Yearly ritual of Canadian RR getting blasted for not carrying grain in timely manner and RRs saing they are not receiving enough revenue… Shades of the old crow’s nest rates. Are these rates the only ones in Canada that are this regulated ? Maybe CN & CP may need more locos that just are not available.
LINK
enough
Hi Blue
Yes, it has been a yearly ritual after the Crow Rate was repealed.
The way things work here in a now deregulated operating structure… The railways can set their rates and prioritize grain traffic according to other traffic volume and the rates this volume commands. Crow forced the railways to move the grain at a fixed rate, with priority, and under conditions set by the governing Crow Rate Act.
This Act no longer applies and the railways have developed other traffic and revenue sources which push grain further down the priority list.
Then we get a bumper crop as we got this year, and guess what.
Nobody is ready, least of all the Government of Canada. What then happens is that the Minister of Agriculture and Transport do their executive thing (read Regulations or Minister’s Orders) which have the force of law to get CN/CP moving the volumes of grain needing to be removed from farmers’ granerys or local elevators.
I’m sure there will be ‘supply chain’ logistics to figure out but the bottom line is that GofC has the legal/regulatory power to force the RR’s to comply. $100K per day fines for non-compliance will get their attention.
Stay tuned…
Charlie
Chilliwack, BC
The railways are certainly not moving the grain fast enough to satisfy the farmers, but hard numbers to compare with previous years are hard to find. I can’t determine how much of the problem is due to the bumper crop overwhelming the system rather than solely the railways’ fault.
I also wonder if there might be more being shipped south into the USA. Grain trains going to Vancouver usually have a fast cycle time getting the empties back to the Prairies, assuming the port elevators are handling the arriving trains properly (not always the case). In the past I had heard comments about slow return of cars from the south. Basic arithmetic says that if it takes twice as long for a cycle, only half the quantity can be moved. We can’t wave a magic wand and have the car builders instantly build another 5,000 cars by tomorrow. Nor does it make economic sense since they might not be required again for five years and the idle asset needs to be stored somewhere.
Putting my tongue in my cheek, perhaps the government should also regulate avalanches in the mountains so they don’t close the line (and the highways) during busy grain seasons. Most avalanches originate in parks and crown land, which are already administered by the government itself.
John.
Canada’s Agriculture Minister says; “You’ve heard of ‘back to work’ legislation, well this is ‘get to work’ legislation”.
http://www.ctvnews.ca/canada/ottawa-steps-in-to-ease-grain-backlog-1.1718837
I will get back to this thread at a more sensible hour, but suffice it to say I am very angry with the way CP and CN have handled this issue since the 1983 repeal of the “Crowsnest Pass Agreement” of 1897.
Bruce
Everybody wants his traffic moved to the front of the line. It would be nice – especially in these capacity-constrained times – if the railroads could oblige everybody, wouldn’t it?
The farmers and elevators here in North Dakota have been upset with BNSF and CP. The problem, besides a big harvest and competing oil traffic, has been severe winter weather.
I’d be surprised if the railroads aren’t doing the best they can, short of breaking out their magic wands. They get a lot of money – about $3,000? – for every car of grain hauled, but don’t get paid until they do the job.
It seem that the Canadians are experiencing their annual rite of Spring…“…Grain Car Blues…”.
[snip] “…In the 1890s, when rich mineral deposits were discovered in the Kootenay region of southern BC, American developers began to move into the region and extend rail lines northward from their transcontinentals. The CANADIAN PACIFIC RAILWAY, determined to retain control of southwestern Canada, asked the federal government for assistance to extend its own line over the CROWSNEST PASS into BC. At the same time, Prairie farmers were complaining about high freight rates charged by the CPR, and further federal assistance to that company would be unpopular unless something was done about the freight rates. …”[snip]
From this link@http://thecanadianencyclopedia.com/en/article/crows-ne
One ‘trueism’ that gets thrown around my company is that a 1 MPH change in system velocity equates to the availablity of 75 locomotives…ie, if velocity drops 1 MPH, 75 more lcomotives are required to support the traffic level, conversly if velocity increases 1 MPH then the system can handle more traffic with those 75 locomotives. The more congested the system gets, the more locomotives (as well as cars) get tied up in the congestion and not moving. With congestion, locomotive utilization and car utilization both suffer and it takes more of both to move the traffic.
My carrier was moving at 23.8 MPH in September and 20.2 MPH currently - 3.6 MPH difference that equates into 270 additional locomotives needed to support the system.
I am sure every carrier has their own yardsticks as to how changes in system velocity affect their particular system and they may or maynot be similar to my carrier’s.
Bruce.
I’m with you.
