Overview of Grain Movements Bruce McFadden , Quorom Corporation

2014 Grain Handling and Transporta4on Summit

3/27/14

www.grainsummit2014.ca 1

The Western Canadian GHTS 2013-14 Update

Grain Summit 2014 March 26 2014

3/27/14 2014 Grain Handling & Transportation Summit

Overview

  Quorum and the Grain Monitoring Program   GHTS Background

  The Playing Field   Performance History

  GHTS This Year   Production   Performance   Challenges

  Other Issues   Revenue Cap



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Who is Quorum?

  Transportation and Logistics consulting firm with a focus on North American surface modes – rail, truck, container, bulk commodity and grain   Established 1999   Have developed a specialization in transportation data management

with a strong IT support   Divisions – Quorum Corp, QGI Consulting

  Grain Monitor for the Federal Gov’t since 2001   QGI Consulting selected to provide services in the

preparation of stats and information for the Rail Freight Service Review


Grain Monitoring Program

  Activity and Performance Measures   Industry volumes, activity and performance metrics   Farm gate to ocean vessel departure   Establishes the industry benchmarks   Used by broad cross section of the industry stakeholders

  15 Year time series providing ongoing assessment and analysis through the measures and document industry’s evolution

  The Grain Monitor strives to retain a neutral and balanced position on issues …



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The Western Canadian “Playing Field”

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• Exports 27-31 MMT/ annually • Worth $21 Billion Annually

• Carry Canadian grain to over 1,000 destinations

2014 Grain Handling & Transportation Summit

3/27/14

The Western Canadian “Playing Field”

30,000 Producers

391 Primary & process facilities

2 Class 1 & 15

Short-line Railways

with 17,600 miles of

track

15 port licensed

bulk terminals at 4 Ports

1,500+ Ocean Vessels

8 Container terminals

2014 Grain Handling & Transportation Summit


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Licensed Elevators – August 1999

1,004 elevators in 685 communities


Licensed Elevators – August 2013

391 elevators in 274 communities



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GHTS Rail Network: 1980

CN CP Regional/ Shortlines


GHTS Rail Network: 2014

CN CP Regional/ Shortlines



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Production – 1980 -2013 (Tonnes)

-

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

60,000.0

70,000.0

80,000.0

Cereals Canola Special Crops Other Total Linear(Total)


Changing Markets

Asia 52%

Western Hemisphere

16%

Western Europe

6%

Eastern Europe

19%

Africa 7%

Oceania < 0.5% 1990

Asia 47%

Western Hemisphere

35%

Western Europe

10%

Eastern Europe < 0.1%

Africa 8%

Oceania < 0.1% 2010

Last 20 years has seen the decline of trade with Europe and growth of Western Hemisphere

Increased focus on West Coast ports



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West Coast Volumes

  Last four years averaged 21 mmt – up from approximately 15 mmt a decade earlier.

  Is this the new normal?   Investments underway.   How much can it grow? -

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

VANCOUVER PRINCE RUPERT Total West Coast


West Coast Drivers

 Changing Global Demand: Rising standard of living in Asia Pacific markets and fluctuating production levels in competitor countries

 Logistical Economics: Spreads on ocean and rail freight are significant drivers on the routing choice for sellers of Canadian grain, making West Coast routing a preference.



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GHTS Performance


GMP Dashboard

2010-11 2011-12 2012-13 Year/Year Change

Total Time in System: 52.3 47.1 46.2 -1.9% Loaded Transit Time: 6.0 5.6 5.4 -3.7% Time In Store – Country: 30.8 27.6 26.5 -4.0% Time in Store – Terminal: 15.5 13.9 14.3 +2.9% Vessel Time in Port: 9.9 6.6 9.7 +47.0% Elevator Turnover Ratio:

Country: 5.7 6.0 5.8 -3.3% Terminal: 9.9 11.1 11.1 -

Total Car Cycle: 14.3 13.9 14.0 +0.9%



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Time in the System

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Country Elevator Storage Time (days) Railway Loaded Transit Time (days) Terminal Elevator Storage Time (days)

Total (days) Linear(Total (days))


Railway Loaded Transit

0.200

0.250

0.300

0.350

0.400

0.450

0.500

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Loaded Transit Time (days) Coefficient of Variation Linear(Loaded Transit Time (days)) Linear(Coefficient of Variation)



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2013 Production

June

• Concerns about late seeding/ slow development/ late harvest

• Expectation of an average Crop

July

• Good Moisture

• Relatively mild temperature

• Prolonged reproductive stage for most crops

August

• Ripening delayed, grains continue to fill

• Expectations of a bumper crop

• No early frost

September

• Continued good harvest conditions

• Recognition of a record level crop


Record Breaking Crop and Capacity Planning

  Stats Canada September Estimate = 65 million tonnes in Western Canada

  Railways and Shippers meet to discuss capacity – railways plan for 5,000 – 5,500 cars/ week per railway

  Stats Canada November final estimate = 75.9 MMT in Western Canada



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Where are we now?

