The following is an op-ed written by Barry Prentice, professor fo supply chain management in the Asper School of Business. It was originally published in the Winnipeg Free Press on Aug. 9, 2018.
Omnitrax argues that the Hudson Bay Railway (HBR) is uneconomic to operate because the Canadian Wheat Board no longer directs wheat shipments through the Port of Churchill. If the owners cannot earn enough revenue to maintain the infrastructure in a safe operating condition, it makes no economic sense to fix a highly depreciated railway.
Three freight markets hold potential for the HBR and the Port of Churchill — grain, oil and containers — none of which is an easy win. Even with the wheat board’s traffic, the commercial viability of the HBR is doubtful, as a back-of-the-envelope cost analysis reveals.
The financial records of the HBR are unavailable, but some educated guesses can be made about its viability, based on Railway Association of Canada (RAC) data. The Canadian railways reinvest $1.5 billion annually to maintain 43,562 kilometres of rail track. This works out to $34,434 per km. Roughly half of this capital is used to maintain the track and roadway, while the rest goes to equipment, rolling stock, signals, etc.