Polar Bear Blog – Port of Churchill Update

The Port of Churchill season is getting rollling, one cargo ship has been loaded destined for arctic communities but the first grain ship is not expected until next week.

It is a port that faces an uncertain future. Traditionally, the Canadian Wheat Board has been, by far, the primary (if not the only) customer at the Port of Churchill. Canada’s Conservative government deregulated grain marketing this past winter and this August marks the end of the CWB’s monopoly on Canadian prairie grain sales. The CWB still exists – it is just a voluntary opt-in co-operative now… It is a move that has received (to put it mildly) mixed reviews.

Most likely, farmers will see benefits in the first few years with gradual declining prices as the larger corporations ‘streamline’ costs and look for ‘efficiencies’ – and in about twenty years, there will be a major lobby to re-establish co-operative grain marketing – of course, it will be too late by then… at least, that’s my take.

The Conservatives have set up a transition fund and I believe there is a $9 per tonne subsidy in place at the port this year. So that’s good for Churchill. This first year, Canadian Wheat Board shipments should remain fairly high given that the change has just been implemented and a fair number of contracts are likely in place.

As well, grain prices are up so that should encourage private companies to ship north as well – one would think that most ports will be running near capacity as companies try to move as much product as possible while prices are up. Hard to say though…

Last year was pretty decent at the Port of Churchill as well… the CWB shipped just over 500,000 tonnes of grain (not a banner year but not bad either…). Sixteen vessels headed out with grain from Churchill in a season that started on August 3rd and finished on Halloween. Most grain shipped from Churchill ends up in Africa, Latin America and Europe.

So we will see, the last five years at the Port of Churchill have actually been pretty good – no one can really tell what the next five will hold but its a fairly safe bet that things will get a little lean… plus the Port seems to have a knock or two against it already.

Omnitrax, the Denver-based company that runs the railway and the port, has a tendency to roll through managers and middle-managers like toilet paper. Once again, it looks like new management is in place at the port. This combined with the departure of two fairly key figures in the grain/rail industry might make shipping companies a little uneasy about Churchill… hopefully not.

Omnitrax is also touting new diversity in grains and new products for the Port of Churchill. Their latest idea is to ship crude oil through Churchill and out Hudson Strait. So aside from the obvious connotations of an arctic oil spill and Omnitrax’s record of being pretty much unprepared for almost anything, this is somewhat concerning. On the bright side, Omnitrax also has a new ‘bright idea’ every year… first it was ’1,000,000 tonnes of grain’ then it was ‘Arctic Bridge to Russia’ and now its ‘Crude Oil for Churchill’… and, of course, none of these materialize, other than funnelling Canadian government funding to the Denver head office.

So anyway, that being said, the bay is free of ice, the route is ready, willing and able and, well, I guess we will see what the ‘free market’ holds in store for the port. There is a new arctic shipping joint venture between Omnitrax and the Inuit – that should add some business. And for the umpteenth year, they are talking about extending the season with an icebreaker – but don’t hold your breath on this one.

Personally, I have a hard time seeing the port competing on the open market… there are just too many variables, too short a season on western Hudson Bay and some aging infrastructure. If I am reading the northwinds right, I would hazard a guess that the port will be replaced by the Canadian military as Churchill’s main employer within a decade. You can hardly turn around without bumping into a soldier or a CF-18 in the north these days… in fact, I have already heard rumours that a small military base is planned for Churchill – but I can’t tell you who told me…

http://www.grainews.ca/news/churchill-shipments-expected-to-remain-high/1001577356/