2013 5 Yr Average

Var %

Production 75.9 55.4 +37%

Carry In 4.9 8.1 -39 %

Total Supply 80.8 mmt 63.5 mmt +27%

mmt Total Supply (2013-14) 80.8

Domestic use/ US movement (5 yr avg.) 29.3

Shipments to port (5 yr avg.) 26.1

Total Marketing (p) 55.4

Carry out July 31, 2014 (p) 25.4


Total Port Unloads – YTD Week 32 (Cars)

Vancouver Prince Rupert

West Coast

Thunder Bay

Churchill Total

2013-14 112,427 34,652 147,079 34,617 6,156 187,852

2012-13 114,916 35,049 149,965 43,314 4,906 198,185

5 Yr Avg 108,701 32,147 140,848 35,748 5,574 182,170 Var % to Last

Year -2% -1% -2% -20% 25% -5%

Var % to 5 Yr Avg

3% 8% 4% -3% 10% 3%



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Port Unloads Week 32

• Significant improvement in unloads

Week 32 Vancouver Prince

Rupert West Coast Thunder

Bay Churchill Total

2013-14 4,306 1,870 6,176 45 - 6,221

2012-13 3,918 1,268 5,186 107 - 5,293

Variance 10% 47% 19% -58% n/a 18%

4 Week Rolling

Average Vancouver Prince

Rupert West Coast Thunder

Bay Churchill Total

2013-14 4,117 1,478 5,595 25 - 5,620

2012-13 3,893 1,210 5,103 136 - 5,239

Variance 6% 22% 10% -82% n/a 7%


Average Weekly Stocks in Store (March 16, 2014)

Country Stocks

Terminal Stocks

0 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000

Tonn

es (0

00)

Grain Week

2012-13

2013-14

5 Yr Avg

0.0 200.0 400.0 600.0 800.0

1,000.0 1,200.0 1,400.0 1,600.0

Tonn

es (0

00)

Grain Week

2012-13

2013-14

5 Yr Avg



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Vessel Lineups (to week 30)

Prin

ce R

uper

t

• Vessel lineups grew steadily throughout the fall and winter

• Vancouver terminals reported car arrivals out of sequence with vessel program resulting in sub-optimal “pipeline” operations.

Vanc

ouve

r 0

5

10

15

20

25

30

35

40

Grain Week

Waiting

Berthed/Loading

0 2 4 6 8

10 12 14 16 18

52/5

3 2 4 6 8 10

12

14

16

18

20

22

24

26

28

30

32

Grain Week

Waiting

Berthed/Loading


What does it all Mean?

Producers

•  Falling Prices • Widening Basis •  Lack of Delivery opportunities • Cash flow crunch • Bins full

Grain Companies

• Widening Basis • Vessel Demurrage • Contract Extension costs •  Lost opportunity for add. Volumes • Pressure to revisit shipper protection legislation

Railways • Guaranteed volumes 18-24 months out • Enhanced revenues •  Focus attention on Revenue Entitlement (Cap) •  Long term capacity question/ strategic choices



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Rail Freight Rates since 1980


  The term “Revenue Cap” is a misnomer as the MRE does NOT a place an absolute “cap” on railway revenues.

  What it does do is:   …Provide a statutory limit on the amount of revenue a

prescribed railway can earn from the movement of regulated grain in western Canada.

  …Provide an effective dynamic control mechanism limiting the amount of revenue per tonne that a railway company may derive from the movement of regulated grain

  … It does not penalize the railways for:   Handling more grain; length of haul   Inflationary effects (VRCPI)

What is The Maximum Revenue Entitlement? ( Cap)



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Going Forward?

  Impacts of record western Canadian crop   Challenges continue into next crop year due to huge

carry over stock   Enhancements to the GMP announced Feb. 3rd:

  Railway order fulfillment data   Fleet size   Port terminal unload performance   Greater granularity - weekly data   Reported monthly


Thank You


Overview of Grain Movements Bruce McFadden , Quorom Corporation

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Transcript of Overview of Grain Movements Bruce McFadden , Quorom Corporation