Evidence of meeting #120 for Agriculture and Agri-Food in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was capacity.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sean Finn  Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company
Michael Cory  Chief Operating Officer and Executive Vice-President, Canadian National Railway Company
Joan Hardy  Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway
Steve Pratte  Policy Manager, Canadian Canola Growers Association
David Bishop  Executive Committee Member, Board of Directors, Grain Growers of Canada
Bev Shipley  Lambton—Kent—Middlesex, CPC

9:20 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Thank you.

9:20 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. MacGregor.

Thank you, Mr. Cory.

Go ahead, Mr. Breton. You have six minutes.

9:20 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you very much, Mr. Chair.

Ms. Hardy, Mr. Finn and Mr. Cory, thank you for being here today to give us an update on this important file. I believe we met last March on this issue.

I would like to continue the discussion you had with my colleague Mr. MacGregor regarding investments. I think it's important, given the capacity needs.

What are the biggest investments you have made? What is the status of the work over the past year? Have these investments enabled you to have the necessary capacity? You have partially answered them, but I would ask you to give us more details, because it is important for Canada's organizations and partners.

You can answer in turn.

9:20 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

I'll start.

Our investments in the network increased from $2.7 billion in 2017 to $3.5 million in 2018. So almost $800 million more was invested in the network, much of it in western Canada, between Winnipeg and Edmonton, where there was an issue for us.

The Grain Plan, which we have provided to you, includes a November 2018 update. It's the first document inside the cover. There are blue lines on the back. It indicates that there are 27 investment projects, 21 of which have already been completed. You have the details for each network.

In the next two years, we will buy 260 locomotives. We have also hired 1,200 new locomotive conductors. Even more important, of the $3.5 billion, $400 million has been invested in the network between Winnipeg and Edmonton. You can read the details in the document. On this network, we are trying to have double-tracking over 60 miles at a time, which will improve resilience and redundancy.

We believe we are entering winter this year much better prepared than last year. We aren't perfect, and we still have work to do, but we will continue to make investments not only to increase capacity, but also to build resilience during more difficult export periods.

When the Port of Thunder Bay closes in December, we want all western Canadian grain to be moved to Vancouver or Prince Rupert. Investments will be made in that network. You have all the details in the document.

We publish updates every month to indicate where we're at. At this point, we are clearly demonstrating that the investments were made where there were problems last winter.

9:20 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you. Your answer has the merit of being very clear and showing good transparency.

What about on the CP side, Ms. Hardy?

9:20 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

We are spending $1.6 billion this year on capital, which is a 20% increase over our spend last year. I mentioned already that half a billion of that is going into hopper cars, which are going to significantly improve the efficiency and capacity for the movement of grain. This year, we have also extended 11 sidings across western Canada, making the sidings longer to allow for more capacity and longer trains to meet each other. We have also added trackage in three of our major yards in western Canada, and have acquired 100 fully remanufactured locomotives, which is an increase of 20% in our road power.

Certainly our investments are strongly focused on improving and increasing our capacity.

9:20 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you, Ms. Hardy.

We talked about private cars, but what is meant by that? Has there been an increase in the number of private cars? As I understand it, CN owns cars and also leases cars from other companies.

Maybe I'm giving some answers that aren't at all correct. So I'll let you explain all this in more detail.

9:20 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

It goes without saying that moving grain is a little complicated.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Yes, it's fairly complicated.

9:25 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

People sometimes tell us that it's 10% protein and 90% politics.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Ha, ha!

9:25 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

In this case, it's quite simple. There is a fleet of cars owned by the Canadian government, which is shared between CN and CP. When we say we place 5,500 cars during normal periods, and 4,000 during difficult periods, we're talking about cars shared between CN and CP for our customers.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Great.

9:25 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

And some customers started buying private cars. They own them.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

All right.

