56% Is not a Passing Grade

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56% Is not a Passing Grade

Klause's Avatar Feb 4, 2018 | 21:19 1 https://www.grainews.ca/2018/01/24/w...passing-grade/


Knock knock jokes are as old as the hills. For those of you who never had the pleasure, they went this way: “Knock, knock.” “Who’s there?” Then a roll-your-eyes type Q & A would ensue.

These days rail service feels like a knock knock joke. The billion-dollar question is when and if cars will arrive. The shipping industry had enjoyed decent rail service since the Conservative government issued an Order in Council in 2014, which imposed minimum volume requirements on the railways. Car orders were fulfilled well last year, and the industry came to depend upon reasonable service.

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Read more: CN’s Q4 grain handle down in ‘challenging conditions’
But in the last few months a sense of déjà vu has set in — no cars, cancelled cars, erratic service, fewer cars than ordered, slow delivery to port.

This fall CN rail’s overall car order fulfilment rate dropped to 56 per cent, well under the performance of CP rail. Shippers made sales only to find themselves plunged back into the territory of unreliable rail service, making it difficult to commit to new sales.

Read more: CN sets new record for grain shipment
This comes in a year when the pulse export market has been tough due to increasing global production. With lower demand, every contract gleaned is a prize weighted heavily, but lack of rail service can mean potentially losing even the little bit of business squeezed out of the moribund market.

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In 2013-2014, when already-bad rail service actually broke down in Western Canada, buyers waited months for product. Today, increased global supply finds Canadian suppliers in a much more competitive market. Importers have options beyond Canada.

Canada’s age old problem needs a long-term solution.

Level of service agreements exist, but without reciprocal penalties for non-performance by the railways (shippers must pay penalties and demurrage), railways have zero liability for failing their customers. Industry has done its part by investing in more efficient elevation capacity. There are fewer loading points with faster loading equipment. Producers haul farther and have invested in more on-farm storage.

Read more: New record set for Prairie grain throughput in 2016-17
Fewer points of origin, we were told, would be the key to better service. But still, railway service is not dependable.

Shippers take issue with the way the lack of service is managed. Individuals must file tedious, expensive and lengthy complaints. If the ruling is in favour of the shipper, relief only applies to that one shipper bold enough to file the complaint.

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Ideally, the Canadian Transportation Agency would be able to take action on its own to address railway underperformance.

Sounds reasonable, but railway lobbyists are working hard to convince the government to err on the side of the railways, and the record suggests they will.

While our forefathers bound the nation with the critical artery of rail, knowing that landlocked production would need to get to an ocean, this country has been continuously plagued with rail service issues. This, despite taxpayer-supported infrastructure and government policy that has included the Crow Rate Agreement, the Western Grain Transportation Act (WGTA) and dozens of studies and commissions. One process after another, until dismal service forced government intervention — a short-lived bill that was rescinded by the Trudeau administration promising relief, which is now held up by the Senate.

Railway shares have been an amazing investment with excellent shareholder returns. But poor service still rears its ugly head, and a tired export community finds less reason to believe the nation has any intention to get this right after 150 years.

Is 56 per cent order fulfilment good enough to ensure Canadian businesses can earn a return on investment and meet their customer’s needs? Is this what global customers expect from a supplier? Like the driving of the last stake 150 years ago, only the federal government can determine the right mix of legislation that will encourage the railways to provide a level of service that preserves the confidence of an industry invested in export supply.

Fifty-six per cent is not a passing grade. Knock Knock. Who’s there? It’s a Canadian exporter! Guess what, we still just want dependable rail service.
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