CP Calls For Face-to-Face Discussions to Address Canadian Grain Supply Chain Issues
Date Posted: May 12, 2014
Canadian Pacific (TSX: CP) (NYSE: CP) Chief Executive Officer E. Hunter Harrison said May 8 direct face-to-face discussions based on facts are the best way to make progress on strengthening Canada’s grain handling and transportation system.
“We need constructive dialogue instead of the ongoing back and forth that is happening in the media among various parties,” said Harrison.
“CP has reached out to customers and other stakeholders, including the Western Grain Elevator Association, and look forward to further constructive dialogue in person, rather than through the media.
"This way, stakeholders like the WGEA, would have a better understanding of supply chain realities and everything CP is doing to continue to move record amounts of grain.”
Harrison noted some CP Canadian grain highlights:
CP continues to meet or exceed the Government of Canada’s Order-in-Council, which directed railways to move about 5,500 cars per week. This level of service was what CP committed to in its open letter of March 6th, before the federal government order.
Versus a 5-year average, CP has moved 15 per cent more grain from September through April.
CP grain volumes from September, 2013 through April, 2014 are up 10 per cent compared to the same period last year.
From March to April, 2014, after the extreme weather lifted, volumes were up 11 per cent compared to last year and 14 per cent over the 5 year average.
Added capacity from Winnipeg to Chicago this spring, which is supporting the strong demand for Canadian grain into the United States.
Harrison also responded to suggestions grain should have moved to the United States during the extreme winter weather periods.
He noted sending grain cars to a congested terminal like Chicago during this past winter would have significantly impacted the supply chain’s ability to move grain to the benefit of Canadian farmers.
2013 was a record crop for the grain supply chain.
Harrison said at close to 80 million metric tonnes (MMT), this crop is 27 per cent above the previous 2008/2009 record and 37 per cent above the 5-year average.
This amounts to an incremental 22 MMT of grain that needs to be moved to an export position in addition to the 33 to 34 MMT that normally moves.
“The reality is that Canada’s grain handling system is just not built to handle this record amount of grain and CP is moving all the grain the supply chain can currently handle,” added Harrison.
“CP is moving grain in all available lanes but we need to move grain to fluid outlets with strong cycle times to move as much grain as possible as quickly as possible.”
Harrison added, “This is a capacity problem and the Canadian supply chain needs to be searching for a capacity solution. Rail is only one element of the supply chain.”
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