(The following story by Scott Simpson of the Vancouver Sun appeared at Canada.com on March 29.)
VANCOUVER — British Columbia’s booming forest industry got a further boost on Monday with an announcement by Canadian National Railway that it has reached the last in a series of deals with erstwhile rivals to greatly speed the delivery of lumber into ravenous United States markets.
The latest deal involves Norfolk Southern Railway and allows CN to bypass congested railyards in Chicago in favour of Memphis, potentially slashing delivery times to southern U.S. markets by as much as one-third.
That’s great news for the B.C. Interior lumber industry, particularly major producers who were forced last year to serve some southern U.S. markets by ship via the Panama Canal — a 9,600-kilometre trip — rather than continue to rely on rail-based routes already plugged with container cars.
“This is the final one. We have now done similar protocol agreements with all of the Class 1 railroads,” CN spokesman Mark Hallman said in a telephone interview.
“It’s an initiative for which CN has been at the forefront. We have initiated these deals with all four Class One railways. We’ve made announcements with Canadian Pacific as well.”
At present, a delivery to the southern U.S. takes about 40 days — compared to a target of 28-30 days, although it used to take as little as 18 for B.C. lumber to get into that market.
Lumber and wood account for five per cent of gross freight revenue for CN and other North American Class One railroads — but they’re B.C.’s top product and the United States is the biggest customer.
North American lumber prices are off to their hottest start in more than a decade, and B.C. producers are anxious to take advantage, but access to U.S. markets remains a stumbling block.
Recently the American Society of Civil Engineers gave U.S. rail networks a C-minus in a report on national infrastructure, saying that limited rail capacity was creating “significant chokepoints and delays” for the first time since the Second World War.
CN has added extra cars in a bid to shorten transit times, but has still been facing delays after it transfers its freight loads onto lines operated by other carriers.
Hans Thur, general manager of global supply for Canfor Corp., North America’s second largest lumber producer, called transit time the B.C. company’s “biggest issue, not just with CN but with all the railways.”
“They are about 33 per cent over their target. If they could reduce it down to their target levels it would be a huge improvement for them and us,” said Thur.
“Certainly any work towards relieving the congestion in the Chicago hub, or any hub, would be welcome for us.
“There is no question that they are not up to par on getting their transit times down to where they want them to be to utilize their equipment properly. Any help in that direction would be favourable, not only for us but for other industries as well.”
Hallman said the deal with Norfolk Southern, as well as earlier routing protocol agreements with Burlington Northern Santa Fe, Union Pacific, and Canadian Pacific, involves “thinking outside the box.”
“It gets away from the traditional railroad approach where you would be trying to maximize the length of haul for that traffic on your system before you turn it over to the other parties — in other words, you traditionally look to maximize your revenues, with service and all the rest coming in second place,” Hallman said.
He added that CN CEO Hunter Harrison has been chasing such arrangements “for the past decade.”
“What we are trying to do here is get the most efficient ways of doing it. That improves transit times, and equipment cycle times which are important in terms of forest products being produced in B.C.
“You take a look at the global picture and both parties come out ahead.”