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The Canadian railways anticipate their grain volume movement in the 2020-2021 crop year will be roughly in line with how much they’ve hauled in recent years, according to outlooks from Canadian Pacific (NYSE: CP) and CN (NYSE: CNI).
CP’s and CN’s expectations come amid record grain volumes hauled in 2019-2020, and amid capital investments to expand grain-handling capacity through initiatives such as acquiring more hopper cars.
The Canada Transportation Act requires CP and CN to submit outlooks for the upcoming crop year to the Canadian government by July 31. The outlooks provide grain volume expectations for the year, taking into account harvesting conditions and market conditions.
The crop year in Canada runs Aug. 1 to July 31.
CP’s 2020-2021 outlook
CP anticipates moving 31.4 million metric tonnes (MMT) of grain in the 2020-2021 crop year, which is similar to its forecast for last year and how much it actually moved, the railway said in its 2020-2021 grain outlook.
To haul this crop, CP expects to provide 5,850 CP-owned hopper cars per week to grain elevators during the nonwinter months and 4,300, CP-owned hopper cars during the winter months of mid-December to March. Part of that reduction is because the Port of Thunder Bay closes during the winter.
CP also anticipates moving an average of 1,050 grain cars per week of customer-supplied equipment for most of the 2020-2021 crop year.
The railway plans to make available 1,000-1,100 locomotives, up to 15,500 grain hopper cars, and 3,600-3,800 train and engine employees for its customers.
CP has been deploying an 8,500-foot, high-efficiency product train model, which the railway says enables a train to carry 15% more grain than a 7,000-foot grain train. The railway has nearly 3,000 new high-capacity hopper cars in active service, and it plans to add more than 300 more by the end of this year. By the end of its $500 million investment, CP hopes to acquire 5,900 hopper cars, which are shorter, wider and higher, and remove from its fleet the low-capacity hoppers.
The capital investments come as CP’s customers have also made their own investments to expand their grain capacity, CP said. More than 30% of customers of the unit train grain facilities that CP serves will be able to accommodate 8,500-foot trains by the end of 2020, CP said.
For 2019-2020, CP expects to beat its all-time grain record of 26.8 MMT set in 2018-2019.
CN’s 2020-2021 outlook
CN expects to move between 26 MMT and 28 MMT of grain in the 2020-2021 crop year that began Saturday, according to the grain outlook it published last week.
The estimate is in line with the range of volumes from over the past three years, and it doesn’t include grain volumes moved by intermodal equipment, CN said.
The estimate comes as the railway seeks to expand its grain handling capacity even further. It plans to purchase 1,500 hopper cars, on top of the 1,000 it purchased in 2018. The new cars will be shorter in length, enabling eight to 10 more cars on a train. This increases the amount of grain moved per train, which in turn expands CN’s network capacity and helps to make rail operations more fluid at the ports of Prince Rupert and Vancouver, CN said.
The railway said it has been working with grain customers to review anticipated car supply requirements for the upcoming crop year along with the mix of railcars supplied by customers. CN projects that over 90% of CN-supplied hopper cars will be committed to customers in advance of the harvests through commercial or other car supply agreements. Car supply products will also be available to the market, with car block sizes of as few as 10 cars.
CN also expects to spot up to 7,600 hopper cars and tank cars per week outside of winter, and up to 6,100 hopper and tank cars per week during winter. Spotting means positioning railcars where they need to be for loading and unloading.
CN anticipates the spotting of bulk grain to increase by 350 car spots per week during winter and 150 per week outside of winter for CN-supplied hopper cars. Meanwhile, the spotting of customers’ cars is also expected to grow in 2020-2021, CN said.
CN moved over 28.2 MMT of bulk and processed Western grain products in hopper cars, tank cars and boxcars in 2019-2020, beating a record set in 2018-2019 by over 0.8 MMT, CN said. The railway also moved over 1.1 MMT of containerized Western grain during the crop year.
This article first appeared on s29755.pcdn.co
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