the challenges, Creel said most of the issues have been ironed out.
“The grain is moving well, the team is doing well,” he said. “We moved record amount in spite of that. As far as Vancouver, we moved record amount in October.”
He noted that CP has lost some business over the gateway through zone switch changes that were made in Canada through Lethbridge. But even with the losses CP has experienced “very strong volumes,” he said.
“What we haven’t moved now, if I could remind you of this year, in 2016, we ran out of grain to move,” he said. “We’ve got a couple of months next year from a comp standpoint that are just valleys that we are going to fill them with grain and get it to the port. So it’s just pushed the revenue forward as opposed to seeing it the fourth quarter.”
Creel stressed that he believes the crop is there to fill the trough that normally occurs in May, June and July. As a result, there should be strong year-over-year grain shipments during that time, he said.
Further ahead, the situation is murkier.
“What I don’t know about is the crop for next year, which comes in Aug. 1,” he said. “And obviously I can’t talk about that past that, but up until Aug. 1 through July, I guess the first two quarters, you’re going to see strong grain shipments period out of Canada.”