Grain moving well despite some backups at port
By Tim Kalinowski, Staff Writer
Emerging from a year like 2015 with outstanding consistency and quality of grain coming off local farms, it is no surprise grain moved tremendously well throughout the early part of 2016; however, so far this fall and winter it has been a different story, says Mark Hemmes, president of Quorum Corporation, the company contracted to monitor grain movement across the country on behalf of industry reps., and the federal and provincial governments.
“Harvest conditions were not ideal,” explains Hemmes. “It slowed down the movement off the field and into the elevators. It really didn’t start ramping up, and seeing things move, until the end of September. It then moved really well into October and November until it got cold.”
Hemmes says the differing quality of the grains being moved has compounded the problem for grain companies.
“When you have spotty quality across the prairies, you have to be really selective, and almost surgical, in how you source your grain out in the country so you blend it at the terminal and at the port and make sure your specifications on what you are loading into a vessel match what you committed to in your sales contract.
“From the time it is shipped off the farm, grain companies have a really good idea what vessel that truck is going to end up in,” continues Hemmes. “That’s how precise the grain companies manage the movement. They do an excellent job at that, but it’s just you have so many moving parts in the supply chain. If one falls off a little bit it starts disrupting things.”
The complexities associated with getting the right grain from the field to blend at the elevators to ship to port has led to some problems on the vessel loading end of things, admits Hemmes.
“It’s challenging year to make sure you have the right grain in position,” he states. “It’s not as fluid as the grain companies would like to have it come into the ports. Demand or expectation was a little bit higher this year. As a consequence there is a little bit of a backlog, particularly in Vancouver. We’re seeing some pretty high counts of vessels.
“The next month or so will tell how we finish off what we call the ‘peak period.’”
Hemmes says, on a more positive note, ocean shipping companies have been hesitant to charge large demurrage fees this year, like Canadian farmers’ saw in 2012/2013, despite the backlog.
“The shipping market globally is really hurting right now,” explains Hemmes. “In a supply and demand perspective, there is anywhere between a quarter and a third more capacity available than there is business. So these guys have suffered through a really long period of extraordinarily low rates. It is a huge benefit to the people in the grain industry, of course, because you are paying dimes on the dollar as opposed to what you would normally pay.
“On the other hand, they are just looking to keep their vessels working as much as they possibly can. So they will arrive before their contract time, and they will just park and wait.”
Hemmes says rail companies in Canada are also not the issue this year, with plenty of capacity in the system.
“CP has had some challenges with car supply amount, but, for the better part, it has been what is the demand for the marketplace as opposed to what the car supply has been. CP and CN have moved good volumes. It is virtually the same to what they moved through the same period last year.”