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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
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 2
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
3/27/14 2014 Grain Handling & Transportation Summit
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 …
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 3
The Western Canadian “Playing Field”
3/27/14
• 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
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 4
Licensed Elevators – August 1999
1,004 elevators in 685 communities
3/27/14 2014 Grain Handling & Transportation Summit
Licensed Elevators – August 2013
391 elevators in 274 communities
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 5
GHTS Rail Network: 1980
CN CP Regional/ Shortlines
3/27/14 2014 Grain Handling & Transportation Summit
GHTS Rail Network: 2014
CN CP Regional/ Shortlines
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 6
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)
3/27/14 2014 Grain Handling & Transportation Summit
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
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 7
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
3/27/14 2014 Grain Handling & Transportation Summit
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.
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 8
GHTS Performance
3/27/14 2014 Grain Handling & Transportation Summit
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%
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 9
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))
3/27/14 2014 Grain Handling & Transportation Summit
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)
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 10
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
3/27/14 2014 Grain Handling & Transportation Summit
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
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 11
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
3/27/14 2014 Grain Handling & Transportation Summit
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%
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 12
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%
3/27/14 2014 Grain Handling & Transportation Summit
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
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 13
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
3/27/14 2014 Grain Handling & Transportation Summit
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
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 14
Rail Freight Rates since 1980
3/27/14 2014 Grain Handling & Transportation Summit
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)
3/27/14 2014 Grain Handling & Transportation Summit
2014 Grain Handling and Transporta4on Summit
3/27/14
www.grainsummit2014.ca 15
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
3/27/14 2014 Grain Handling & Transportation Summit
Thank You
3/27/14 2014 Grain Handling & Transportation Summit