Canada Markets

Railways' Shipping Recovery Slowed by Cancellations

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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While the backlog of railcars is slowly being addressed on the prairies, the unfulfilled demand for cars continues to increase, reported at 31,232 cars as of week 35, as railway cancellations continue to add stress to the country handling system. (DTN graphic by Cliff Jamieson)

The expected recovery in movement of grain by rail could be a long one. In week 35, the two railroads combined spotted 69% of the empty hoppers requested for loading in the country, the best performance seen in 10 weeks and well above the 32% reported for week 30. At the same time, this remains well below the 86.5% average reported over the past two years.

The number of cars in the backlog is reported at 3,460 hoppers, the lowest reported in eight weeks while having fallen four times in the past five weeks. This represents 1.2% of total cars ordered, down from 2.1% calculated in week 30 when the backlog reached its highest level of 5,383 cars.

At the same time, the total unfulfilled shipper demand continues to grow. This is defined as the sum of outstanding orders (the backlog), rejected cars, railway cancelations, and shortened supply, as reported by the AG Transport Coalition, a group of shippers representing 90% of prairie grain shipping. As seen on the accompanying graphic, this number has swelled to 31,232 cars, up from 12,040 cars reported for the same period last year and the three-year average of 14,635 cars.

The largest share of this unfulfilled demand is made up of railway cancellations, which at 21,851 cars (21,751 CN and 100 CP), makes up 70% of the unfulfilled demand. The week-over-week increase in railway cancellations fell for two consecutive weeks from 1,536 cars in week 32 to 382 cars by week 34, while increased by 659 cars in week 35. It may be two steps forward and one back while the railways attempt to execute on commitments made to improve shipping.

Over the past five weeks since week 30, the backlog in cars has fallen from 5,383 cars to 3,460 cars, an improvement of 1,923 cars, while outright cancellations have increased from 17,210 cars to 21,851 cars, or a total of 4,641 cars. Total unfulfilled demand has increased from 27,361 cars to 31,232 cars, or a total of 3,871 cars. As of week 35 in 2016/17, the unfulfilled demand was reported at 12,040 cars and in 2015/16, 7,839 cars.

What remains interesting in the weekly coalition report, the total demand for hopper cars is reported at 298,055 hopper cars in the first 35 weeks of the 2017/18 crop year, just 56 cars short of the same period in 2016/17.

The result is that a total of roughly 2.8 million metric tons remains trapped on the prairies, given a volume of 90 mt/car.

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

Follow him on Twitter @CliffJamieson

(AG)

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