Canada Markets

The ink had barely dried on Canada's Supreme Court January 30 decision, which ruled to include the right to strike in the country's Charter of Rights -- including government workers that are viewed as essential services -- when farmers might have gotten a glimpse of what's to come.

Members of the Teamsters Canada Rail Conference voted 93% in favor of a strike pending the outcome of ongoing negotiations with CP Rail. This union represents locomotive engineers, conductors and other staff across the country.

While the two sides are in the middle of a 21-day period which is viewed as a cooling off period and mandated by Labour Canada, the eligible unionized members could be in a position to strike as soon as Feb. 15.

While the Supreme Court decision could make it difficult for future government intervention involving back-to-work legislations in situations such as this, the action also comes at a time when rail service for Prairies grain is far from satisfactory, which will lead to pressure from the farm community along with other shippers.

The most recent Weekly Performance Update, the third of its kind from the Ag Transport Coalition which covers week 24, the week ending Jan. 18, shows a continuation of the disappointing results indicated in last week's report.

In week 24, CN and CP placed just 32% of the cars ordered for the week (in addition to previous week's orders), which is an improvement from only 25% of the ordered cars spotted during the previous week. Year-to-date, 45% of the cars ordered were spotted in the correct week, which is consistent with last week's percentage, while the number of cars not spotted has grown to 17,701 cars year-to-date, 10% of the total demand. At an average of 86 mt/car, this lag in performance is stranding roughly 1.5 mmt on the Prairies.

The data also pits railways, where of the 45% of cars that have been spotted in the correct week, CN has supplied 57% of their total demand in the correct week and CP has supplied 33% of their total demand in the correct week. The two railways have also shown a stark contrast when it comes to corridor performance in week 24 as compared to the previous week, with CN spotting 50% of the cars ordered in week 23 and week 24 for what's known as non-bulk corridors such as the U.S./Mexico, Vancouver transload and Canadian domestic shipments. CP spotted just 10% of the orders destined for these corridors in week 23 and 11% in week 24.

Challenges in moving grain south may have caught up to the industry with today's USDA report cutting U.S. imports of both spring wheat and durum by 10 million bushels each, or 272,000 metric tonnes of each.

The report also assesses railcar dwell times at both country locations and at unloading facilities. While both railroads improved their country dwell-time in week 24 as compared to the previous week, the range of results between railroads is hard to miss. The average country dwell time for CN was 24 hours while CP's came in at an average of 76 hours.

Dwell times at unload facilities in Thunder Bay, Vancouver and Vancouver facilities for transload in week 24 improved in almost all cases over week 23, with CN also much more efficient in turning around cars.

As mentioned last week, CP's response to the Ag Transport Coalition was lukewarm, indicating that the entire focus is on the railroads while focus should be placed on the entire supply chain, "from ports to elevators to terminals."

CN released a statement on Monday boasting grain movement taking place at a record-setting pace and states the company is current in all freight corridors. By the end of January, CN's movement is suggested to be 18% ahead of the same period last year. CEO Claude Mongeau indicated "CN is working closely with its grain customers to make sure all end market segments receive proper service, and we are current in all the corridors we serve for the grain destined to overseas and North American markets."

CN's Western Canada Grain-Order Book shows cars ordered in December exceeded cars shipped by an average of 426 cars/week while cars ordered in January exceeded cars shipped by 443 cars per week. Also added to this report for the first time is data which indicates cars cancelled by customers, perhaps CN's way of fighting back, which indicates cancelled cars ranging from an average of 129 cars per week in January up to an average of 810/week in September.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

© Copyright 2015 DTN/The Progressive Farmer. All rights reserved.