Canadian Crop Trader Has a Workaround for Rail Backlogs
(Bloomberg) -- One Canadian grain trader says it has figured out how to ensure its wheat and canola shipments don’t get caught in the transport backlog gripping the Prairies: load rail cars faster than everyone else.
The secret for G3 Canada lies in high-efficiency grain elevators, according to Chief Executive Officer Karl Gerrand. The enhanced speed has already helped G3 receive better rail service, a trend it expects to continue it completes a C$1 billion ($780 million) expansion that includes as many as eight more elevators in Canada, he said.
“We want to be the shipper of choice for railway companies,” Gerrand, 55, said in an interview at his downtown Winnipeg office. “If we can make ourselves more attractive to the railways we think they’ll give us preferential treatment when times are tough and we’re seeing that today.”
A shortage of rail cars in Canada has left grain and other commodities stranded in parts of the Prairies after harsh winter conditions and a sudden boom in energy production sparked a surge in demand. Grain companies have had to reschedule deliveries as a result and some farmers have been waiting months to deliver their crops to local elevators.
Shippers of grains have 3,965 outstanding orders for rail cars, according to data from the Ag Transport Coalition, which represents agriculture associations including the Alberta Wheat Commission, Canadian Canola Growers Association and Pulse Canada.
Twice as Fast
G3’s elevators can load a train in under 10 hours, about twice as fast as the industry’s average, Gerrand said. Construction of two new elevators in Saskatchewan will be complete before this year’s harvest and the company is now examining expanding its footprint into western Saskatchewan and Alberta, including possible new locations in Vermilion and Carmangay.
The Winnipeg, Manitoba-based company was formed in 2015 after Saudi Agricultural & Livestock Investment Co., or Salic, and Bunge Ltd. acquired a 50.1 percent stake in the former Canadian Wheat Board for C$250 million. Salic increased its share to 75 percent a year later.
G3 is in the midst of building the first new crop terminal at the port of Vancouver since the 1960s. The facility will slash by half the amount of time it takes rail cars to get from the middle of the Prairies to Vancouver and back, Gerrand said.
“We’re not feeling it, not as much as the others,” he said of the current rail delays. “We think it’s impacted us much less because of the infrastructure we’ve invested in.”
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