Evidence of meeting #15 for Agriculture and Agri-Food in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cars.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Tim Heney  Chief Executive Officer, Thunder Bay Port Authority
Lynn Jacobson  President, Alberta Federation of Agriculture
Robert Chapman  Grain Manager, South West Terminal, Inland Terminal Association of Canada
Humphrey Banack  Second Vice-President, Alberta Federation of Agriculture
David Miller  Assistant Vice-President, Government Affairs, Canadian National Railway Company
Michael Murphy  Vice-President, Government Affairs, Canadian Pacific Railway
Robert Taylor  Director, Government Affairs, Canadian Pacific Railway

4:35 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

All right. There has also been some discussion about reductions in the numbers of engines and railcars at CP—numbers like 400 locomotives and 2,700 railcars—but I also recognize that CP doesn't operate just in Canada. You also operate in the United States. While one might hear those numbers, they might also unfairly attribute those numbers strictly to Canada. I'm wondering if you could clarify for the committee how those numbers would play out in Canada versus how they would in your operations in the United States.

4:35 p.m.

Vice-President, Government Affairs, Canadian Pacific Railway

Michael Murphy

You're right. Those are system-wide numbers in terms of CP.

The first point to make here is that the fleet size we have is the same as what we were dealing with in the fall when we were moving record levels of grain. That's why I made the comment earlier about having the right-sized fleet. I don't think it's a question of not having the mobile assets that we need to move the crop.

On the locomotive situation specifically, one of the things we talk about is productivity enhancement in terms of how much more productive our locomotive fleet is now than it was before. In our most recent results we talked about a 20% improvement in locomotive productivity. Part of the reason for that is that some of the locomotives that we moved out of the system were our least productive, older locomotives. The fleet is actually in terrific shape, so you're getting greater productivity. Our velocity is up and our train lengths are up, and when you package all that together, we're in much better shape that way.

The size we had in the fall is the same size we would have available now. Our problem isn't the size of the fleet; it's a weather problem.

4:35 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thank you for that.

Let me just follow up on the weather problem. You were saying that -25°C is a tipping point in terms of, let's call it, efficient operation and in terms of train length and air-brake use. Can you perhaps give the committee an indication of what sort of train length you are moving when you're in the 0°C to -25°C zone, and what length you are moving when you are below that, in the -25°C to -30°C zone? What percentage of cars are you losing on that?

4:35 p.m.

Director, Government Affairs, Canadian Pacific Railway

Robert Taylor

It's quite significant. We run less than 7,000 feet on CP once the winter operating condition kicks in on that subdivision. We're running some trains up to 14,000 feet, so if you do the math, it's quite significant. I can't throw out all the numbers, but it really affects our ability to run long, and also it really affects our velocity. It takes a lot longer to propagate air through a train, and trains have an air-brake system. It takes hours versus minutes, in some cases, to get air through that train. It might take you 45 minutes to build up proper brake-pipe pressure in normal temperatures. That might take five or six hours at temperatures less than -25°C.

4:35 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

You're talking about 7,000 feet to 14,000 feet. Is that a 50% difference?

4:35 p.m.

Director, Government Affairs, Canadian Pacific Railway

Robert Taylor

Yes, but that would be the longest train—the longest to the shortest.

4:35 p.m.

Conservative

The Chair Conservative Bev Shipley

It's a math question.

4:35 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Well, it is, but it's a valid question

4:35 p.m.

Conservative

The Chair Conservative Bev Shipley

Thank you, Mr. Lemieux.

Now we'll move to Mr. Eyking for five minutes.

February 12th, 2014 / 4:35 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

Thank you, Chair.

Thank you for coming. We wish you had not been asked to come here, but with the crisis in grain handling, all the previous witnesses have pointed their fingers at you guys. That's why you're here.

I guess there were some comments made in the last few days about how there was a sense in September that everybody in the industry knew that the crop was going to be big. The other statement we heard, which I was surprised at, was that this is not the first time we've had a big crop like this. It was mentioned that the crop was a similar size in 1994, and movement was better.

