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CN Railway Sees Grains Boost After ‘Exceptional Year’ of Woes

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(Bloomberg) -- Western Canadian grain shipments by rail are expected to rebound after a year plagued by drought, flooding, wildfires and supply-chain snarls, according to the latest Canadian National Railway Co. estimates.

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Canada’s largest railway expects to move 24.5 million to 27 million metric tons of bulk and processed grain in the next crop year, which starts Aug. 1, according to Canadian National’s latest annual grain plan report published Friday. The rebound comes as CN ends this crop year with 18.2 million tons of grains transported, well short of its 2020-21 record.

“This year was exceptional on many fronts, and these events had real impacts on rail capacity and the movement of grain,” the Montreal-based company said. “These are exceptional circumstances, unprecedented in the history of Canadian railway transportation, and all occurring within a compressed period.”

Shipments were hurt by a dramatic decrease in grain volumes in the past year due to last summer’s drought, said CN, which moves about a third of grain shipments in Canada. Wildfires and floods in the western Canadian province of British Columbia also caused havoc and disruptions, halting trains, while extreme winter weather, supply-chain disruptions and workforce impacts from Covid-19 also took a toll.

Demand from all commodities could exceed capacity during some weeks later in the year and in early next year between Edmonton, Alberta and Canada’s west coast, the document said.

CN is adding 1,000 higher-efficiency hopper cars to expand its fleet to 14,000 by early next year, according to David Przednowek, assistant vice president of grain. Another 750 will be delivered through the rest of next year into 2024. The new cars can carry 15% more grain than the old cars.

CN said it also plans to make better use of its eastern Canada network in light of increased pressure on western rail corridors, he said in an interview.

“There’s a lot of terminal capacity and throughput in eastern supply chain that was built a long time ago that was underutilized,” Przednowek said.

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