Port of Churchill grain shipping operation on the Churchill River. Port of Churchill photo.
A First Nations group based in Northern Manitoba is in the process of buying the Port of Churchill and Hudson Bay rail line from OmniTrax, a Denver ,Colorado based company. The town known as the polar bear capital of the world has been struggling to keep the ancillary business viable in these changing times.
The First Nations group provided a letter of intent for the purchase of the port and the Hudson Bay line – the stretch of track from The Pas to Churchill – as soon as both sides complete necessary research on the transaction.The rail line is the lifeline that connects all the small communities that have no road access in the region.
“It’s a group of communities along the line and others that, you know, over the period of time have always believed the railway was theirs. This now can become a reality based on current negotiations,” said OmniTrax president Merv Tweed. With the invested interest that the group has to keep the rail line running smoothly as a means of access to their remote communities, train service there and onto Churchill should thrive for the distant future.
At this juncture of the negotiations the buying group nor the purchase price of the assets has not been specifically identified.
“They’ll make their own statement in their time,” Tweed said.
For the next 45 days OmniTrax and the First Nations group will engage in a “due diligence period in which both parties will work together to ensure that a purchase becomes a reality,” a news release from Omnitrax stated. Omnitrax has agreed to work with the First Nations group for the next several years to facilitate a smooth transition. However, given the lack of success that Omnitrax has had in managing the port and increasing the shipping quota, this new regional rooted infusion might be a time to try new strategies for building the business and attaining higher levels of success.
OmniTrax acquired and began operating the port and rail line in 1997, though a reduction in grain shipments has placed financial strain on the operation. An attempt to diversify and specifically ship oil through the port was met with voracious public outcry which inevitably killed the initiative. The operation just seemed dead in the water after that battle this past year.
All these factors combined spurred the company to announce earlier this month plans to sell the operations. A quicker than expected sale agreement and local interest in the growth of the operation has instilled high hopes for the next phase in the life of the Port of Churchill. The operation employs roughly 100 local workers.
The Port of Churchill, MB. Photo: Steve Selden
The Port of Churchill and the Hudson Bay Railway are being put up for sale by Denver based Omnitrax owned by the Broe Group. Both the Hudson Bay line from the Pas to Churchill and the port are being sold together as a package deal.
Prior to 1997 the Government of Canada owned the Port but then divested many of their crown holdings and sold the facility to US based Omnitrax. Because the Canadian National Railway had also been privatized, the line between Churchill and the Pas was also sold to the company.
While the sale announcement has been kept low key the news is now out and potential suitors have yet to come forward.
After anticipating a surge in shipping from the port, years of average growth and a decline this year in the grain shipping out of Churchill have lead management to search for new product avenues. Recent attempts to initiate oil shipments from the sub – Arctic port were quashed by public outcry amid fears of potential environmental destruction in the case of a spill. Protesters fear an oil spill in the Hudson Bay would cause irreversible damage to the fragile northern ecosystem that, among other wildlife, is home to the mighty polar bear.
It will be very interesting to see who steps forward as a potential buyer and what plans are put forth for the port and the Hudson Bay Line. The challenge is huge.
“Obviously, after a tough year in the industry we’ve looked at a lot of things and concluded that either the railway and the port needs more support or perhaps another owner or operator could take it on and see what they could do,” say Merv Tweed, president of OmniTrax Canada. “It is obviously a big challenge, but we feel we’ve put the port and railroad in decent shape over the last couple of years. We’ve brought in a lot of efficiencies, but it is a challenge.”
Grain vessel awaits docking at the Port of Churchill. Photo Steve Selden
The Churchill shipping season is off to a late start this fall, nearly a month behind its regular schedule for shipping grain and wheat products from the port to various countries worldwide.
Late harvest, shallow inventory as well as shipping industry variables have created a created a time sensitive shipping schedule to attain the slightly lower average tonnage threshold according to Merv Tweed, OmniTRAX Canada president. OmniTRAX is the owner/operator of the Port of Churchill and they hope to reach 400,000 to 500,000 tonnes of grain by November and the end of the shipping season.
With this goal about 12 and 15 ships will make Churchill a port of call this year. Between now and the first week of November, the port will have to hustle to meet the quota projected. Sea ice will begin to clog passages at that time and ships will be unable to safely pass through Hudson Bay to reach Churchill.
