We're providing you with a short presentation, in both languages. I don't intend to go through all of it, but I thought it would help to frame the issue. It's been a very difficult winter, and I think it's important that we follow the facts if we want to make the right policy. There's been a lot of advocacy, and at the end of the day following the facts is the only way to make sure we make wise decisions.
I'll refer to page 2, and let me just say very briefly what this line situation is not about.
It is not about a conflict between crude and grain. We move less than 1.8% of our carloads in crude at CN. We have been planning every one of the loads for months. The loading facilities are being built. It takes months. We have the crews, the locomotives, and we move the traffic when it's handed to us. It's a very, very small portion of our overall traffic.
It is not about flatlining. Sometimes you may hear Wade Sobkowich saying that we only want to move so many per week, that we don't care about demand and we move grain the way that fits our interests or our shareholders. Those are not the facts. The chart you see shows that in reality we surge very significantly in the fall, and then in most years, following the winter, we have very little demand for our services. The so-called “peak to trough” is about 80% from the surge that we do in the fall to the trough in the summer.
It's not about flatlining; our interests are aligned. And it's not about crude. What is it about, then?
Page 3 shows you what it's about. First and foremost, it's a hundred year crop. It's a shattering of prior records. We've never moved anything close to that in Canada. Production has never been anywhere near that overall. The portion that's the extra tonnage all has to be exported. We don't eat more Quaker Oats or more Cheerios in the morning because there's more grain being grown. The excess has to move, and the actual excess is close to 55% more grain than in an average year.
In tonnes, it's about 10 million tonnes. To give you a sense of things, if we plan our assets perfectly and have exactly the right amount of locomotives and crews.... Of course, we always have more to be able to surge and meet volatility. But if we were doing it perfectly, the only way we can move all this extra tonnage of grain would be by stopping the movement of all the lumber that we move. It's twice as much as all the potash that we export at CN. In order of magnitude, 10 million tonnes is that much grain. To find resources to be able to move that on short notice, no supply chain in the world can be expected to be able to do that.
The Minister of Agriculture, at the end of September, was calling for a crop of 62 million tonnes. It was only in late November that it was made official at 76 million tonnes. Now, all of us in the grain transportation business or grain trade knew that we had more to move, but it was very late in recognizing that we had that extra tonnage to move.
Turning to page 4, it's not the big factor, but it was also about a very difficult winter. I'll let my colleague Keith tell you a bit more about that, but a picture tells the whole story. We've not had a winter like this for at least 50 years, if not 60 years. Winter plays havoc with our capacity, not just for grain, but for all the commodities we move, every one of them. From intermodal to crude to potash, every one of the commodities we move was impacted by this winter. Every one of you who used an airline was impacted by this winter too. It was a winter that impacted all transportation modes, not just railroads.
Turning to page 9, you have the details in your presentation, blow by blow. I would encourage the committee to study it carefully because it's important. However, I will give you a summary on page 9.
That's our performance at CN since the beginning of the crop year. You will note that for the first five weeks we had a very slow start.
We moved far less than what the capacity of the railroad is. About 10,000 to 12,000 cars could have been moved in the first five weeks of the crop year while this huge crop was being grown in the backyard of Mr. Sobkowich. After that, when orders started to ramp up, we were able to move a record amount of grain. In fact, we moved 22% more than in an average year, and we established our record best performance in our history, moving more than 5,000 cars straight all the way until winter hit, unfortunately, very early in the year.
For those of you who are from Winnipeg, in December, at the very beginning, winter hit hard, and we had impacts all the way until the beginning of March. During that period, it's important for you to know, versus an average year, we moved about 10,000 fewer carloads than what a normal winter would have allowed us to move. So 10,000 to 12,000 carloads were not moved because they were not ordering in August, and 10,000 to 12,000 carloads did not move because of the winter of decades. I call it a wash.
Right after the winter stopped, we started to move a lot of grain again, and last week we moved more than 5,000 carloads. In the last four we were moving 22% more than in a normal month of March. That's what we performed. On balance, given the winter, we performed reasonably well. The root cause had to do with winter to a small degree, but it was mostly about a very large crop and a few other factors, which I will take a minute to describe.
