Canadian National’s president and CEO, Paul M. Tellier, says that existing grain car cycles are too long, preventing just-in-time delivery of grain and rapid response to market demand.
He has challenged all the stakeholders in Canada’s grain transportation and handling system to halve the time it takes to deliver grain to port and return empty grain hopper cars to the Prairies for reloading.
Citing the example of Vancouver, which handles more than 60 per cent of Canada’s export grains, Tellier said the grain supply chain in 1999 required 21 days to deliver grain to port from the Prairies and to get grain cars back in position in the country for reloading. CN has since taken 2.5 days out of its cycle but Tellier says the cycle is not good enough.
“Twenty-one days is simply not acceptable. No commodity can remain competitive on world markets with that kind of turnaround time… My goal is to be able to make that trip in 11 days,” he says.
Tellier says a more efficient logistics system that halves turnaround times would reduce inventory and storage costs, and permit spot sales of grains that can put more money in farmers’ pockets.
Moving more grain at peak demand is worth $10 to $15 per tonne, representing close to 50 per cent of the average cost of hauling grain. Such a system would also require fewer grain cars – a 10-day improvement in cycle times would permit a significant reduction in the fleet. And with fewer cars, CN would have more room to lower rates.
Tellier says CN has proven that it can offer more precise transportation, as it already operates Supertrains – 100 cars of corn or soy beans that go from Illinois and Iowa to New Orleans for export and back again in six days. And in a pilot project last year involving a 100-car car Shuttle Train, CN moved loaded cars from high throughput elevators to Vancouver and back to the country for loading in seven days.
But, says Tellier, while the grain companies’ investments in high throughput elevators are a solid foundation of a good logistics system, export terminals must also increase their efficiency.
The increased use of short lines would help grain logistics, Tellier says. But he made clear the short line solution “works only when it is based upon commercial agreements… Short lines will not solve any grain transportation issues if they are anchored in regulatory intervention.”
For example, he says, forced access would re-introduce heavy regulation of the rail industry. “What farmers need, however, is a system that greets the future. They need a system that anticipates that global markets will only get more competitive,” that promotes competitiveness and fosters greater efficiencies.
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