CN, Canadian Pacific Foresee Lower Grain Volumes, Colder-Than-Normal Winter

Colder weather and lower grain volumes are just some of the issues that Canadian railways CN and Canadian Pacific anticipate as winter approaches, according to the winter operational plans that both submitted to the Canadian government.

The railways are required to submit the plans under the Canada Transportation Act.

Grain shipments likely to be lower this winter: CN

After achieving record grain volumes during the 2020-2021 crop year, which ran from Aug. 1, 2020, to July 31, 2021, grain shipments will be affected this year by the dry summer, according to CN CNI President and CEO JJ Ruest.

"We recognize the extremely dry conditions experienced by Western grain farmers in 2021 and the negative effects they have had on crop production for the start of the 2021–2022 crop year. This will impact grain shipment volumes during winter 2021–2022," Ruest said in CN's winter plan.

There are other issues that CN acts on as it prepares for winter operations, including monitoring for avalanches and landslides, conforming to new train speed restrictions that go into effect when the air temperature heads below -25°C, and being ready to add track patrols and deploy standby engineering crews, CN said.

CN uses customer forecasts to gauge when and where to have resources in place to move customer traffic, and it said it will deploy a three-tier system that prescribes specific train length reductions in cold weather. Other steps it will take to mitigate potential seasonal issues are seeking to maintain a consistent flow of air through the brake lines of trains, which helps them brake in lower temperatures, and analyzing data from the 2020-2021 winter season to maximize the effectiveness of distributed braking cars, which enables CN to run longer trains in colder weather.

Capital investments also help CN's network perform in winter conditions, according to the railway. CN has planned nearly $3 billion in capital investments in 2021. Those investments over the past three years have included 250 additional locomotives, 101 distributed braking cars, additional sidings and lengthened sidings, 150 miles of double track, 10 automated track inspection cars, and seven automated inspection portals, which allow for full inspection of a train at track speed.

"The company is prepared for winter. The added miles of double track, new and lengthened sidings, and additional alternative current and distributed power locomotives and air distribution cars are particularly valuable in this regard," CN said.

La Nina could bring frosty winter: CP

Western Canada might experience lower-than-normal temperatures this winter amid an anticipated La Nina event, CP CP said in its winter plan last week.

Although the La Nina prediction by the U.S. National Oceanic and Atmospheric Administration is still preliminary, what that might mean for western Canada is increased precipitation, as well as lower temperatures, for CP's western and central corridors, CP said.

"We analyze weather data and predictive modeling in an effort to forecast the conditions we are likely to encounter during the upcoming winter, including the type, severity and geographical reach," CP said. "Once weather models are analyzed, CP then develops specific winter plans for each region, subdivision, rail yard, and facility across our network. We place assets and resources (i.e., snow removal equipment and sand) in strategic locations across the network to improve our ability to respond quickly to winter weather, wherever it may occur."

CP also said it develops winter contingency plans for its train and engine employees, its engineering and mechanical personnel, and its operations centers in Calgary and Minneapolis. The railway prepares and watches out for potential avalanches as well.

"CP has robust systems in place to monitor winter conditions across our network. Hot box detectors provide real-time track-level monitoring of ambient temperatures. Accurate, real-time visibility on changing temperatures and winter operating conditions provides strong situational awareness and it informs our operational decision-making," CP said. "When the temperature on a railway subdivision drops below -25° C, we reduce train speed and length to ensure safety. When snow, ice and moisture fall on rail tracks, we must reduce the train's weight. Our locomotives are equipped with a cowcatcher on the front, which acts as a snowplow."

Like competitor CN, CP anticipates that persistent dry conditions and above-average temperatures the past summer will negatively affect grain crop yields, which in turn will likely lead to lower grain volumes.

CP quoted Statistics Canada as forecasting the country to have the smallest total wheat crop since 2007, with canola seeing its lowest production level since 2010.

U.S. forecasters also expect lower Canadian wheat and canola exports for 2021-2022.

"The total wheat harvest volume is anticipated to be approximately 21.7 million metric tonnes (MMT), while canola production is expected to be approximately 12.8 MMT, down 38 and 34 percent respectively from the previous crop year," CP said. "Nevertheless, CP is dedicated to the transportation of grain to market and we are prepared to move this year's crop both safely and efficiently."

CP expects its 2021 capital investment to be approximately $1.55 billion.

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