Port of Churchill frozen and shut down for the season. Photo Steve Selden
“We’re seeing the volumes increase. The biggest challenge the grain sellers have is just getting the ship allocation,”stated Tweed. “No one seems to know why (the ships are late in arriving), other than that it was a late grain season.”
Lentils have made a return to the shipping docket as two ships are now scheduled for this season after a few years absence from the product ledger.
“We are hoping it will become a bigger opportunity as the market for lentils grows,” Tweed said. “It may become the specialty crop that we grow our business on just based on the amount of production coming out of northern Saskatchewan.”
Northern Saskatchewan is the prime supplier to the port of Wheat and grain products across the board with 70 per cent production from that region.
A few years ago, OmniTRAX announced plans to get into the crude oil shipping business, however that agenda has not materialized amid public outcry. Tweed indicated that oil transport is no longer being pursued. The surprise announcement that a $22 million Churchill Marine Observatory to study the detection, impact and mitigation of oil spills in the Arctic raises questions as to future possibilities of such commerce.
For now only grain products will leave the port and this season will be a condensed and frantic one to say the least!
Port of Churchill in the siege of winter. Steve Selden photo.
With the Port of Churchill processing over 600,000 tonnes of grain last year, the stability of the industry in Churchill has stabilized.
This has alleviated the need to a degree for Omnitrax Canada, owner of the port and Hudson Bay rail line, to continue to press for crude oil shipment by rail to Churchill and subsequent shipping through the port and Hudson Bay.
Environmental activists and farmers have praised Omnitrax for the decision to shelve shipping the oil at this time.
Eric Reder, The Wilderness Committee’s Manitoba campaign director, organized a year-long campaign including town hall meetings in Winnipeg, Thompson and Churchill and solicited over 4,000 protest letters mailed to the provincial and federal governments. The campaign was aimed at raising awareness thus facilitating pressure for the authorities to intervene and prevent Omnitrax from continuing the venture into transporting and shipping oil.
From the start, anyone familiar with the rail-line north from The Pas, knows of the calamity of grain – car derailments over the past decade. It seems irresponsible for any company failing to address those issues first then research and evaluate an emergency recovery plan for derailment of oil cars as well as shipping such a commodity on the pristine Hudson Bay.
“What we were asking of Omnitrax was to find any other product to ship other than crude oil, because every other product than this specific one is easier to clean up,” Reder said. “People from around the world voiced their objection… we are all relieved.”
Churchill Democratic Member of Parliment (MP) Niki Ashton
had a fervent opinion on the issue. “Omnitrax has a lead role to play and I hope they continue to do that and support and respect the livelihoods of northerners”, stated Ashton.
“People didn’t feel safe, not only for the environmental conditions but because the emergency measures aren’t in place at all. Northerners and First Nations leaders spoke out loud and clear… although Omnitrax may not acknowledge that overtly.”
The Wilderness Committee also presented strong anti-shipping points to engaged people and the government. For some of the remote communities along the rail line, this single railway is their only access to the outside world – and to each other. How can oil spill response equipment be transported into these communities, when the only rail line has an accident on it? How do you evacuate people when there is no road into these communities? How do we safeguard the population, the wildlife, and the lands and waters that provide for them, when the only access – the rail line – is blocked by a train derailment?
Port of Churchill with grain ships dockside. Port of Churchill photo.
Suspending crude-oil shipments to Churchill indefinitely was a logical business decision considering the record-breaking success of grain shipments in recent years.
“Having reviewed all of our opportunities and the things we’d like to do, we decided it wasn’t necessary or in our best interests to pursue shipping oil any further,” Stated Omnitrax Canada President Merv Tweed. “I’m convinced that within the next couple of years we’ll hit the million-tonne mark.
Grain vessel awaits docking at the Port of Churchill. Steve Selden photo.
However, the grain market has fluctuated this last decade leading to the break-up of the Canadian Wheat Board’s monopoly with the Port of Churchill. With this history there’s no telling whether soaring grain shipment tonnage will permanently quell Omnitrax’s long term aspirations to ship crude oil through the Port of Churchill. News releases from the company have framed the current status as “suspended”.