No.
Evidence of meeting #29 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cars.
A recording is available from Parliament.
Evidence of meeting #29 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cars.
A recording is available from Parliament.
11:50 a.m.
Senior Vice-President, Western Region, Canadian National Railway Company
No.
11:50 a.m.
Senior Vice-President, Western Region, Canadian National Railway Company
Yes.
11:50 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Thank you for being here, gentlemen.
Many farmers are concerned about the loss of the Canadian Wheat Board as a single desk. They feel that by changing it to be another small grain company it won't be a major player on the world stage, and this will take market power away from the farmers. That's one point of view.
At this committee's meeting, some stakeholders have claimed that companies would be in a good position if the CWB lost its influence over grain transportation. How would you respond to such a statement? In your opinion, what leads some people in the community to make such comments?
Maybe I can get an answer from all of you, please.
11:55 a.m.
Vice-President, Transportation Services, Canadian National Railway Company
We're sort of the operations guys from our side of the house. We're not really qualified or capable of making comments on the policy the government may bring in for the CWB.
We have processes that have been built over the years that include the CWB in our overall tactical planning of transportation on a weekly basis. If for some reason the CWB wasn't there into the future, we would have to rebuild some of those processes.
But CWB is a very important customer of ours. It's our largest single grain shipper from western Canada. We work with it very closely. I guess we'll wait with others to see what comes down the pike.
11:55 a.m.
Chief Executive Officer, Thunder Bay Port Authority
About 65% of the grain through Thunder Bay is Wheat Board grain. The remainder is non-board. We have a variety of users of the port system, and there doesn't seem to be a real consensus as to the effect the Wheat Board and its single desk would have if it were modified. There are those who say they would get more grain through the port. Others say it would be poor for the port. I don't really know the answer to that. There are a lot of variables in play.
Certainly the ocean vessels are not being utilized by the Wheat Board, whereas they are being used by the grain companies for their non-board shipments. The direct rail program is entirely Wheat Board grain. So from that aspect it's really difficult to determine the exact effect a change to the Wheat Board would have on transportation. We consider the seaway and the port to be a viable system under all conditions, so whether that changes or not....
There is also the fact that the Wheat Board ships a lot of grain through Churchill. It's always been a sore point with Thunder Bay, given that it serves the same markets under different subsidy conditions. If that grain were to come back to Thunder Bay, I guess we'd consider it a good thing.
11:55 a.m.
Executive Director, Western Grain Elevator Association
Likewise on CN, we don't have a recommendation on the Wheat Board file whatsoever. But the changes we are recommending to the Canada Transportation Act are going to be required regardless of what happens or doesn't happen with the Canadian Wheat Board.
You said people are asking you if we need the Wheat Board there to counterbalance what otherwise we'd be left with in terms of an imbalance if they weren't there. Whether that question is right or wrong, the fact that it's being asked speaks to the fact that we need to strengthen the Canada Transportation Act.
11:55 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
I'm going to get a little more specific here on transportation itself.
I think all of us agree it's unacceptable that there's a 60% or 70% spotting plan. It doesn't make sense from the point of view of business if I want to do something, I'm relying on a day, and I can't because the cars aren't there. Are cars being held back somewhere to ensure that profit, or are there just not enough cars?
To you folks, is there a difference between CN and CP? If that's the case, what is the difference? Are you learning from your competitors if they're more efficient in certain areas? Obviously this situation has to be improved.
Maybe I'll start with you, Mr. Sobkowich.
11:55 a.m.
Executive Director, Western Grain Elevator Association
I'll start with your last question.
CP is performing better than CN. We don't have an accurate measurement, but they're spotting at closer to 80%, and we're seeing a trend to more grain moving to CP because of it. But companies are obviously limited in their ability to do this, because if they're located on a CN line it costs more to the company and the farmer to truck that grain to a CP site.
We come back to the fact that the rules set out for the railways are deficient, regardless of how they're performing within those rules.
11:55 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Gentlemen, let's put you on the spot. That's why you're here.
CP has an 80% rate and yours is 60% or 70%. What's the reason? You're both in it to make money. Obviously something's wrong. Do you have an explanation for this?
