(Reuters circulated the following article by Roberta Rampton and Jeffrey Jones on February 18.)
WINNIPEG/CALGARY — Canadian Pacific Railway said on Wednesday it will stand by its decision to cancel some shipments without recourse after its lines were hit by severe cold and sliding snow, leaving problems for grain customers ahead of a likely strike by its main rail rival.
CP Rail, the country’s No. 2 carrier, declared force majeure on some contracts after weeks of brutal winter conditions, including avalanches in the British Columbia mountains, clogged up its mainline and caused major backlogs in its biggest yards, a top executive said.
That left ships waiting on the West Coast with grain companies unable to get loads through, and grain customers have disputed the force majeure decision.
“We did declare force majeure with a handful of clients, and that included some folks in the grain industry, because we thought it was important that they understand that the circumstances that we were facing were beyond our control,” said executive vice-president Fred Green.
Some contracts were halted for two weeks “at the outside,” Green said.
He declined to talk about specific contracts affected by the force majeure, which takes advantage of a contract clause that allows a provider to cancel services due to events it cannot control.
He said CP Rail is still working through backlogs at yards in Toronto and Thunder Bay, Ontario, and Calgary, Alberta, and it could be another week and a half before operations return to normal.
These backlogs are one of two headaches facing Canada’s grain companies — unionized workers at rival Canadian National Railway
Green said severe cold and snow in eastern Canada in early January slowed slowed shipping volumes. Then CP Rail was buffeted by a series of British Columbia avalanches, the biggest of which closed its main corridor for 2-1/2 days.
“Coquitlam (British Columbia) is quite fluid on the coast now, other than we’ve still got some backed-up trains for the international side. Those vessels keep coming even though the trains are not running,” Green said.
The carrier typically moves as many as 40 trains through the British Columbia corridor each day.
The Canadian Wheat Board, Canada’s largest grain shipper, disputes the force majeure, saying the railway did not give proper legal notice, board spokeswoman Louise Waldman said. She said the two sides were discussing the issue.
Last week, the CWB ordered almost 1,400 rail cars from CP, but Waldman said the railway did not provide any. This week, the railway provided 1,219 out of 1,599 requested.
Waldman acknowledged that cars are starting to move again but said the CWB still has a shortfall of more than 3,200.
Agricore United
She said shipments of malt barley headed for maltsters in the United States and Mexico were held up, forcing two plants to temporarily shut down because of the delays.
“There’s a huge financial repercussion there,” she said.
An industry official said canola shippers have been meeting customers’ orders with oilseed that had been stored in West Coast port terminals.
But Barb Isman, president of the Canola Council of Canada said companies have had to truck canola from grain elevators on CP tracks to lines owned by CNR to meet orders.