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Photo by THE CANADIAN PRESS/Michael Bell

Bad weather probably didn’t have all that much to do with it

In their comments before the federal Agriculture Committee last month, railroad executives continually cited unusually cold weather as having been a contributor to the backlog. Trains have to run slower and lighter when it’s -25 degrees, so a cold snap does reduce a railroad’s hauling ability. However, analysis by Quorum has found that there were aren’t that many more -25 days this winter. In Edmonton, there were 24 days during which railroads had to take cold weather precautions — compared to a five year average of 19 days. Critics have also pointed out that railroads have been running trains over the wintertime Rocky Mountains since the Age of Steam and should probably be pretty good at it by now. As Canadian Federation of Agriculture president Ron Bonnett said before parliamentarians last month, “the excuses of winter weather and unexpected yields don’t pass the smell test.”

This exact same thing happened four years ago

The current chaos is all déjà vu for Canadian grain farmers. In 2013, farmers brought in a record-breaking crop, only to find most of it stranded on their farms, with railways cancelling more than 60,000 grain cars worth of orders. It ultimately took most of 2014 to ship out all the Canadian export grain grown in 2013, with the Alberta Federation of Agriculture estimating that the backlog cost them $8 billion. Demurrage fees alone were more than $30 million. At the time, railroads offered the explanation that they had been blindsided by poor weather and larger-than-expected grain yields.

Railways are prohibited by law from making too much money on grain hauling

There’s one major reason why the average railroad executive may not be as enthused about hauling grain as other commodities. The Canadian Transportation Agency polices a system wherein railroads cannot earn more than a set amount per tonne when they’re shipping grain for export. Railways will even be penalized if they exceed this amount. Tight regulation is arguably necessary when railroads are effectively given monopoly control over certain regions, but it also means that, regardless of the grain haul, railroad companies like CN or CP are incentivized to send their locomotives towards more profitable routes.

Photo by The Canadian Press/Troy Fleece

An oil pipeline probably wouldn’t help all that much

Last week, Alberta Premier Rachel Notley said that if Canada just started building more oil pipelines, we wouldn’t be in this mess. It’s a fair point; pipelines are generally very good at getting oil cars off the tracks. However, there isn’t all that many oil cars on the westbound routes favoured by grain. While there is no shortage of angry farmers posting social media photos of oil trains chugging west through grain country, Mark Hemmes with Quorum Corp. suspects they might be seeing trainloads of canola oil. “There’s very little (crude) oil traffic that goes to the West Coast in rail right now, but there’s a fair bit of canola oil — and the cars look exactly the same,” he said.