CP developing new car ordering plan
Canadian Pacific Railway says it will create a new grain car ordering system for its fleet and add more cars. The announcement is in response to a June 20 order by the Surface Transportation Board, requiring CP and Burlington Northern Santa Fe to develop a plan to catch up on severely late grain car shipments.
As Agweek previously reported, BNSF says it will take a number of steps, including hiring more employees and adding locomotives to its network.
On June 27, CP said it had increased U.S. grain loadings by 27 percent since reporting to the STB in April, but acknowledged the “importance of continuing to respond to shipper require- ments” and says it is committed to moving “as much grain as possible” on its U.S. network.
The two railroad companies had previously been ordered to report fertilizer shipment delays and progress on catching up, but that reporting period is over.
In the June 27 report, Keith Creel, CP president and chief operating officer, said the company would supply up to an additional 500 grain cars and is working with other railroads on fluidity, including “exploring new transportation options to avoid congested areas.”
CP said it would supplement 300 to 400 grain cars a week to the Rapid City, Pierre & Eastern Railroad based in Rapid City, S.D., which it sold to Genesee & Wyoming Inc. on May 31. To meet estimated demand for 2013 crops, CP expects to move 2,000 to 2,500 CP-supplied grain cars per week.
The amount shipped will depend on the “markets grain companies wish to ship, and the fluidity of the rail network through Minneapolis-St. Paul, Chicago and beyond,” CP says. Earlier in the spring, CP had attributed most of its delayed shipments to Chicago bottlenecks, but added there were more recent delays in the Twin Cities. The company noted that 70 percent of its wheat shipments are domestic and go through those two terminals.
Beyond the current year, the company is developing a new grain car request system that will provide a “more efficient system for customers and the railroads to meet,” the report says.
Currently, CP has an order system that allows customers to make “unlimited car requests,” so the amount of cars requested or late doesn’t offer an accurate measure of demand, he says. Consequently, the railroad will offer a new Dedicated Train Program. It’ll also add a new method of managing less-than-trainload demand for the fall harvest.
“Recent experience has … illustrated that adding additional resources in congested areas can compound the problem,” Creel says.
Keith Brandt, general manager of Plains Grain and Agronomy of Enderlin, N.D., a CP shipper, says he’s seen an outline of what the new ordering system will be. He says the setup will limit the amount of cars the company puts on the open market.
“That will spoon-feed the supply so it doesn’t look like they’re so far behind,” he says.
Brandt says his company is waiting for CP shuttle trains. The oldest order should have been delivered April 14.
“We have single-car orders that go back to March,” he says.
Brandt says the federal crop report on June 30 indicated 1 million fewer corn acres in North Dakota in 2014 than in 2013 and that will help fix some problems with train shipments. Farmers shifted to soybeans, which have fewer bushels per acre.
“There are a lot of bushels that aren’t going to move by rail,” he says, adding there will be an incentive for farmers to keep grain in on-farm bins.
CP says, based on 2013 crop production data, it could have a backlog demand of 10,000 to 12,000 cars on its railroad. It has a total cumulative open request for 23,818 cars in North Dakota, 8,426 in Minnesota and 985 in Iowa. It says the average age of open requests is just more than nine weeks.
Mark Hovland, a Fessenden Co-op Association manager who is a member of the transportation committee for the North Dakota Grain Dealers Association, says he has met with CP officials about the issue but declined to comment in detail until it is clarified.
“There’s way too many loose ends on it yet,” says Hovland, whose elevator ships on both CP and BNSF lines.