UPDATED: Railways install new systems for allocating grain car orders
Posted Nov. 27th, 2014 by Brian Cross
CN and CP Plans, including dedicated service for large grain shippers, aren’t enough to quell criticism from federal ag minister
UPDATED: Friday November 28, 2014 – 12:15 CST
Canadian Pacific Railway has released additional information about recently implemented changes to its rail car allocation system.
Officials with CP say one of the key elements of the company’s new car allocation system is a dedicated train program that allows large shippers more flexibility to control their own logistics.
“One of the key changes is a dedicated train program that allows larger, unit-train shippers the opportunity to control their own supply chain and commercial interests,†CP officials said.
The company has also placed a cap on the number of car orders it will accept from small shippers.
“For smaller producers, we have given them flexible options with an open distribution system that allows them to book up to four orders per facility at one time,†the company said.
According to CP, each of the four current orders placed by a small shipper may be no more than the spot capacity of the elevator.
For example, a 25-car shipper can have a total of four 25-car orders in the CP system at a given time.
If a shipper has four elevators, that means CP will accept up to 16 orders at one time.
Orders placed by small shippers do not need to be for consecutive weeks.
As orders are filled, new orders will be accepted by CP.
“These changes give flexible options to our customers both large and small,†CP said.
Canadian National Railway also confirmed last week that it has changed the way it handles rail car orders.
CN’s new rules include limits on the number of car order requests that will be received by the railway during periods when the demand for rail cars exceeds the supply.
“The changes CN has made to the western grain hopper car order-taking process and to the grain car allocation methodology were driven by a number of key considerations,†said a Nov. 21 email from Mark Hallman, CN’s director of communications.
“Ultimately, these changes are intended to promote more effective communication of week-to-week priorities among grain shippers, operators of unloading facilities and CN.â€
Under CN’s system:
• Total car order requests by a large grain shipper must not exceed two weeks’ worth of the shipper’s maximum base car allocation.
• Outstanding producer car orders must not exceed twice the car spot capacity of the loading site.
• Producer car shippers will be required to provide additional information, including unload destinations for grain hauled exclusively on CN’s network and interline route information for grain that is transferred to another network.
• Shippers will be required to provide terminal authorization confirming that a terminal will receive and unload the grain when it is delivered.
CN said new measures that limit the number of car order requests received will provide the railway with “ample forward visibility to plan service and deployment of its assets and resources at times when the grain supply chain is in high gear.â€
The new provisions will also reduce so-called “phantom†car orders, in which shippers request more cars than they actually need, CN said.
“First and foremost, CN’s experience during the record 2013-14 crop year clearly established that unlimited car order requests can provide an unreliable and misleading indicator of demand because some shippers can place ‘phantom’ order requests,†the company’s email said.
“Indeed, by March 2014, the accumulation of so-called unfilled orders reached an unprecedented level, well beyond the capacity of the overall supply chain, not just of CN’s communicated rail capacity.â€
If car order requests exceed the limits established by CN, shippers will be expected to remove excess order requests from CN’s Grain Car Order Book.
If shippers fail to remove excess orders, CN will remove the orders on its own.
The Western Grain Elevators Association (WGEA), which represents Canada’s largest grain handling companies, declined to comment on the new car allocation policies when contacted last week.
Speaking from Regina on Nov. 24, federal agriculture minister Gerry Ritz dismissed the railways’ new rail car allocation policies, suggesting Ottawa will continue to ensure that CN and CP move Canadian grain to market in a timely manner.
“CN and CP can howl at the moon, they can do whatever they want, but … they’ll haul what they’re asked to haul,†Ritz said.
“They can make up whatever (rules) they want, but at the end of the day, they’re not the ones that allocate producer cars, they’re just the ones who haul them.â€
Ritz said producer car orders will continue to be handled as they have in the past.
He acknowledged that the performance of the producer car allocation system was hit and miss last year, depending on where producers were located.
“Certainly, there were high points and there were low points,†he said.
CP has been using its new car allocation procedures since the end of October.
CN’s changes were communicated to grain shippers in August and implemented in mid-September.