I will just give you two or three questions, and both of you can answer them.

My first immediate question is a question most farmers would be asking. Over the next four months, what are you going to do, more than you are doing now—there is talk of 20 million tonnes that could be sitting in farmers' backyards—to move that volume of grain that needs to be moved out of their yards?

My second question is that we are apparently losing a lot of these markets in Asia because of what's happening at Vancouver. The big story said that some of the ships are going down to Seattle. What is the big bottleneck in Vancouver that you can't get these ships loaded on time? Is it because you can't pull the right quantities of a certain grade of grain?

My third question—because farmers are going to lose billions of dollars unless you do something drastic—is about the other commodities. Are they losing the money? Now you're blaming the cold weather and you can't.... Are they losing billions of dollars? I'm talking about potash and oil. Are they losing billions of dollars as the farmers are because of the problems they're having with the system?

4:40 p.m.

Assistant Vice-President, Government Affairs, Canadian National Railway Company

David Miller

I'll start with your last question.

Take intermodal, for example, which is the most time-sensitive of traffic—that's containers, that's consumer goods—there's no question. There are hits that customers are facing; it's inevitable. I can't begin to quantify it. One can't really compare one commodity to another. There certainly would be similar demurrage charges that some of the other commodities that are not hitting their ships would be facing. There's no question. I would say that all of our customers are taking some hit as a result of the problems that we're facing.

4:40 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

What about the amounts of money that farmers are taking?

4:40 p.m.

Assistant Vice-President, Government Affairs, Canadian National Railway Company

David Miller

Frankly, I really can't comment on that. I'd be guessing.

We're taking a not-insignificant hit as well. I'm not looking for sympathy, but just realistically, particularly because occasionally you hear suggestions that there's some intent here, in terms of our not moving grain or whatever. In terms of the extra costs of the cold weather on our operations, and the money we're losing because of the goods we haven't been able to move, we're taking a hit as well.

4:40 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

With all due respect, sir, I only have five minutes, and I have three questions for both of you, so if you can keep it....

4:40 p.m.

Assistant Vice-President, Government Affairs, Canadian National Railway Company

David Miller

Yes.

In terms of the bottleneck at the coast, the current problem is that we're not getting the grain there the way we need to. In the fall there was not a bottleneck particularly. The terminals were fluid and we were fluid and the grain was moving through very well. When the system's working properly, there is not a significant bottleneck at the coast.

There is the loading in the rain problem that can arise from time to time, but that's getting better.

What will we do in the next four months? As quickly as the weather allows us to, and as we can get our network back in sync the way it should be, we want to ramp right back up to the kinds of levels we were hitting in the fall and move as much of the crop as we can, as quickly as we can.

As I said, we've added 1,000 cars since the fall, and we think we can move a lot of grain if the weather cooperates.

4:40 p.m.

Vice-President, Government Affairs, Canadian Pacific Railway

Michael Murphy

Could I just add briefly to that?

I have a quick comment on the first point you made about this comparison with 1994. I don't think it's a critical point here, but it's a bit much to be looking at that pretty atypical year, where you had a heavy amount of grain pushed to the system right off the get-go in August that year, about 50% higher than the typical August. A lot more grain presented at the railways to move during the beginning of that crop year than the current crop year, so I think that's why that comparison gets made. I don't think it's a reasonable one.

But on your other questions with respect to the time, and I agree with David, my only other point is about markets to Asia, which are really important for this product area. One of the things that I did talk about is making sure that we do what we can not only at Vancouver, but we're also looking at other corridors. We use the Pacific northwest as well. I think everything we need to do is to keep all of these channels open as much as we can, because that market, obviously, is very important.

From my standpoint, in Vancouver we still have some issues in terms of loading and the weather. I think there's some innovation being brought to bear there. I think more of that needs to happen as well. We talked about 24-7. All of those kinds of things are very specific and directly being addressed today.