What you see on page 10 is a red line that shows the orders we received from the grain elevator companies. In the first five weeks they were not ordering, unfortunately. When they realized we had a big crop, in week six, they started to order more. In week seven and beyond they started to order far more than we were ever able to move in the history of the rail supply chain of Canadian grain. In fact, they were ordering close to 7,000 orders every week from CN. For the whole industry, that would be 14,000 cars. Of course, we never did anything close to that. In fact, we saw a continued pattern of very high orders by the grain companies that were all looking for market share and all looking to place orders, to order ships, to take contracts with farmers, and to promise deliveries, but the deliveries they were promising were well in excess of even the best performance ever.
You referred earlier to an automotive company. In any business, when you're trying to plan a supply chain, normally if you look at average performance, and maybe if it's a great year, then look at best performance, or performance somewhere in the range of average to best, that's where you should place your bets. To place 28,000 more orders over the period than the absolute best performance of CN over the last 10 years is a lack of coordination. It's too many orders for a system in which not only railroads would not be able to deliver, but railroads and grain elevators themselves would not be able to deliver.
I hear a lot of people saying that there are some 35,000 orders on the waitlist at CN and some 30,000 orders on the waitlist at CP, which is a total of 65,000 orders. At CN, of the 35,000 orders we have on our waitlist, 28,000 are orders that have been placed in excess of our best performance ever. Some of the responsibility for those promises, the boats that are waiting at anchor, and the delivery contracts for farmers that are not being fulfilled is the railroad's. An awful lot of it belongs to the grain elevator companies that are lacking coordination and that are having growing pains in lining up their aspirations with the supply chain capability.
I'm finishing, Mr. Chairman. Give me eight and a half minutes. It's my industry you're about to target.
The next page is the actual story in a nutshell. The best ever for the entire industry is 9,500 cars in a week. That's the best performance ever in the last 10 years. The government grain order is asking us for 11,000 cars per week or thereabouts, which is a stretch but a stretch we're prepared to sign up for.
Some in the industry, like Mr. Sobkowich a minute ago, at some point were calling for 20,000 carloads. He was told that it's a little too much, because we wouldn't be able to unload them. Now they're calling for 14,000 carloads. It's not possible to move 14,000 carloads. We will be lucky if we move 11,000.
In order to move 11,000, the grain elevator companies will have to start selling hard at Thunder Bay, because we are at capacity in Rupert as we speak. We are a whisker away from being in excess of what they can unload in Vancouver. The sum total of those two corridors is about 6,200 cars. If we want to get anywhere close to 11,000 cars, they had better start selling at Thunder Bay hard, soon, even though it costs a little bit more to go through Thunder Bay, and even though there might not be as much shipping capacity as one would like, because they did not ship enough last year going to Thunder Bay, and because they make more money going to the west coast using their elevators in shipping lanes that are less costly.
A lot of this is about grain elevator companies. There are only three controlling the market, so when they say there's a duopoly in railroads, there's an oligopoly in grain elevator companies. They're taking advantage of the situation at the moment in many ways, and it's not just railroads, it's a team sport, and the supply chain capacity we will prove very soon is close to 11,000, no more.
Last, in my view, the regulation you're considering will set the grain handling industry backwards. You're encouraging adversarial relationships, as we are demonstrating right now. You're undermining collaboration. You're going to be driving rigidities, and in many ways, setting ourselves backwards.
The physics are clear. The capabilities depend on assets in the ground. Assets get in the ground if investment is possible. There's no amount of regulation that can move grain.
One piece of the puzzle that I believe is misguided and is bad policy is this notion of extending interswitching to 160 kilometres, without any due process, and to do so not just for grain but also for other commodities. I think this has been done in haste, without any due process. It's not just the rail industry that you're going to be damaging. You're going to be damaging the Canadian economy.
If you do anything, Mr. Chairman, you should start by being a little bit more prudent. Limit the extension to grain—it's a grain bill, after all—and let's find out how it works. If everybody loves it and we all agree that it's the best thing for Canada, you then can extend it to all commodities everywhere. But don't do it without due process, and don't do it under the guise of a 100-year crop with a difficult winter and grain elevator companies that are lacking coordination and are as big a part of the problem as we are in the rail industry.
Thank you.
