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Published August 29, 2014, 11:34 AM

New CP ordering system draws criticism, despite improved figures

Concern over harvest-time rail shipping backlogs is mounting and many areas of Agweek country are eager to attend the Sept. 4 U.S. Surface Transportation Board field hearing in Fargo, N.D.

By: Mikkel Pates, Agweek

FARGO, N.D. — Concern over harvest-time rail shipping backlogs is mounting and many areas of Agweek country are eager to attend the Sept. 4 U.S. Surface Transportation Board field hearing in Fargo, N.D.

Canadian Pacific Railway, which handles about 20 percent of the region’s grain, has been ramping up a new car ordering system that commits shippers to dedicated trains that operate on a continuous loop, rather than an open order system that allows double-ordering. Not everyone is happy about it, even though it improves CP’s backlog figures.

As of Aug. 22, CP was able to drop 16,256 open car requests from its system, leaving the open requests to 11,989, according to Robert Johnson, CP senior vice president of operations, in the weekly report to the STB. Johnson says the railroad expected a 15 to 20 percent improvement to move grain into the fall harvest.

CP had 1,457 new requests on the Rapid City, Pierre & Eastern Railroad system, which is largely in South Dakota. It had filled 1,883 grain orders in the country during the week, of which 173 were related to RCP&E. The target has been 500 cars a week to the RCP&E, but the lower number of cars delivered was “at their request to allow them to catch up on outbound volume to CP,” the report says.

Meanwhile, Burlington Northern Santa Fe Railway, which handles about 80 percent of the crops, in its Aug. 22 report to the STB, indicated the railroad has 2,671 single cars past due an average of 17 days, including 1,117 new past-dues. Of those, 1,262 were in North Dakota, past due an average of 19.6 days. That’s followed by Montana, 599 past-dues, 19.1 days; and Minnesota, 221 past-dues, 22.3 days late. The company also reported shuttle turns at 2.2 per month, with Pacific Northwest turns at 2.5. Turns to the Gulf of Mexico ports are at 1.7 times per month.

On Aug. 26, Jim Miller, BNSF vice president for the company’s agricultural group, told Agweek “in general, we’re still improving quite a bit across the board,” from the STB numbers, and preparing for a big harvest.

‘Seriously flawed’

Meanwhile, U.S. Sen. Heidi Heitkamp, D-N.D., says she’s already been receiving complaints from CP elevator customers and has called the system “seriously flawed.”

In a letter to CP CEO Hunter Harrison, Heitkamp says she understands CP is limiting the number of cars customers are allowed to order at one time. She wondered if the railroad would reimburse shippers for late delivery of cars, as Harrison discussed in a meeting in Minot, N.D., on Aug. 11. She also wanted to know whether CP will prefer customers ship to the Pacific Northwest for export, while customers shipping east and south have no certainty on turn times.

The new CP system “ignores the current number of unfulfilled requests from grain elevators, and forces North Dakota’s farmers and grain operators to start from scratch in the middle of the state’s harvest season,” she says. “It’s making grain elevators essentially leave massive quantities of crops on the side of the road while the railroad will only transport new grain orders.”

Heitkamp says she’s heard from “numerous” grain elevators who are CP customers. “For many, their number of open requests for grain cars has recently dropped dramatically,” she says. “But it isn’t because Canadian Pacific has fulfilled those requests. Rather, it’s because Canadian Pacific is making them cancel most of their open orders…”

Heitkamp says CP is “trying to pretend like the massive agricultural shipment delays across North Dakota don’t exist, despite the fact that grain has been piling up around the state for months.”

CP elevator shippers declined comments to Agweek, referring questions to Stu Letcher, executive vice president of the North Dakota Grain Dealers Association. Letcher says his organization is studying the plan and a potentially difficult transition.

“I will not tolerate bullying tactics of any kind, especially given the pressures already placed on our agriculture industry,” says Rep. Kevin Cramer, R-N.D.

Cramer has publicly questioned whether fines imposed on CP by the Canadian government for failure to meet certain ag commodity shipping goals has affected the poor service in the U.S.