9:25 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

Five years ago, we were moving 30 to 40 private cars a week. Last week, we moved between 600 and 800. Now companies that elevate grain own cars, and they are part of the shared fleet. This allows us to have a fleet reserved for certain customers and to respond directly to their needs. Today, the fleet has a much larger capacity thanks to the investment by grain companies in the cars reserved for them.

9:25 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

These are commercial contracts that we sign with our customers, where they provide the fleet. This is an addition to the actual grain fleet that we have.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

So they are your locomotives and your railways, but you use customers' cars.

November 27th, 2018 / 9:25 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

They are our employees, our locomotives and our railways. There are more and more private cars for moving wheat. As far as moving oil is concerned, the fleet is almost entirely owned by oil producers.

9:25 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you very much.

9:25 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Breton.

Mr. Peschisolido, you have six minutes.

9:25 a.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

Mr. Chair, thank you.

I'd like to thank Mr. Cory, Mr. Finn and Madam Hardy for joining us.

I'd like to follow up on Mr. Longfield's point about the whole supply chain, the various terminals and how the integrated system functions. I was intrigued by Mr. Cory's focus on the importance of the shippers. I'm assuming they want to get the grain out quickly and efficiently, as do you. You mentioned that you were doing your part. Can we talk a little bit about the role of the ports in this system?

I was intrigued by Mr. Finn mentioning Prince Rupert. I was surprised by the comment that it's difficult to get grain out at some of the terminals in Vancouver when it rains. You don't have to be a strategic thinker to know that it rains a lot in Vancouver.

Could I have your comments on the overall supply chain and what the role could be of a modernized system with Prince Rupert? As well, Ridley Terminals has been put up for sale by the government. I'm wondering about what role that could play and about the relationship in terms of Prince Rupert, Ridley and port metro Vancouver.

9:25 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

Let me start by saying that the Prince Rupert grain terminal is separate from Ridley. Ridley is the coal and coke terminal.

I don't know how to answer your question. Every participant in the supply chain needs to have resiliency. As we've spoken about, whether it's more track, more people, more cars or more locomotives, we know there will never be a perfect linear movement of grain. You need to be able to catch up.

For the terminals in Vancouver, it's somewhat the same. If there's heavy rain and they can't load the grain into the ships because we can't use tarps or holes, then that stops the entire system. What we work with them on is to first of all make sure we have the proper understanding of what they're going to unload, how they're going to unload it and what grain they need from us so that we can get it there and maximize that part of it. The resiliency we need in a place like Vancouver is to be able to unload 24 hours, seven days a week, in the rain, just like we need to be able to run when it's 30 below zero and snowing dramatically. In terms of rain, Joan can speak to the issues of going through the spiral tunnels.

Those are all very tough things we need to have resiliency on, and that will definitely help the supply chain.

9:25 a.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

Madam Hardy.

9:25 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

Just this fall, some of the major terminals we're servicing finally shifted to 24-7 operation. That is a game-changer. As the railways, we have been encouraging 24-7 operation for a long time. As soon as you have a day when you're not unloading, it creates bumps in the supply chain. It causes trains to be stopped and it's difficult to get them started again. We're almost there with almost all of the terminals in Vancouver working 24-7. It's not quite all, but almost.

The rain issue is a concern. Until this spring, terminals in Vancouver had been able to load in rainy conditions using two operations. First, they were able to load through the feeder hole. Some decks of ships have holes in them. They were primarily started to load cement into ships, but basically grain shippers started to use these feeder holes to put their spouts in and load in the rain. They were also able to load using a tarping system. This spring the unions declared...it was declared that this was an unsafe operation. Right now there is no ability for the grain terminals to load in the rain. This is a concern, because when we get into our rainy period, it can cause serious delays.

We understand that there's a fix to that and that the feeder hole operation will be able to be used again shortly, but it's still not there. Already this fall there were a couple of situations where three to four days of rain happened and suddenly railcars could not be unloaded because the space in those terminals was fully taken up.

Anything that can be done to encourage these rain loading practices to be able to be used again would be very helpful.