Contact brian.cross@producer.com
Posted Nov. 27th, 2014 by Brian Cross
CN and CP Plans, including dedicated service for large grain shippers, aren’t enough to quell criticism from federal ag minister
UPDATED: Friday November 28, 2014 – 12:15 CST
Canadian Pacific Railway has released additional information about recently implemented changes to its rail car allocation system.
Officials with CP say one of the key elements of the company’s new car allocation system is a dedicated train program that allows large shippers more flexibility to control their own logistics.
“One of the key changes is a dedicated train program that allows larger, unit-train shippers the opportunity to control their own supply chain and commercial interests,†CP officials said.
The company has also placed a cap on the number of car orders it will accept from small shippers.
“For smaller producers, we have given them flexible options with an open distribution system that allows them to book up to four orders per facility at one time,†the company said.
According to CP, each of the four current orders placed by a small shipper may be no more than the spot capacity of the elevator.
For example, a 25-car shipper can have a total of four 25-car orders in the CP system at a given time.
If a shipper has four elevators, that means CP will accept up to 16 orders at one time.
Orders placed by small shippers do not need to be for consecutive weeks.
As orders are filled, new orders will be accepted by CP.
“These changes give flexible options to our customers both large and small,†CP said.
Canadian National Railway also confirmed last week that it has changed the way it handles rail car orders.
CN’s new rules include limits on the number of car order requests that will be received by the railway during periods when the demand for rail cars exceeds the supply.
“The changes CN has made to the western grain hopper car order-taking process and to the grain car allocation methodology were driven by a number of key considerations,†said a Nov. 21 email from Mark Hallman, CN’s director of communications.
“Ultimately, these changes are intended to promote more effective communication of week-to-week priorities among grain shippers, operators of unloading facilities and CN.â€
Under CN’s system:
• Total car order requests by a large grain shipper must not exceed two weeks’ worth of the shipper’s maximum base car allocation.
• Outstanding producer car orders must not exceed twice the car spot capacity of the loading site.
• Producer car shippers will be required to provide additional information, including unload destinations for grain hauled exclusively on CN’s network and interline route information for grain that is transferred to another network.
• Shippers will be required to provide terminal authorization confirming that a terminal will receive and unload the grain when it is delivered.
CN said new measures that limit the number of car order requests received will provide the railway with “ample forward visibility to plan service and deployment of its assets and resources at times when the grain supply chain is in high gear.â€
The new provisions will also reduce so-called “phantom†car orders, in which shippers request more cars than they actually need, CN said.
“First and foremost, CN’s experience during the record 2013-14 crop year clearly established that unlimited car order requests can provide an unreliable and misleading indicator of demand because some shippers can place ‘phantom’ order requests,†the company’s email said.
“Indeed, by March 2014, the accumulation of so-called unfilled orders reached an unprecedented level, well beyond the capacity of the overall supply chain, not just of CN’s communicated rail capacity.â€
If car order requests exceed the limits established by CN, shippers will be expected to remove excess order requests from CN’s Grain Car Order Book.
If shippers fail to remove excess orders, CN will remove the orders on its own.
The Western Grain Elevators Association (WGEA), which represents Canada’s largest grain handling companies, declined to comment on the new car allocation policies when contacted last week.
Speaking from Regina on Nov. 24, federal agriculture minister Gerry Ritz dismissed the railways’ new rail car allocation policies, suggesting Ottawa will continue to ensure that CN and CP move Canadian grain to market in a timely manner.
“CN and CP can howl at the moon, they can do whatever they want, but … they’ll haul what they’re asked to haul,†Ritz said.
“They can make up whatever (rules) they want, but at the end of the day, they’re not the ones that allocate producer cars, they’re just the ones who haul them.â€
Ritz said producer car orders will continue to be handled as they have in the past.
He acknowledged that the performance of the producer car allocation system was hit and miss last year, depending on where producers were located.
“Certainly, there were high points and there were low points,†he said.
CP has been using its new car allocation procedures since the end of October.
CN’s changes were communicated to grain shippers in August and implemented in mid-September.
Contact brian.cross@producer.com
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