February 13, 2008

 

Rail changes may throw grain shipments into disarray in Canada

 

 

Six Western Canadian grain shippers have applied to the Canadian Transportation Agency for emergency relief after Canadian National Railway suddenly introduced a new rail car allocation system, which they claim is throwing the shipping season into disarray midway through the 2007-08 crop year.

 

"This new programme will significantly impact our ability to efficiently move grain on behalf of Prairie farmers," said Ward Weisensel, chief operating officer for the Canadian Wheat Board, "The new system forces us to guess at our rail car orders, risking the wrong grain moving to port at the wrong times."

 

He added that CN's new system risks congesting port terminals and costing farmers millions of dollars in shipping penalties, not to mention the damage to Canada's reputation as a reliable supplier of grain to its customers.

 

CN's new program, which was put into effect Feb. 1, creates a system where grain is "pushed" from origin, instead of being "pulled" to destination.

 

This prevents efficient matching of rail car supply to ocean vessel arrival, given that each ship must be loaded with the correct class, grade and protein level of wheat or barley, Weisensel said.

 

CN's new system removes accountability for the railway, as CN ultimately determines which grain elevators it will service in a particular week, without having made a firm commitment to the CWB and grain shippers regarding car supply, according to contacts.

 

"CN's new system is completely inappropriate for the grain industry," said Keith Bruch, vice president of operations for Paterson Grain. "It does not recognize the grain industry's unique requirements and will cause substantial commercial harm to the shippers and farmers, who rely on adequate rail service."

 

The sudden introduction of the new system comes on the heels of a Jan. 18 CTA decision that found CN Rail guilty of a chronic service failure in grain transportation for 2006-07 (August/July). The CTA has asked for more information to assess CN's performance for the current crop year.

 

Applications to the CTA were filed by the CWB, North East Terminals, Parrish & Heimbecker, Paterson Grain, Providence Grain Group and North West Terminals.

 

CN has filed a response that includes many claims and conclusions that the grain shippers reject. They will reply by Feb. 13, the statement said.