Western Canadian grain producers remain without the protection of legislation that enforces the efficient and orderly flow of grain to domestic and export markets as the Canadian Senate deals with Bill C-49, or the Transportation Modernization Act. While December reports point to the complexity of the bill, which includes a wide variety of transportation components including passenger protection on airlines, it may not be a stretch to view the railways' lobby resources playing a role in the foot-dragging.
Week 26 data from the Ag Transport Coalition, data comprised from a group of shippers that covers 90% of grain shipped in Western Canada, shows 57% of the hopper cars in demand for week 26 loading were spotted by CN Rail, while cars representing 78% of total demand were spotted by CP Rail.
As seen on the attached graphic, CN Rail and CP Rail have reversed roles since the 2016/17 crop year, with CP's weekly order fulfillment percentage lagging CN Rail for most of the crop year, as indicated by the brown line (CN) exceeding the yellow line (CP). In 2016/17, CP's weekly fulfillment rate trailed CN in 46 of 52 weeks, or 88% of the crop year. Results fell closely into line by week 40, or early May. The average spread between the fulfillment rates reported for the two railways was 10.6 points, while the widest spread was 29 points for week 30, with CN's fulfillment rate of 88% compared to CP's rate at 59%.
Fast forward to 2017/18 data. Over the first 26 weeks or 50% of the crop year, CP's fulfillment rate has averaged 14.9 points higher than that of CN, as seen by the trend in the black line (CP) as compared to the blue line (CN) on the attached graphic. The widest spread on the graph is seen in data for week 12, with CN spotting just 51% of the cars in demand for loading for the week while CP spotted 94% of the cars in demand, a spread of 43 points. The recent trend shows CN's fulfillment rate sliding from 90% in week 21 to 57% in week 26, or over five consecutive weeks. While CP's fulfillment rate slipped below 60% three times in 2016/17, CN's rate has slipped below the 60% level six times in the first half of 2017/18.
The Canadian Grain Commission's week 27 statistics shows in-transit stocks of all grains on western rail at 489,900 metric tons, which is 67,400 mt below the same week in 2016/17 and 11,800 mt below the five-year average.
The coalition's report also includes unfulfilled shipper demand, which consists of the sum of outstanding orders, rejected cars, railway cancellations, shortened supply and denied orders. The chart data that cannot be missed is railway cancellations. In total, CP's unfulfilled shipper demand this crop year is 3,164 cars, or at 90 mt/car, totals an estimated 284,760 mt. CN's unfilled shipper demand totals 15,951 cars or 1.436 million metric tons, with 80.5% of this volume due to CN Rail's cancellations.
While the transportation wreck of 2013/14 remains fresh in shipper's minds, one media report indicates this time is different in that CN has recognized and has reported it has a problem.
In the meantime, the Senate should follow the advice of Larry the Cable Guy and just get 'r done to allow for to permanent legislation to protect producers by leveling the playing field.
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