Canada rail shutdown may still delay western grain exports

Canada’s rail shutdown may still delay loading of some bulk grain ships at the country’s west-coast ports despite the government’s move to end a stoppage at the nation’s two largest railroads, traders and analysts said.

At risk are more than 20 bulk cargo ships at or bound for British Columbia ports as in-port grain stocks represent just a fraction of what is scheduled to load over the coming weeks, according to shipping industry and government data.

Exporters in the world’s top canola producer and No. 3 wheat shipper could rack up vessel demurrage penalties totaling tens of thousands of dollars a day if ships sit idle waiting for supplies, analysts said.

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CN workers threaten strike, vow to fight Canada move to end rail shutdown

The union representing workers at Canadian National Railway said on Friday they would strike next week, in a fresh threat to the economy after vowing to challenge a government decision to end an unprecedented rail stoppage.

Although workers at Canadian National Railway returned to work on Friday, their union said they will strike on Monday and challenge the constitutionality of the government’s move to end the shutdown. Canadian Pacific Kansas City has yet to lift its lockout.

Thursday’s stoppage marked the first time both railroads had shut down simultaneously.

“The rail situation in Canada remains very fluid and uncertain,” Mike Steenhoek, executive director at the U.S.-based Soy Transportation Coalition said in a statement.

Rail delays threaten the flow of grain from Canada’s prairies to export terminals just as farmers begin to harvest their crops.

If disruptions persist, sales booked for loading in the autumn are also at risk of being canceled.

“(Exporters) could try to declare force majeure and go into arbitration … or they can rack up the demurrage charges,” said independent analyst Wayne Palmer.

There were 20 bulk vessels anchored near or en route to Port of Vancouver as of Aug. 19, earmarked for loading with 638,900 metric tons of canola and 428,200 tons of milling wheat, according to vessel lineup data seen by Reuters.

Most of the canola was due to be shipped to China, while the wheat was slated for various destinations in Asia, South America and Africa, the data showed.

However, the commitments far exceeded commercial stocks in Vancouver of 217,500 tons of canola and 216,100 tons of wheat as of Aug. 11, according to the latest data available from Statistics Canada.

Vessel-lineup data identified another two vessels bound for Prince Rupert, British Columbia, to be loaded with 134,200 tons of wheat. Wheat stocks there were just 11,900 tons, StatsCan data showed.