Industry Needs Railways to Improve Their Service

by | Feb 16, 2024 | 2024, January/February, Logging & Sawmilling Journal

Recently, a new rail advocacy group from Alberta called the Community Rail Advocacy Alliance (CRAA), of which the Alberta Forest Products Association (AFPA) is a member, stated in an Opinion piece in the Edmonton Journal newspaper that “right now, 20 to 30 per cent of the railcars ordered to forestry mills do not show up.”

Kelly Levis, Vice-President of Industrial Products at CN Rail, spoke recently at a forest industry conference, and noted that CN is spending upwards of $27 billion over the next two years, to deal with congestion on its railway network in Western Canada.

Brock Mulligan, Senior Vice-President at AFPA, says that at present, this situation has generally gotten better but the challenge has not gone away—and could easily take a step backward with changing market conditions. There is still an ongoing issue with inconsistent and unpredictable railcar delivery service.

“Poor service to remote areas is not something that our industry can tolerate from a viability standpoint,” he says. “It’s not that there is a perpetual shortage of boxcars. It’s that service can be inconsistent and unpredictable.

“Our view is that this system is critical infrastructure,” Mulligan added. “It’s like the electrical grid or healthcare. It’s a lifeline to communities and it can’t be inconsistent. It has to work well all the time. That’s an ongoing challenge and they (railways) need to figure out how to solve it.”

He says that this is a huge challenge for the forest industry because delivery issues affect forest companies’ reputation with customers, impact costs when such alternatives as trucking and warehousing of product is considered, and ultimately impacts the viability of operations.

Inadequate rail service is not just a concern in Alberta, because as recently as last spring, issues with the timely delivery of railcars actually caused forest industry leaders like Canfor and Paper Excellence to slow down production.

Canfor reduced operating schedules at 11 sawmills in Western Canada for four weeks, blaming the “global supply chain slowdown.” The Paper Excellence pulp mill in Meadow Lake, Saskatchewan also slowed down production indefinitely because of what it said was a recurring lack of railway service.

At present, according to CN Rail, forest products represent 12 per cent of its overall business, broken down to 36 per cent lumber and panels, 56 per cent pulp and paper, and eight per cent wood pellets. Forest products represent about four per cent, overall, of CP Rail’s business.

So, what’s to blame for this less than adequate railcar delivery service?

The CRAA blames not enough railcars, power and crews, as well as “unfair car-allocation practices.”

Described as a “file with a lot of history of rawness,” the rail car situation has spurred the creation of organizations like the CRAA. One reason that the organization came together is that they felt as individuals, their concerns weren’t being heard by the federal government, the railways or regulators.

“The past several years have shown how fragile and vital our supply chains are,” Mulligan says. “We want to see significant investment in our railway network for strengthened infrastructure, rolling stock, and human resources to keep Alberta’s and Canada’s supply chains on track.”

Kelly Levis, Vice-President of Industrial Products at CN Rail and headquartered at the railway’s head office in Montreal, was the first presenter at AFPA’s annual conference this past fall. She also met face-to-face earlier with CRAA members in Grande Prairie, Alberta. Mulligan says that the CRAA is encouraged by this first step toward better communication. Levis is ultimately responsible for the movement of industrial goods on the rail company’s network.

Once Levis took the podium at the AFPA event, it was as if she had read the CRAA’s Opinion piece line by line, taking great pains to address each of the concerns, essentially asking those present to try to understand the reality of how the railway operates, while acknowledging that CN Rail has a congestion problem on its network in Western Canada.

Essentially, she reminded those present that the railway operates very much like a train and that their business model is almost entirely reactive, designed to function under ‘normal’ circumstances regardless of the level of demand and prices for products in the marketplace. As with a loaded freight train, it takes the railway a long time to stop, and pivot to respond to market demands.

“When lumber goes crazy, to $1600 per thousand board feet, we can’t keep up,” with railcar demand, she said, adding that, “we don’t turn on a dime, but our focus is to work on schedule…If we take on more than we can handle, everybody loses.”

To that end, she reported that CN Rail has improved what she called its ‘velocity’ over the past 18 months by between 12 to 15 per cent. This essentially is the speed of rotation of its forestry-based railcars to and from end points. Improved velocity means that the rail company has more cars available, as needed.

She said that CN Rail is not only focused on its velocity but also its capacity. To that end and realizing that it has a congestion problem on the busiest stretch of its railway network in Western Canada, the company is spending upwards of $27 billion for 20 new siding projects, 300 locomotives, and 1600 replacement and new railcars over the next two years.

With more sidings, the railway will be able to better co-ordinate the transport of goods on stretches of its single-line track where trains heading in opposite directions can pass more easily, and in theory, increase the speed at which goods are transported. Levis said that CN Rail has also added about 200 kilometres of double track since 2016.

That’s the good news. On the flip side, “it takes 9 to 12 months to get a locomotive and 12 months to get new boxcars.”

Staff levels at the railway is also an issue, and to that end, Levis indicated that CN Rail has gone on a hiring spree and its classes for both engineers and conductors are full. However, labour legislation enacted by the federal government is not doing the railway any favors and is actually working against train crews showing up for work.

For example, federal legislation regarding the number of sick days an employee can take without a doctor’s note is having a significant impact on staff scheduling. What the legislation failed to consider is the number of sick days already negotiated under collective agreements. The federal legislation has added to the number of sick days already allowed under CN Rail’s collective agreements with its employees.

“What we found this past summer is that 50 per cent of the sick days (taken) were in the summer,” Levis said, with the biggest staffing challenges being on branch lines which many forest companies depend on.

There is also proposed federal legislation disallowing the use of replacement workers or managers in the event of a strike which, if enacted, would shut down the entire railroad within 24 to 48 hours, she said.

Levis urged the forest industry to work with CN Rail to consider alternative methods of delivering their products to market. For example, containers of goods from overseas transported by the railway are often transported back to their place of origin empty. It might be worth investigating if those empty containers can be filled with forest products on the return trip, and CN Rail is willing to work with individual companies to explore these types of outside-the-box solutions.

“I think the test for us is going to be how they perform when we have a really strong market for multiple commodities or a really cold winter,” says the AFPA’s Mulligan. “How will they deal with the challenges? We are encouraged that they are working toward more consistency, but we need to wait and see . . . we know that (right now) slower commodity markets are playing
into less demand for railcars.”

Tony Kryzanowski

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