Open Letter From CP CEO Hunter Harrison.
You may have seen and heard a lot of confusing and contradictory information in the news recently about the railways and their reported inability to move Canadian grain to ports in the face of a record-setting harvest.
As you may expect this is a very complicated issue. I would like to set the record straight and provide some context and facts.
Anyone in Canada or the Northern U.S. has experienced the frigid reality of the past few months. Moving consumer goods and other commodities like grain has been severely impacted by harsh winter temperatures not seen in more than 60 years. Environment Canada reports that this winter’s extreme cold temperatures have created an unprecedented low average temperature - the coldest December/January since 1949/1950. We know “winter happens every year” which leads us to conduct extensive winter preparations. Despite these preparations, sustained cold below -25 degrees C is a tipping point for railways, as it is for other modes of transportation. The last three months have been exceptional, with 49 days below this temperature in the Canadian central prairies vs. 25 days on average. When the weather is this cold, we must take steps such as reducing train lengths to continue to move freight and ensure the safety of our employees and the communities in which we operate.
I’ll be the first to admit that our usual service levels aren’t being met during this period when all commodities in the entire supply chain are impacted by this brutal weather. Despite this, the women and men of CP remain on the job 24/7, exposed to this weather as they keep the railway operating even while, in some cases, grain elevators have temporarily suspended loading operations.
Distinct from operating conditions, Western Canadian farmers last year produced an extraordinary grain crop of 80 million metric tonnes (MMT), 27% above the previous 2008/09 record and 37% above the five year average. This increase was not forecasted by anyone, including grain growers themselves.
CP is moving more grain than ever in its history. This crop year CP has moved more grain than the previous year, itself a record for grain movements in Canada. In February alone, despite the weather, we managed a 15% increase in grain shipments.
Moving grain from the farm to the port is a complex pipeline involving many parties. Canada’s largest ever grain crop and this winter’s weather created the “perfect storm.”
Some have called for CP to add more rail cars and locomotives. Adding more cars to the system when it is congested and being negatively impacted by weather is exactly the wrong thing to do. It is like adding more cars to a highway at rush hour – everything moves that much slower. To improve the situation, all of us in the grain supply-chain must be accountable for our respective pieces on a 24/7 basis. We can’t move trains out of the prairies if rail cars haven’t been loaded and we can’t return empty cars back to the prairies if trains are sitting idle waiting for port terminals to unload them.
The grain supply chain will return to very high levels of performance over the coming weeks when these extreme cold temperatures lift. In the meantime, we need all the parties to step up and provide commitments and exert additional effort.
We’ll do our part. We expect to move 240,000 carloads of Canadian grain this crop year, a more than 20% increase over last year’s record.
We are having productive discussions with governments. With their help, I am confident that we will tone down the rhetoric and move forward with a coordinated transportation system for the betterment of all Canadian shippers, including grain producers.
Source: Canadian Pacific
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