Railway delays at the port of Vancouver cost grain companies $7.8-million in late 2018, a regulator’s hearing into transportation problems at Canada’s busiest trade gateway has heard.
The exporters of wheat, canola and other crops incurred the costs of contract extension penalties and ship delays for the second consecutive winter of congestion at the port, Wade Sobkowich, head of the Western Grain Elevator Association, told a two-day hearing held by the Canadian Transportation Agency in Vancouver.
The regulator is investigating rail service delays in and out of the West Coast port, which accounts for one in three dollars in overseas trade and where freight volumes have risen by 30 per cent, to 112 million tonnes, over the past 10 years. The inquiry could result in new rules and regulations governing the rail carriers' operations and commercial relationships.
Representatives of the agricultural commodities and forest products industries said companies face delays reaching markets and new costs hiring trucks and renting warehouses to store unshipped goods as a result of the restricted access to the rail lines operated by Canadian National Railway Co., Canadian Pacific Railway Ltd. and BNSF Railway Co. of the United States.
Chris Vervaet, executive director of the Canadian Oilseed Processors Association, which represents makers of canola and soybean oil for livestock, food and biofuels, said his members were seeing delays at the interchange points where the railways swap cars. One trainload of canola meal recently took 16 days, instead of the usual eight, to reach California because it was delayed in a Vancouver rail yard.
“The most significant long-term cost … when there is inconsistent rail service is the risk of losing customers due to an inability to supply products in a timely manner,” Mr. Vervaet said.
Joel Neuheimer, vice-president of the Forest Products Association of Canada, said the congestion is standing in the way of the country’s attempts to expand trade with overseas markets. “One of the government’s priorities is to diversify trade,” he said. “Unless we fix whatever is wrong with the Vancouver portion of the supply chain, we will not get there.”
Governments are spending hundreds of millions of dollars at the port to improve the flow of increased trade with Asia.
Peter Xotta, vice-president of planning at Vancouver Fraser Port Authority, which operates the port, said increasing trade with Asia has placed new demands on the gateway. He said the time it takes for a typical grain rail car to arrive at and depart from the port was up by 30 per cent in December, to 134 hours, an indication the rising volumes are overwhelming current infrastructure.
In testimony before the tribunal, representatives of CP and BNSF said their operations were affected by congestion at CN’s Thornton Yard, a major train facility at the entrance to the port’s labyrinth of tracks, roads, warehouses and terminals. The railways in December halted or restricted shipments of some commodities, steps they said at the hearing were needed to prevent the bottlenecks from backing up through the wider North American rail network.
CN attributed some of its congestion to a surge in freight volumes. At the hearing, the company’s representatives said the railway denied allegations it gives priority to certain commodities, and disputed shipper group complaints the railway is to blame for any delays or declines in commodity shipments.
This is the second year in a row the rail industry has faced customer complaints about slow service, unfilled car orders and delays.
Dan Sherman, an Edward Jones analyst, said CN’s freight volumes grew too quickly in late 2017, leading to congestion across much of its network, complaints from customers and scoldings from governments. CN’s chief executive officer left in March, 2018, replaced by current chief Jean-Jacques Ruest. Mr. Ruest apologized to customers and said the company’s plan to hire crews, expand its track network and buy more locomotives would help it deal with rising freight volumes.