September 26, 2008


Transportation agency rules for Canada grain shippers/farmers



The Canadian Transportation Agency, or CTA, Thursday ruled in favour of six grain shippers who had launched a major level-of-service complaint against Canadian National Railway in September of 2007, a release from the shippers said.


"CN has been steadily shifting the balance against shippers for years," said Ward Weisensel, chief operating officer of the Canadian Wheat Board, or CWB, one of the complainants. "At some point you have to stand up and say, 'Enough is enough'. That's what we've done as a group."


Weisensel said that while the CWB is disappointed with the assessment of CN's performance on its shipments, there are positive elements in the ruling for the group as a whole and grain shippers in general.


The CTA found CN Rail to be in breach of its legal obligations to provide adequate rail service for grain in 2007/08 (Aug/Jul) to four of the six grain shippers, the release said.


However, the CWB, the single largest grain shipper, is disappointed that the CTA has discounted data for eight shipping weeks in which CN's performance was the most damaging to the CWB's sales program and farmers' bottom line, Weisensel said.


GNP Transportation & Logistics manager Perry Pellerin, whose company represents five Prairie inland grain terminals, said he was pleased that the CTA found CN in breach of its service obligations to North East Terminal, North West Terminal, Paterson Grain and Parrish & Heimbecker.


He said CN's continuous unilateral changes to grain transportation programs risk squeezing smaller and single-point grain shippers out of business. Several of these terminals are owned or partly owned by farmers themselves. Ongoing service shortfalls have left shippers and farmers at a disadvantage in a system designed to serve the needs of the railway alone, he added.


"Our grain terminals are now struggling to get rail cars when we need them for our markets because CN's program requirements have been so rigid and unworkable for us," Pellerin said. "As a result, none but the largest grain handlers with multiple elevators could fit within CN's service model, which strongly favoured those who can ship in large rail car blocks, week after week, to a single destination."


In March 2007, Great Northern Grain (GNG) of Nampa, Alberta filed a complaint against CN that was backed by 10 other Prairie shippers. GNG won its case, but CN refused to comply with the system-wide implications of that CTA ruling, leading to the new complaint that was decided September 25.


In January, the CTA issued a partial ruling in the case, deeming CN to have breached its legal obligations to all six complainants for grain transportation in 2006/07. The CTA reserved decision on 2007/08, pending further information.


But in February, CN suddenly changed its railcar distribution program, throwing CWB grain shipping into disarray and backlogging car orders for all the shippers. The shippers sought an interim order to halt the program, but the CTA decided to instead consider those issues within the overall level-of-service case.


Keith Bruch, vice-president of operations for Paterson Grain, said the situation highlights the dangers for the captive grain shippers, who have no choice but to deal with a single railway company at most prairie grain elevators.


"Without adequate competition in Canada's rail system, there must be some way to ensure accessible service for all shippers, not just a select few," Bruch said. "The laws governing grain shipping were created in recognition of this imbalance. It's a shame that we are forced to continually battle to have CN comply with those laws."


Weisensel said the onus is now on CN as to how it responds to the spirit and letter of the CTA decision.


The grain shippers involved in this case are: the CWB, North East Terminal, Parrish & Heimbecker, Paterson Grain, Providence Grain Group and North West Terminal.


The case is actively supported by Great Northern Grain Terminals, Great Sandhills Terminal, Prairie West Terminal, South West Terminal and Weyburn Inland Terminal.

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