4:40 p.m.

Conservative

The Chair Conservative Bev Shipley

Thank you very much, Mr. Eyking.

Now we'll move on to Mr. Payne.

You have five minutes, please.

4:40 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Thank you, Chair.

Thank you to the CN and CP people for being here.

You were sitting in the back. One of my constituents, Lynn Jacobson, is a farmer. His is one of many calls I get every day on the grain movement. Some of the complaints, of course, are not just this year, but it seems like almost every year I hear from the farmers saying, “We're not getting the grain moved”. Then they were complaining about a monopoly. There are a number of those things.

What I'd like to do is I'd like to just follow up in terms of the length of a train. If you would have a normal standard train—I don't know how many cars would be in a grain train, for example. How many cars would be in that? Then with the bad weather, -25°C, how many railcars would be in that kind of a set-up?

4:45 p.m.

Director, Government Affairs, Canadian Pacific Railway

Robert Taylor

The bulk trains are generally shorter than some of our intermodal trains, so it would depend. It's just having a cascading effect right across the entire network—not only our network but also other railroad networks as well. The same weather is in the Dakotas and right in the grain-origination system, so it's affecting crews, locomotives, trains, right across the system. That's the way I would describe it. But the bulk trains, like grain, are generally shorter in length than are our long intermodals. The average grain train would be in the 7,000s, something like that, and that would be a train that would probably have 130, 140 cars, something like that.

4:45 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Then in colder weather, obviously, that goes down, or is that the cold?

4:45 p.m.

Director, Government Affairs, Canadian Pacific Railway

Robert Taylor

That would be affected. That would be less than 7,000 feet. But the other very significant impact from these extreme temperatures is velocity reduction, so everything takes a lot longer.

4:45 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

That's right.

4:45 p.m.

Director, Government Affairs, Canadian Pacific Railway

Robert Taylor

The efficiency of the system—and we have an incredibly efficient system—is designed around velocity. The gentleman from Thunder Bay was right. Thunder Bay is a great location for CP because we have a seven- or eight-day cycle time. So we're spinning cars through Thunder Bay in seven or eight days. As soon as you send a car to Vancouver, you're looking at fourteen to fifteen days. If you send it to Quebec City, you're probably looking at twenty-odd days.

So when we talk about maximizing outlets and driving velocity, that's really what we're trying to do. We're trying to put the most throughput through the capacity because no system really wants to be built around inefficiency. You want to maximize your assets. I don't think anybody in the supply chain wants to deploy new, expensive capital until you utilize your existing capital.

4:45 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Just on that point, though, say, you are already at the right levels. I know that CN has said that they added another thousand cars, so I'm just wondering. You've reduced some of your older engines and cars. Is there any plan to actually increase those volumes? Because it's not just going to be grain, as obviously you're aware. There are all kinds of resource products heading out. Will you be able to take those capacities that are coming? There are going to be expansions in all kinds of areas. But certainly from this point of view, the grain farmers right now are getting in dire shape. I'm just wondering if you're going to be adding further capacity in terms of your engines and cars.

4:45 p.m.

Vice-President, Government Affairs, Canadian Pacific Railway

Michael Murphy

In terms of the size of the fleet, we won't be looking at increasing that in the very short term because we think we're right-sized in terms of being able to move just like we did in the fall with the kind of incredible demand we were faced with, and we were able to do that. I don't want to keep harping on the weather, but that's what's impacting the fluidity here on the network.

Our locomotive fleet is now far more productive than it was before. So that's the advantage you get with that kind of a fleet. It's not a question just of the numbers in there; it's how efficient and how productive these things are.

On the car side, there's an opportunity to think about that because a lot of these cars are older cars in the fleet, as you well know. That's something in a marketplace that may be a little different from the one we're looking at now. Is there an opportunity to think about upgrading on the car fleet? I think that's something we're going to be having a look at as time goes by here.