Consequences of rail strike could be felt for months

By Tim Kalinowski

While the eight-day rail strike mercifully came to an end on Nov. 26, the economic impact of the strike could be felt by the agriculture sector for months to come, says Mark Hemmes, president of Quorum Corp., which monitors grain-by-rail transport for the federal government.

“The upside is we were sitting here thinking this strike was going to go on for a lot longer, and it was such a pleasant surprise when we got the news the strike had ended,” Hemmes says. “It could have been worse, and thank god it wasn’t.

“As is, I think the ramifications of this will take two to three months to really get a firm handle on.

“I think there is going to be some farmers in some places that are really going to have a hard time getting their contracts filled in the time they originally planned for.”

Hemmes expects there will be something in the neighbourhood of 7,000-9,000 grain cars backed up in the system at the worst time of year to be backed up.

“There is obviously going to be a pent-up demand coming out of the strike, and what compounds that is the fact we had such a late harvest,” he says.

“That basically moved the heavy volume period forward about four weeks. So just as heavy volume was starting to go, and both railways were doing really well at moving that traffic, then the strike hits. So it is a two steps forward, one step back, sort of thing.

“So we have that facing us, and it has just started snowing in a lot of places (in Western Canada), and it’s getting cold,” he adds.

“So we’re going to get into the winter period, and that’s traditionally when the railways have to slow things down. Weather basically slows down all the operations outside.

“It’s going to be a challenge for them to try and make up for that pent-up demand.”

Hemmes expects vessels to be lining up at both Prince Rupert and Vancouver in the weeks to come as a result.

“The grain companies put in their plans about 10-12 weeks ahead of when the actual vessel is going to load. It’s hard to change things at very short notice as many of the ships are already at sea.”

As of Dec. 3, Quorum was reporting 26 vessels lined up at the Port of Vancouver and nine lined up at Prince Rupert, both above average numbers for those ports with plenty of ships still expected in.

Hemmes says one bright spot of news is the elevator networks across Western Canada still seem to have capacity to take in some crops from farmers despite backlogs in the rail system.

“All indications are is the country elevator network still is accepting delivered grain,” he says.

“There are probably a few elevators out there that are getting pretty tight for space, but I would expect that they’ll start to flush that out.

“They will also be careful about what grain they buy over the next few weeks to make sure they stay pretty fluid at the individual elevators,” Hemmes adds.

“Stocks at the port terminals, of course, are starting to really go down.”