By Karl Bloom
(Reuters) – A rail shutdown in Canada may delay the loading of some bulk grain ships at ports on the country’s West Coast despite a government move to end a standstill at the country’s two largest rail operators, traders and analysts said.
More than 20 large cargo ships are at risk at or heading to British Columbia ports, with grain stocks at the port representing just a fraction of what is scheduled to load in the coming weeks, according to shipping industry and government data.
Analysts said exporters in the world’s largest canola producer and third-largest wheat exporter could face demurrage costs of tens of thousands of dollars a day if ships sit idle waiting for supplies.
Although workers at Canadian National Railway (TSX:) 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 not yet lifted its lockdown.
Thursday’s stoppage marks the first time that rail lines have been closed at the same time.
“The rail situation in Canada remains volatile and uncertain,” Mike Steenhoek, executive director of the U.S.-based Soybean Transportation Coalition, said in a statement.
Rail delays are threatening the flow of grain from Canadian farms to export terminals just as farmers begin to harvest their crops.
If the unrest continues, sales booked for fall loading are also at risk of cancellation.
“(Exporters) could try to declare force majeure and go to arbitration… or they could stack demurrage charges,” said independent analyst Wayne Palmer.
According to vessel formation data seen by Reuters, there were 20 general cargo ships anchored near or en route to the Port of Vancouver as of Aug. 19, set to load 638,900 metric tons of canola oil and 428,200 tons of milling wheat.
The data showed that most of the canola was scheduled to be shipped to China, while the wheat was scheduled to be shipped to various destinations in Asia, South America and Africa.
However, the commitments far exceeded Vancouver’s commercial stocks of 217,500 tonnes of canola oil and 216,100 tonnes of wheat as of Aug. 11, according to the latest available data from Statistics Canada.
Shipline data identified two more ships bound for Prince Rupert, British Columbia, carrying 134,200 tonnes of wheat. StatsCan data showed wheat stocks there were just 11,900 tonnes.