Fields on Wheels presentation looks at grain movement to Port facilities

Quorum Corporation, the federal grain monitor for prairie grain handling and transportation, has been studying the costs associated with moving grain to the East Coast versus the West Coast.

Quorum's Mark Hemmes says the majority of grain destined for export - about 75 per cent - moved out of the West Coast Port facilities while about 11 million metric tonnes of grain moves through Eastern Canada each year.

"7.7 million metric tons of it is going over the Seaway through Thunder Bay, 3.3 million metric tons on top of that goes by rail, and about 1.9 million metric tons of that 3.3 is being used domestically a lot of it is wheat going to the flour mills that are in Eastern Canada, Montreal exports are about 2.6 million metric tons. And about 37 per cent of it on average is containerized. So a big portion of the grain that goes through the Port of Montreal, is actually going in containers."

Hemmes says they looked at six locations across the prairies and six global destinations with grain moving through Vancouver and Thunder Bay to Montreal.

"What that told us was that first of all the cost to port position can equal almost 65 per cent of the total cost. Thunderbay to Montreal is rail plus the Seaway cost an average of what $70 a tonne. Vancouver is only rail but its average cost is also about $61.44 per tonne. But the big thing about this is that the rail rates are the largest proportion of the total logistics cost. So when you think about what the total logistics on average of all of the places that we looked at, through the Thunder Bay/Montreal routing, it was about $129 a tonne. The Vancouver average was about $95.50."

He notes rail rates are just part of the cost to export the other factor to consider is ocean rates which can fluctuate dramatically.

"In the last five years, we've seen ocean rates range anywhere from about $5,000 a day, all the way up to $45,000 a day for a Panamax vessel. So that kind of fluctuation can really make a difference on some of the logistical decisions that people make and it moves the line.  So when we look at just running it through Thunder Bay to Montreal, and then to the destination, the biggest part of that is the effect on getting it to the port position. So, Saskatoon to Thunder Bay as an example, runs by rail and then it's got to go from Thunder Bay all the way through the Seaway. And Montreal is the example that we use when you compare that to moving it to Vancouver. It's a shorter period of shorter length of haul.  And therefore, it is a lower cost just to get it to port position."

He points out that if the ocean rates are low, then it actually starts to move closer to Thunder Bay. If they get higher, it moves closer to Vancouver. 

"A crude example of that just happened in the last month to month and a half, when we did our last run of these number. It was about four or five weeks ago, and during that time, from when we did the analysis, the number was about $16,000 a day for ocean freight. In the period of time since then, that number has now climbed to over $29,000."

 Generally, about 52 per cent of all of the traffic that goes through Thunder Bay is coming out of Manitoba, and it is a vast majority of what's getting produced there. Of course, it's going to stretch into Saskatchewan, Alberta, it's 1 per cent hardly enough to mention, and BC isn't even really there. When you look at Vancouver, for instance, Saskatchewan is the big provider. That's because Saskatchewan is the biggest producer of grain in Canada, and then Alberta, but Manitoba really doesn't play into the Vancouver market 5 per cent maybe."

Hemmes was one of the presenters during the University of Manitoba's  28th Annual Fields on Wheels Conference.