The Crow was a good thing IMHO but IIRC neither CN or CP liked it much, especially latterly. Said it forced them to ship grain at a not profitable enough rate and forced them to move the traffic expeditiously IIRC. Seems to me also that Gof C purchased most of the grain hoppers they used before repeal of the Crow. I never thought the railways had a bad deal with the Crow and as you say it served them and us well for 100 years. The railways even got the hoppers on their rosters now as I notice those grain hoppers coming through town have CP reporting numbers now.
I’d be really interested in your reasons for your anger at the railways, given that you and your family had a long history with CP.
Op’s insider’s view would be really instructive.
Charlie
Chilliwack, BC
Everybody likes being on the receiving end of a cross subsidy, those on the paying end – other shippers, the taxpayers, the railroads – not so much. The outmoded Crow’s Nest rates had to go for the same reason such confiscatory arrangements were scuttled in the United States: The government was scared to death that it would end up having to run the trains itself! (In Canada, the government didn’t just shed Crow’s Nest but a whole railroad!)
Fred
I can appreciate your point of view, however as Sam pointed out above, it was a significant historical quid pro quo that got the Crow Rate established in the first place in 1897. CP got lots of help from the federal government at that time.
I have no idea about analogous situations in the US. In Canada there have been plenty of cross subsidies over the years, the latest being auto manufacturing (tax breaks, development funding etc). Don’t they now occur in the US too, in areas needing an economic ‘boost’?
CN, when it was a Crown Corporation still and before it was devolved to the private sector, was turning a profit under Paul Tellier’s leadership.
As I said previously, I’m really interested to hear what Agentkid has to say, given he and his family’s working association with CP over the years.
Until then I really don’t have much more to offer.
Charlie
Chilliwack, BC
I can’t disagree with you there, my problem is the behaviour of the railways since the repeal of the Crowsnest Pass Agreement. The revenue increases for grain hauling they received after the repeal should have been treated like a gift from God, and poured in to bringing their infrastructure in western Canada up to the requirements of the 20th and 21st Centuries, Instead it went to line the pockets of shareholders and increase executive salaries. Boasting how revenue per carload of grain is one of their highest earning categories is inexcusable.
It has been said that the “Prime Directive” of democratically elected governments is to get themselves reelected. In two of the three prairie provinces there is sufficient farmer vote to scuttle that plan for the current Federal government if they don’t do something significant, quickly. And it is not just the inability to move grain that is the problem. There is intermodal from Asia, crude oil from Alberta and Saskatchewan, and potash from Saskatchewan. See the following article on potash:
http://www.ctvnews.ca/business/potash-market-uncertain-but-expected-to-grow-td-1.1715291
As I have said elsewhere, the population of Alberta has almost tripled in my lifetime, and Saskatchewan is experiencing significant growth as well. This is a result of very good paying jobs in the resource extraction sector, and those folks are all purchasers of co
Bruce
IMHO you got it, in spades, from a Canadian point of view…
Charlie
Chilliwack. BC
Charlie:
The Crow rate was indeed a very good thing, for the farmers. I would love to go down to the store and buy my groceries at 1897 prices, while still earning a modern income. It wasn’t that the rate wasn’t “profitable enough” for the railways, instead in modern times they were actually losing money hauling grain and it had to be cross-subsidized by other commodities.
Back in 1897 the Crow Rate was not such a marvelous deal for the farmers. It was intended to approximate a commercial rate if normal competition had existed. But it never occurred to the parties to include any provision for inflation. Modest inflation did occur but the railways were able for many years to absorb it through increased efficiency, as the 4-4-0 steam locomotives and 30 ton boxcars increased in size. For a short period the rates actually dropped below the Crow. It was after WW2 that inflation started to accelerate. Dieselization helped keep it somewhat compensatory for a little longer.
The agreement was only between CPR and the government, and covered only the CPR lines that existed at the time. It was expanded to apply to both railways and all prairie branches by unilateral legislation several decades later.
By 1970 the Crow rate was a serious losing proposition for the railways. The government was in a bind, since it looked like political suicide to eliminate the Crow rate. The railways were losing lots of money hauling grain, weren’t willing to throw good money after bad, and major investment was urgently required. As a result, the band-aid solution was a government sponsored program to rehabilitate a number of grain dependent branchlines and buy the fleet of covered hoppers to replace the worn out fleet of 36 and 40 foot boxcars. That kept the system creaking along for a few more years.
[quote]
Canada grain shippers, railways in a “cold” wars
Railway Age (Online)
By David Thomas March 6, 2014
Clearing the autumn grain harvest from trackside elevators is a perennial occasion for ritual fist-shaking on the Canadian Prairies. Western Canadian farmers enjoy a long tradition of blaming the railways for their woes, even more than the weather. (A favorite national folk tale has a Prairie farmer stricken by hail and locusts cursing, “God damn the CPR.”)
