Pandemic Downturn Frees Up Rail Cars to End Canada Grain Logjam


(Bloomberg) -- A backlog of grain is almost gone from farms on Canada’s Prairies after the coronavirus outbreak damped demand for rail transport of goods from sectors including manufacturing and construction.

Railways handled record-high volumes of wheat, canaola and other crops, said Wade Sobkowich, the executive director of the Western Grain Elevator Association, which represents exporters including Glencore Plc’s Viterra unit and Richardson International. Exports are surging through the Port of Thunder Bay, and the number of ships waiting for grain in Vancouver has tumbled 43% from a peak in March.

In early March, grain shipments to ports trailed year-earlier volume by more than 1 million metric tons after rail blockades in protest of TC Energy Corp.’s planned Coastal GasLink project. The delays added to a backlog of crops stuck in the Prairies stemming from a late harvest and a week-long strike at Canadian National Railway Co. in November. Farm analysts had anticipated the backlog would take six months to clear.

“We certainly don’t want to say it’s a good thing, because it hasn’t been, but the reduction in other sectors has freed up capacity for grain,” Sobkowich said in a telephone interview. “People can live without fuel for a while, but they can’t live without food, and countries are looking to bolster their supplies.”

Pandemic Downturn Frees Up Rail Cars to End Canada Grain Logjam

Canada is the world’s top canola exporter and one of the top wheat shippers.

CN moved a record amount of grain in April and delivered more rail cars than planned, said Sean Finn, the company’s executive vice president of corporate services and chief legal officer. Adding grain cars and bolstering the main line between Winnipeg and Edmonton helped expand capacity to haul crops, he said. Meanwhile, shipments of goods such as lumber and automotive parts declined.

Last month, CN said 500 locomotives and 14,000 rail cars were idle as manufacturers cut production amid shutdowns linked to the virus outbreak.

Canadian Pacific Railway Ltd. moved 2.8 million tons of grain in April, a monthly record high, and the railway handled 6% more grain this crop year to date than a year earlier. The company cited investments in new, larger rail cars.

“The backlog has been eaten up because the overall supply chain and unloading at the ports and terminals and ships have all been in sync,” Finn said in a phone interview. “That’s allowed us to clear out a lot of grain that was there.”

Grain shipments through Port of Thunder Bay are up 17% from a year earlier, and the number of vessels waiting for crops in Vancouver has dropped to about 30 from more than 50 two months ago, according to Quorum Corp., a company hired by the federal government to monitor Canada’s grain-transportation system.

Turkey and other northern Mediterranean countries are buying ample supplies of durum wheat from eastern Canada, and grain volumes have been strong from the West Coast, Quorum President Mark Hemmes said.

“The good news for the grain industry is everything else has slowed down so much that the railways are really focusing on moving grain,” Hemmes said.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.