With the Canadian Rockies offering an awe-inspiring backdrop, some 120 industry representatives gathered Aug. 12-13 at the stately Fairmont Banff Springs Hotel in Banff, Alberta, for the North American Fertilizer Transportation Forum.
The event brought together a range of businesses involved in the rail, truck, and marine transportation of fertilizer products, and offered a look at some of the logistical challenges and opportunities facing the movement of crop nutrients in the U.S. and Canada. Assessments varied from sobering to optimistic, but change was a common theme, as was safety and security with regard to toxic-by-inhalation (TIH) commodities such as anhydrous ammonia and chlorine.
Brian Jean, Parliamentary Secretary to Canada’s Minister of Transport, Infrastructure and Communities, detailed some of the “bold and forward-looking initiatives” Canada is undertaking to advance trade, including its Asia/Pacific Gateway national policy framework, designed to make Canada’s West Coast ports the gateway for trade between Asia and North America.
While noting successes such as co-production agreements between the Canadian National (CN) and Canadian Pacific (CP) railroads to keep huge ports like Vancouver running smoothly, Jean talked of the need for infrastructure improvements, particularly in mainland Canada. He also detailed the progress of Canada’s shippers’ rights bill, and said both Class 1 railroads need to focus on enhancements, such as longer notices for rate changes and arbitration/mediation policies between shippers and carriers.
Lee Clair, a Chicago-based partner at Norbridge Inc., talked of the “new normal” for freight transportation, which includes congestion at critical “choke points,” higher freight rates, demand exceeding supply, slow growth rates in rail and truck capacity, and customers bidding for the limited capacity there is.
Clair said it is time to reinvent the North American fertilizer supply chain, referring to an “obsolete” inland waterways system, insufficient rail capacity at key locations, and no excess capacity for seasonal surges. He said railroads are heavily de-marketing single car shipments and taking away storage tracks, while also facing dramatically higher costs for new cars.
Necessary changes, according to Clair, include increasing load capacity, minimizing empty miles and unproductive time, enhancing equipment utilization, and improving forecasting. He said partnerships and joint initiatives with the railroads are necessary to design a new network that decreases seasonality and the dependence on single-car distribution, but the changes will require a heavy capital investment.
Henry Ward, director of transportation safety and security for the Dow Chemical Company, talked about new rail tanker car designs for the transportation of TIH commodities. “The noise in the public was such that the current tank car is not going to carry us into the future,” he said. “We do need a better tank car.”
Ward detailed the so-called “enhanced 105” first-generation designs for TIH tank cars, including retrofit options to maximize the utilization of existing cars with head shields, nanotechnology thermal protection, multi-layered crush zones, and enhanced steel jackets. He also talked of “tank-within-a-tank” designs for the next generation that are much more complex and costly.
While noting that the initial Phase 1 prototypes are expensive, Ward said “we believe improvements are possible at a competitive cost, and are necessary for the industry to be sustainable.” He said small-run production chlorine tank cars will be available for service trials by the first quarter of 2009, with full TIH fleet replacement to be completed between 2010 and 2014.
Jean-Jacques Ruest, senior vice president of marketing for CN, talked of the railroad’s efforts to address safety, capacity, and labor concerns. On the safety front, Ruest detailed CN’s Responsible Care program and talked of the railroad’s increased safety standards for TIH commodities. Ruest said the CN response includes a consolidation of all TIH rates into one general tariff, with an introduction of differential pricing for tank cars according to safety specification by 2008/09.
On the capacity front, Ruest said CN is focused on targeted, specific investments in infrastructure; siding optimization; fuel efficiency and modernization in its locomotive fleet; and moving to private car ownership in its fertilizer hopper car fleet. He also detailed new hires for the company, saying CN is focused on train crew renewal, particularly in its western division.
CP’s Judy Harrower assured conference attendees that “agriculture is important to CP,” and that the railroad is committed to safety. Grain, fertilizer, and sulfur shipments make up 30 percent of total CP revenue, she said, noting that the railroad has spent $250 million over the last three years on network capacity expansion. Other key investments have been in hiring new employees and purchasing additional covered hoppers and locomotives.
Harrower said CP is not moving to a “tariff environment” regarding TIH commodities, but the railroad is evaluating pricing differentials. “We need a cooperative-type approach to address TIH issues,” she said. “There should be incentives for customers to move to the safest alternatives for the transport of these commodities.”