This year’s historic bumper crop has conspired with exceptionally frigid air to make the grain-shipping season particularly contentious.
The immediate conjunctural factors of crop size and weather have conspired with underlying structural conditions to increase the prospect for yet another in Canada’s long history of federal attempts to balance rail efficiency and the frustrations of Western Canada’s grain growers.
The leading wheat farmers’ lobby wants the Western-dominated Conservative government in Ottawa to legislate “service obligations of the railways, in terms of car order fulfillment, car spotting, pickup, and delivery.” It also wants shippers to have “interswitching” access to a competing main line carrier extended from 30 km (18.6 miles) to 120 km (74.4 miles). The government says it is listening sympathetically.
The Western Canadian Wheat Growers’ Association advocates adjusting the country’s regulated cap on grain rates to give railways “greater incentive to provide additional surge capacity during the peak post-harvest shipping period.” But it wants to rake some of that back by sharing in the productivity gains made by the railways since the rate cap went into effect 14 years ago.
Crude-by-rail has become a new but probably illusory target for grain shippers. The Saskatoon-based wheat lobby argues, "Increased shipments of oil by rail result in fewer locomotives, crews, and line capacity dedicat
Balt,
Good article. Glad you posted it. It lays out the variety of factors historically and presently at play.
In my own sometimes inept way I was trying to get at this in fewer words (not always a good thing with something so complicated).
Again, the article lays it out well.
Thanks again
Charlie
Chilliwack, BC
First, I wanted to thank blue streak 1 for bringing this matter to our attention. As one of Newton’s Laws points out, for every action there is an equal and opposite reaction. As was pointed out on a Canadian RR forum yesterday, now we await the “fine levy” season which will soon follow. It was pointed out that these fines have rarely been that significant. During EHH’s tenure at CN, that company raised appealing those fines up to almost an art form. They would cite weather, avalanches, and a plethora of other excuses. IIRC I believe some of those appeals still haven’t been resolved.
I want to thank Balt for posting the Railway Age article. It did a fairly good job of covering the issue. That CN invested $100 million is just one of many projects that need to be completed, so kudos to CN for dealing with that aspect of the problem. Also, I was under the impression that one of EHH’s achievements while at CN was getting the elevators at Vancouver to accept cars on a 24/7 basis. I did not realize some are apparently still not doing so.
I do want to address Ed Greenberg’s comment further. I have no reason to doubt that his assertions about CP’s deliveries to the coast are correct, but he does not address the real problem, Cycle Time. You can haul that many loads west, or return that many empties EB, but you cannot do both at once. Further significant investment in infrastructure will be required before a balanced cycle can ever be achieved reliably on a year round basis.
Bruce</
Bruce
I’m still with you. That’s why your CP ops insight/experience was important IMHO.
I value your comments and perspective from where you sit/stand…
Charlie
Chilliwack, BC
Who is in charge of the transloading facilities at the Western Canada ports? Railroads? Port Authorities?
The speed of the transloading facilities is the normal determinate in cycle times. If the transloading facility can handle a train a day and the railroad delivers two, they aren’t doing the cycle time any benefits. Secondarily, loading time at the elevators. I suspect there are many more elevator able to load trains than there are port transloading facilities.
The latter. That’s a major part of the problem Agent Kid refers to. They are an entity unto themselves often enough. The feds have a strong say in their operation which is evident especially in ongoing discussions about pipeline terminals and the like.
this is a very tangled web, believe me…
Charlie
Chilliwack, BC
That is not the case here. The point I was trying to make is the constraint posed by the mountain railroading between Calgary and Vancouver. You simply can’t get enough loads out to Vancouver and empties back to Calgary at the same time to overload the transloading facilities, as you call them, in Vancouver. We call them elevators. And I have to admit I never heard of Port Authorities until I started reading TRAINS.
The business has always been conducted between the railways, and the grain companies, who both load the grain at the country elevators and unload the grain into their own elevators at the docks. Although this has been changing as grain companies, like other big corporations, spin off profit centres or sell them to specialists in a particular field. I know there are others, but the only one I am familiar with is at Thunder Bay, ON. The former Saskatchewan Wheat Pool Elevator there is now operated by Mission Terminals.
I can’t remember when I read this, but it was before the internet, I’m just not sure if it was before or after the Mt. MacDonald Tunnel opened in 1986. The article said; the railways would improve their deliveries to the coast if the grain companies would just tell them when the ships were due, so they could have set deadlines. The grain companies said essentially, don’t worry your pointed little heads about that, just haul all grain, all the time, and we can load everything you can get to us. The railways of course replied, that is impossible, we have other customers. Unfortunately, in typical Canadian fashion, this impasse was never resolved to everyone’s satisfaction