Transportation continues to operate well
The Agriculture Transport Coalition (ATC) reported that railways supplied 84% of hopper cars ordered by Canadian grain elevators in week 34, representing a 2% week over week increase. Order fulfillment in Alberta dropped week over week for both railways, with CP dropping from 99% to 91%, and CN dropping from 93% to 72%.
Continued strong movement is important this year, as compounding delays have resulted in a backlog of grain movement. Compared to this week 34 last year, Canadian elevators ordered an additional 2,114 cars of grain to be moved, which represents an ask for an additional 21 trains. Of the 7,878 rail cars supplied in week 34, 4,456 were directed to bulk shipments in Vancouver and 816 were directed to bulk shipments in Prince Rupert. High demand for western movement to both Prince Rupert and Vancouver is expected to continue through the spring months.
As projections call for increasing amounts of COVID-19 cases into May, the possibility of experiencing transport delays increases as well. While there are no reported issues with the movement of grain by truck, members are reporting that deliveries across the U.S. border are taking 3-4 weeks. This delay appears to mainly impact parts for equipment over 10 years of age, as local warehouse supplies appear targeted toward newer equipment.
Keeping the supply chain open and moving during COVID-19 – Alberta
Alberta is temporarily modifying some regulations for truck drivers and railway operators to protect the supply chain and ensure Canadians can access necessities.
Regulations changes will temporarily allow commercial truck drivers transporting essential supplies in direct support of the COVID-19 relief efforts to:
- Work for longer periods of time, provided all safety conditions are met.
- Apply for fewer municipal and provincial overweight permits by increasing the limits on weight of loads some vehicles can carry.
- Be exempt from road bans.
- Be exempt from municipal bylaws that restrict the hours they operate and park.
These temporary adjustments are being offered as part of pandemic response efforts, provided all safety conditions are being met.
Improvement in grain deliveries to port terminals has allowed for port unloads to remain above average, helping to further address the backlog of grain deliveries for 2020. In week 28, grain deliveries for the 2019/20 year were over 1.3 million metric tonnes behind 2018/19 deliveries over the same time. Moving into week 34, this difference has fallen to just over 785 thousand metric tonnes.
For week 34, port grain stocks to remain at 75% of capacity, which is close to average. West coast vessel lineups for week 35 now sit at 31 ships. This amount of ships is near normal for what would be expected at this time of year. However, the average vessel time in port remains just over 4 days higher than normal. Until vessel time in port is back to normal levels, there are still more demurrage charges being incurred than normal on the ships in port, fees which will be passed back to farmers.
A fulsome analysis has been conducted by Grain Growers of Canada (GGC) in conjunction with Mark Hemmes of Quorum and Doug Mills of the Port of Vancouver
We have had four straight weeks of strong deliveries in the country and the railways are now getting close to “normal” car supplies. Optimally we would hope to see 1 MMT weekly moved out of the country and the past two weeks that has been happening. Deliveries have matched what the railways have moved so the country elevator space remains constrained at 90% of working capacity. With the axle weight restrictions (Road Bans) in effect across the prairies, we could see a decrease in the delivery volumes, but stocks are such that it shouldn’t impact railcar loading for a few weeks.
Volumes to Vancouver and Thunder Bay have been strong and both ports saw strong unload volumes, raising the stock levels. Prince Rupert still has lower than normal movements which is contributing to the higher than normal vessel line ups. Both railways are seeing their order fulfillment rates increase to near normal (CP is at 95% and CN at 73%). That said, car cycle performance is still very high and that is a concern as it relates to overall railway capacity.
Year-to-date total western port unloads are 1% lower than the same period last year. This is a bit misleading as Thunder Bay is much higher (9%) and Prince Rupert is 13% behind. Vancouver terminals remain fluid and operating. Vessels at anchorage have reduced.
The over all vessel lineup has come down significantly, largely due to the reduction in Vancouver. It is down to 22 vessels with 12 scheduled to arrive (we’ll likely see an equal number of departures between now and the weekend). Prince Rupert however is down, but only to 6 vessels with 3 scheduled to arrive, and what looks to be not a great week for unloads.
There are some considerable concerns over the movement of grain in containers. The movement of grain in containers has grown from slightly less that 3% of the total movement in 2000 to almost 14% this last crop year. This is now under threat and will drop considerably for the next few months, if not longer.
The COVID 19 event that began in China in December 2019 led to actions that all but shuttered the manufacturing activities in that region and extended quickly to other Asian Pacific countries in January. This of course caused a severe reduction in the traffic that would be offered for movement from Asia Pacific countries into the North American market. Consequently, the container lines started to cancel sailings, and have continued to do so right up until today. I expect this will continue for some months.
The result of this was first realized in January with a backlog of loaded containers in Vancouver and Prince Rupert as the reduction of inbound vessels mirrors the outbound capacity. It is important to note that the inbound movement is also the source of the capacity used for outbound loading so now we are looking at a shortfall in empty 20’ container capacity. (Export container capacity is derived capacity dependent on the consumer items that are imported). Compounding this, as the virus moved into the European region, the manufacturing there started to falter and the imports from Europe followed the same pattern – thus decreasing capacity both in terms of the outbound and the inbound / available empty capacity on the east coast.
Going forward, Hemmes believes that the economy will severely depress demand for much of the consumables that are normally imported from both the Asia Pacific and European regions, thus reducing the capacity that was available for the containerized grain we have enjoyed at an increasing rate over the last number of years. The challenge for processors will be how to continue to supply this niche market where the buyers look for small lot sizes that are not conducive for movement in bulk vessels.