Canadian National Railway Co. (CN) and Canadian Pacific Railway Ltd. (CP) on Jan. 23 both announced 10-year deals, effective July 1, 2012, to serve Canpotex Ltd., the Canadian export potash group. It was particularly a feather in the cap for CN, which had been trying to get its foot in the door at Canpotex (GM Sept. 26, 2011). However, both CP and Canpotex acknowledge that CP will move the majority of the potash.
Potash Corp. of Saskatchewan President and CEO Bill Doyle weighed in on the rail business Jan. 26, praising both railroads. “It’s not that CP hasn’t done a great job for us because they have, it’s just that we’re going to grow so fast that we’re going to need both of them, and I will tell you, and I think most people know, that CN handles our domestic business (PotashCorp) and they just are a wonderful partner for us as well. So we have nothing but good things to say about both railroads, and we just think it’s smart to diversify and it’s going to be done to accommodate our growth.”
CN said its agreement is to transport potash volumes that Canpotex ships to export markets. CN will haul via its southern British Columbia (B.C.) line a portion of what Canpotex exports through CN-served Neptune Terminals in North Vancouver.
CN and Canpotex will also continue work on the feasibility of a potential new potash export gateway terminal in Prince Rupert, B.C., which would be served by CN over its northern B.C. line. In both cases, CN said train design will be highly efficient, utilizing distributed power locomotives pulling 170-car trains.
CN Executive Vice President and Chief Marketing Officer Jean-Jacques Ruest told analysts Jan. 24 that Prince Rupert is attractive because it is a deep water port, deeper than Vancouver, and it is a little closer to the northern part of Asia. As a greenfield project he said you could start with a map where you lay down the terminal the way it should be done and plan for long-term phases, as there are no neighbors. He said it would give Canpotex a long, long time in terms of access to market and future expansion.
“It’s a very compelling proposal if you’re looking at diversity in your supply chain and you have an aggressive growth plan, which is what Canpotex is after,” added CN Chief Operating Officer and Executive Vice President Keith Creel. “So we feel very good about our chances to convince them to stay in Canada and have a supply chain solution that meets their needs.”
“We are very excited to partner with a customer like Canpotex that has such a world-class distribution system,” said Ruest.
“Canpotex is focused on growth, efficiency, and strategic investments,” said Steven Dechka, Canpotex president and CEO. “We are pleased again to be partnering with CN, a company that shares the same values and will help us achieve these objectives.”
CP says it will still be Canpotex’s principal Canadian railway, transporting a large majority of potash shipments to Canpotex’s main terminal in Vancouver, B.C. In addition, in conjunction with Union Pacific, CP will transport all Canpotex potash shipments to Portland, Ore.
To move Canpotex’s potash more efficiently and reliably, CP said it has enhanced the infrastructure of its north main line and western corridor, which handle potash service originating from 10 Saskatchewan mines. It said improvements made under CP’s Multi-Year Plan are reducing average route miles and improving the capacity and responsiveness of the CP network. CP’s infrastructure enhancements are part of its four-year capital investment program, approved by the board of directors in the fall of 2010.
"Selection of CP to move the majority of our product to port is a reflection of the strength of our partnership and CP’s ongoing commitment to effic