Noon
Senior Vice-President, Western Region, Canadian National Railway Company
I do. And these are good questions. We don't shy away from them.
CN supplies to quite a different network from the one CP supplies to, and CP does a great job. In fact, just this past year we put in place a new co-production agreement with CP into Vancouver. It allows CP to bring railcars, and specifically grain cars—and other products, but mostly grain—that run on the CN lines in Vancouver to get to the Saskatchewan Wheat Pools and the JRIs of the world rather than going through their own yards. It's more efficient for the industry. It's more efficient for CP, it's more efficient for CN, and it's more efficient for the grain companies if we allow that co-production agreement to take place. I got in bed with CP to do that specifically. It's better for the industry, so we have a new co-production agreement into Vancouver as one example.
We also go to Ridley, which CP does not. We also go to Churchill, which CP does not. Any delay in those supply lines to Churchill or to Prince Rupert is going to impact the return of cars to get spotted back into the field.
In the process that we employ today, the plan is put together a week ahead of time. Cars that are coming back to the country could be at Thunder Bay, could be at Churchill, could be at Prince Rupert, or could be in Vancouver. We're anticipating them to flow back into the field to get spotted at elevators. If there's any kind of disruption like the one we had in Churchill at the end of this shipping season, when the weather was bad, they couldn't unload, and the ships couldn't come in, those railcars sit there day after day. I'm planning on those cars to come back into the field to get spotted. If they don't return to me, I can't spot them.
What we do have to do a better job at is communicating. If the cars are not going to come back, we have to tell the grain company, “I'm sorry, we anticipated a hundred cars back from Ridley or a hundred cars back from Churchill. They didn't make it for these reasons, so we're not going to be there on Tuesday; we're going to be there on Thursday.” There's no question that there has to be some communication going on there.
But there are pieces of the puzzle that the railway does not control. Those two pieces themselves, Churchill and Ridley, are two pieces of the puzzle that CP does not have to contend with.
Noon
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Just as another follow-up on this, it sounds to me as though there's not enough equipment.
Noon
Senior Vice-President, Western Region, Canadian National Railway Company
I believe there is enough equipment. If it's used properly, there's enough equipment to move the Canadian grain crop.
Noon
Conservative
The Chair Conservative Gerry Ritz
Mr. Sobkowich, do you have a response to that?
You're out of time, Alex. Sorry.
Noon
Executive Director, Western Grain Elevator Association
I just wanted to mention that if a grain company sells canola to Japan and they aren't able to meet their contractual commitments, they don't go to the customer and say, “We didn't get the grain from the farmer, so we're going to be late”, or “We can't fulfill our obligations.” We have items in place in our contract with the farmer to mitigate damages.
CN and CP have demurrage. It may be the fault of the company or it may not be the fault of the company, as we said before. You plan your movements. If you're planning to get the car on Monday, it's going to end up at the terminal so that you can unload it in a timely way. If you don't get it on Wednesday, you take that into account with all the rest of the elevators, and you end up with bunching at a terminal. You can't unload the cars quickly enough because you got them all at the same time, and you pay demurrage. We have demurrage in place presumably to be used to mitigate the ill effects of that when spotting is required in the country.
We assume that the railway would take that demurrage, use it to increase car supply or whatever they need to do in order to ensure their commitments in the country. But what we're seeing is a demurrage penalty in place. However, we're also seeing CN using the fact that terminals can't unload the cars quickly enough—or maybe they didn't, which may or may not have been the terminal's fault—as a reason for why they couldn't spot in the country. But in our view, that's why demurrage is there.
Noon
Senior Vice-President, Western Region, Canadian National Railway Company
I'm not saying it's the terminal's fault. I'm just saying those are the facts we have to deal with.
Noon
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Atamanenko.
Just before we move on, does anybody have the comparison in volume numbers between CP and CN?
Noon
Senior Vice-President, Western Region, Canadian National Railway Company
Not in a detailed view.
Noon
Senior Vice-President, Western Region, Canadian National Railway Company
We're about fifty-fifty.
Noon
A witness
Yes, it really is about fifty-fifty.
Noon
Conservative
The Chair Conservative Gerry Ritz
It's a good comparison. It's not apples and oranges; it's two different kinds of apples.