CN, CP respond to grain shippers' concerns over rail shipment backlog

Both Canadian Class Is today announced their efforts to improve grain shipments following extreme winter weather in February that affected the nation's grain supply chain.

The announcements were made in response to grain shippers' and producers' recent concerns about a growing backlog of rail shipments.

CN Interim President and Chief Executive Officer JJ Ruest said the railroad will quickly improve the movement of Western Canadian grain and is directing additional people and equipment to clear backlogs across the network.

"We apologize for not meeting the expectations of our grain customers, nor our own high standards," said Ruest in a press release. "The entire CN team has a sense of urgency and is fully focused on getting it right for farmers and our grain customers, regaining the confidence of Canadian businesses, and protecting Canada's reputation as a stable trade partner in world markets."

CN "can and will do much better, and that starts today — no excuses," Ruest added.

Steps taken by CN to address the situation include:
• offering incentives for key operating employees to delay retirement and postpone vacations, and for recently retired operating employees to return to work;
• deploying qualified management employees to operate extra trains;
• adding train crews in Western Canada: about 250 conductors were put in the field in the last three months of 2017, with about 400 conductors coming into the field in the first three months of 2018, and an additional 375 from April to June;
• leasing 130 locomotives to increase capacity in Western Canada, almost all of which are now online; and
• investing more than CA$250 million this year to build new track and yard capacity in Western Canada to boost supply chain fluidity and build in capacity resiliency for future grain crops.

CN delivered 4,577 empty hopper cars last week, up 35 percent from the February average of 3,400. All available hopper cars are in service, and the railroad aims to up the figure to 5,000 cars per week by the end of March, CN officials said.

"Canadians can count on CN to get this job done and to get it done safely, reliably and efficiently," said Ruest. "We will provide regular weekly tracking on our grain movements and engage our grain customers."

Ruest's statement follows Monday's announcement that CN President and CEO Luc Jobin abruptly resigned. CN's board appointed Ruest to the position on an interim basis.

Meanwhile, Canadian Pacific officials said the Class I's network is starting to recover from last month's extreme weather. Grain shipments rose 16 percent in Week 31 while year-to-date grain supply shipments through that week climbed 3 percent compared with the year-ago periods.

CP also deployed nearly 50 percent more empties in the country in Week 31 compared to the same week last year.  Moreover, CP's velocity is improving, with train speeds up 10 percent this week versus mid-February, officials said in a press release.

"We are optimistic that with the weather turning in our favor, our singular focus on delivering safely for the supply chain, and the re-opening of the Port of Thunder Bay, that we are on the road to recovery," said CP President and CEO Keith Creel. "While our challenges have been significant, they are different than that of our competitor's and the success of the supply chain depends on both railroads running at optimum levels."

In addition to unprecedented cold and snow that caused line outages, CP "is experiencing unprecedented and unexpected demand being driven from dual rail-served territories in the northern catchment areas of our network," company officials said.

"In spite of significant weather challenges our shipments are up 30 percent crop-year to date in this area," they added.

This year's crop was originally forecast to be 65 million metric tons, but will end up being closer to 71 million metric tons, with much of the increased production occurring in the northern catchment area of the prairies due to dry conditions in the south, they said.

"These short-term challenges are episodic, not systemic and we expect our network to improve with improving weather conditions," Creel said. "We are still moving more grain than we did last year and we are well positioned to have a great year overall across most commodities and lines of business."

CP is adding crews and locomotives to support volumes across all commodities, Creel said.

"We have 550 new people, across all crafts, in various stages of the hiring process, 100 additional locomotives, which will start being integrated into the fleet this month and into the spring and summer, and we have earmarked between CA$1.35 billion and CA$1.5 billion in capital improvements this year that will further improve the flow of goods across North America," he said.