Canadian Railroads > What's Going on at CP

First they lose the Ocean Network Express contract now a good chunk of the Teck coal contract as well. What's next?

Tim
mp35mountain

Posted from Android

My understanding is that the loss of the coal business from the Crowsnest Pass has to do with the worldwide coal market rather than CP.

I just finished listening to both JJ Ruest and Keith Creel speaking st an investors conference. They are expecting Teck to increase production of met coal.  The reason CP lost the Kamloops to North Vancouver part is because CN serves the Neptune Terminal.  Teck is moving most if not all of their business to their co owned terminal.

Tim

Kind of ironic when you consider that CP used to own Cominco, which merged with Teck.
 

I seem to remember some of the Teck coal business was routed CP Kamloops CN, to meet some agreement about rate divisions.

Mike Root
Madras, OR

shortlineboss Wrote:
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> I seem to remember some of the Teck coal business
> was routed CP Kamloops CN, to meet some agreement
> about rate divisions.

No, it was a provision won by Teck in a 2009 aribitration, aimed at moderating CP's monopoly over the coal traffic from Teck's mines in southeastern B.C. The arbitrator awarded Teck the right to have 3.5 million metric tonnes (about 15% of CP's volume at the time) transferred to CN at Kamloops for onward shipment to the coast, whether to Westshore Terminals at Roberts Bank or Neptune Bulk Terminals in North Vancouver, although Teck said at the time most would be going to Neptune.

That came at a time when Teck's negotiations with CP over a renewed long-term contract were not going well. Ultimately, a new 10-year contract was reached in 2011 (which continued the Kamloops transfer provision) and that is the one expiring in 2021, which will free Teck to make a more substantial transfer of coal traffic to CN.

In part, this is being done because Teck is a co-owner (with Canpotex) of Neptune Bulk Terminals, as stated earlier in this thead.

Today's news is not unexpected, as Teck had given notice to Westshore Terminals that it would be shifting more traffic to Neptune. That was covered in a March 25th post to this board: https://www.trainorders.com/discussion/read.php?15,4760613,4760672#msg-4760672

 



Edited 1 time(s). Last edit at 12/04/19 23:17 by railsmith.

mp35mountain Wrote:
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> I just finished listening to both JJ Ruest and
> Keith Creel speaking st an investors conference.
> They are expecting Teck to increase production of
> met coal.  The reason CP lost the Kamloops to
> North Vancouver part is because CN serves the
> Neptune Terminal.  Teck is moving most if not all
> of their business to their co owned terminal.

CP trains also run to Neptune under the co-production agreement with CN.  CP crews bring these trains as far as Sapperton (on the Westminster Subdivision), where they are handed over to CN crews for the last part of the run to Neptune.

Is the capacity freed up at Westshore from Teck moving additional business to Neptune expected to be filled by more export Powder River Basin coal?

BoostedFridge Wrote:
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> Is the capacity freed up at Westshore from Teck
> moving additional business to Neptune expected to
> be filled by more export Powder River Basin coal?

If Teck could move all 19 MMT to Neptune, that would leave a very big hole to fill at Westshore, which has capacity for 35 MMT, although its best year was just over 30 MMT.

However, the expansion project under way at Neptune will bring it to 18.5 MMT, not enough to handle all the Teck coal currently going through Westshore. And Neptune has already a capacity of 12.5 MMT (some of which is already absorbed by product from Teck mines), so it's not as though it's starting from scratch. The difference of 6 MMT/year equates to about one unit train per day.

Some of Neptune's existing capacity is currently used for Teck coal shipped on CN from the Cardinal River mine in Alberta (on the CN coal branch), which is closing in 2020. So that would also be available for southeast B.C. coal routed via Kamloops, but that and the expansion is still not enough to absorb all of the current Westshore traffic from Teck.

Westshore has already announced some new contracts. One that starts in 2021 is with Riverdale Resources, which has contracted for 4.5 MMT to be shipped from its mine at Blairmore, Alta. Another is with CST Coal Canada, which will ship from Grand Prairie, Alta.; I haven't seen a volume amount for that deal.

As for thermal from U.S sources, that already amounted to 39% of Westshore's throughput in 2017. Is there that much more business out there?


 



Edited 3 time(s). Last edit at 12/05/19 16:32 by railsmith.

greasemonkey Wrote:
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> Kind of ironic when you consider that CP used to
> own Cominco, which merged with Teck.

And that CP used to own Fording, the second largest of the four remaining southeast mines, now owned by Teck.

The CN connection to CP between the two railyards is east facing only, so that most of the "co-production" directional running takes place at the signalled double crossovers at Coho-Nepa, west of Ashcroft.  However, during track maintenance , CP and CN crews run on each others routes right out of Kamloops. In the image, the tail end DPU is shown passing through Rayleigh BC on the CN. This is in fact the tail end of a coal train returning from Prince Rupert.

The connecting spur was part of CN's route to Kelowna and involves a 15 mile an hour swing span over the South Thompson River.

Over the last couple of decades, the interchange track has seen increased use, both by CN and CP, but also by Rocky Mountaineer Railtours and the Kamloops Heritage Railway which operate out of Lorne Street station.

The neighborhood around the downtown CN station has totally changed for light industrial/residential to high density residential, in other words, condos.

Lorne Steet has become busier also and is crossed by the CN on a diagonal rail crossing.  I'm predicting there will be a public outcry if rail traffic increases on the connecting track.

In 2019, CN imposed curfews on the hours and days of operation of the Kamloops Heritage Railway steam train. Rocky Mountaineer has a manager that coordinates times when the tour train can occupy the spur and the station platform.

There is a solution for the Teck traffic, leave it on the CP to the usual interchange at Coho-Nepa.



Edited 2 time(s). Last edit at 12/06/19 20:15 by eminence_grise.

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Eminence has some interesting thoughts that I had forgotten.  The CP to CN connection in Kamloops is a much bigger problem than I think people realize. Those condo people are going to get a real taste of canadian railroading when an additional 5 - 10 coal trains come rumbling through.  I just hope that taste isn't coal dust!  Coho-Nepa is a logical choice.

Tim
mp35mountain



Edited 1 time(s). Last edit at 12/06/19 08:24 by mp35mountain.

mp35mountain Wrote:
-------------------------------------------------------
> Eminence has some interesting thoughts that I had
> forgotten.  The CP to CN connection in Kamloops
> is a much bigger problem than I think people
> realize. Those condo people are going to get a
> real taste of canadian railroading when an
> additional 5 - 10 coal trains come rumbling
> through.  I just hope that taste isn't coal
> dust!  Coho-Nepa is a logical choice.

CP has already hinted at the difficulties with this interchange in its news release of December 4, reacting to the CN-Teck news. It concluded by saying: "There is a significant amount of work required to ensure that the interchange at Kamloops is capable of accommodating the additional interchange volume in April 2021, and CP expects that all stakeholders will do their part.”

Coho/Nepa is a logical choice if the CP power is staying with the train, but CP might not be in any mood to provide its power when this change goes into effect.

And Coho/Nepa will not be a solution for any trains that Teck/CN choose to run to Ridley Terminals in Prince Rupert. A recent Teck presentation to investors gives a hint that this is how Teck will handle the volumes that cannot be accommodated at Neptune (which equate to about one-third of Teck's current throughput at Westshore Terminals). Of course, that could just be a ploy to squeeze really good terms from Westshore for that remaining traffic.



Edited 1 time(s). Last edit at 12/06/19 14:22 by railsmith.