Borderlands: CanadaNewsRail

Canadian grain shippers still see hiccups in rail service

Canadian grain shippers to get relief with opening of Port of Thunder Bay at end of the month; US grain carloads also higher year-over-year

Despite significantly high Canadian grain volumes in February, Canadian grain shippers are still seeing some rail service issues as the network recovers from last month’s cold snap and nears the end of March.

“Several monitoring sources point to some significant challenges, which can be attributed to the deep freeze that blanketed the prairies in late February,” said Erin Gowriluk, executive director for the Grain Growers of Canada. “This severely constrained rail movement and the resulting impact on the network is still being seen several weeks following.”

According to data from the Association of American Railroads (AAR), Canada has shipped 107,439 carloads of grain year-to-date, a 39% increase from the same period in 2020. The data includes grain shipped by the U.S. operations of Canadian Pacific (NYSE: CP) and CN (NYSE: CNI), and the data is through last Saturday.

Grain carloads originated in Canada are shown for 2021, 2020, 2019 and 2018 in blue, purple, green, and orange, respectively. (FreightWaves SONAR) To learn more about FreightWaves SONAR, click here.

The year-over-year increase may potentially be somewhat uneven due to the volume downturn that occurred in North America last year as a result of the coronavirus pandemic (see below). However, CN and CP reported record Canadian grain shipments in January, and CN said it also experienced a monthly record in grain volumes for February.

“Most recent metrics are illustrating a gradual improvement, but significant capacity has been lost,” Gowriluk said in an email to FreightWaves on Tuesday.

Indeed, earlier this month, the head of the Western Grain Elevator Association (WGEA) expressed concern that challenges with rail service in February and early March could mean that the rail network will not have enough capacity to meet higher grain volumes. 

“Grain production is increasing at a rate of 3% per year, which means exports will grow at a rate closer to 4% due to the fact that domestic consumption is not growing at the same rate as production,” said WGEA Executive Director Wade Sobkowich in a March 12 statement.

To accommodate increasing production levels, Canadian grain companies have expanded country elevator storage by 13.9%, port terminal storage by 11.2% and increased system throughput by 16.5% over the last five years, according to Sobkowich. 

But in that same time frame, Sobkowich says railway fleet sizes have grown by 2.5% and loaded weight per car has increased by 3.1%. However, car cycle times, or the time in which rail cars complete their loading/unloading cycle, have grown by 19%, Sobkowich said, using figures from the Federal Grain Monitor.

For now and in the meantime, Canadian grain shippers could find some relief at the end of the month, according to Gowriluk. “Grain is now being positioned at Thunder Bay as the port will be reopening for the season at the end of March,” she said.

US rail volumes face uneven comps in the weeks ahead

As with Canada, U.S.. grain volumes have also seen significant jumps year-over-year, with year-to-date grain carloads up 27.2% to 278,926 carloads amid strong export demand.

Meanwhile, U.S, rail volumes on a weekly basis rose 11.6% year-over-year, but the comparison is uneven because last year marked the start of the steep downturn in rail traffic due to the COVID-19 pandemic, according to AAR.

U.S. rail volumes for the week ending last Saturday totaled 513,325 carloads and intermodal units, a 11.6% increase from the same period in 2020.

Year-over-year intermodal volume growth has been concentrated in international intermodal volume. International intermodal volume, relative to the year-ago period is shown on the above left and domestic intermodal volume, relative to the year-ago period is shown on the right. (FreightWaves SONAR) To learn more about FreightWaves SONAR, click here.

Of that, carloads rose 2.9% to 230,605, while intermodal units gained 19.8% to 282,720 containers and trailers.

However, the year-over-year comparison is “inflated because of the widespread economywide shutdowns — and subsequent large reduction in rail volumes — last year at this time,” AAR said.

Meanwhile, on a year-to-date vasis, U.S. volumes totaled 5.49 million carloads and intermodal units, which is up 3.5% year-over-year. Carloads are down 4.3% to 2.45 million carloads, and intermodal units are up 10.7% to 3.04 million containers and trailers.

U.S. carloads (blue: RTOTC.USA), intermodal trailers (red: RTOIT.CLASSI) and intermodal containers (green: RTOIC.CLASSI) over the past year. (FreightWaves SONAR) To learn more about FreightWaves SONAR, click here.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.