Railways need to lose “entitlement attitude”: Wheatgrowers’ Association

by Canadian Shipper

SASKATOON, Sask.–The Wheat Growers (WCWGA) are calling on the federal government to bring about more competition in the western Canadian rail sector, in light of chronic performance failures of CN and CP, “and their cavalier attitude toward the resulting losses suffered by prairie grain farmers,” the association said in a release.

The Wheat Growers were reacting to comments made by CN CEO Claude Mongeau in a speech in Winnipeg on Wednesday April 9.  Mongeau spoke out strongly against a provision in Bill C-30 that would give shippers modest improved access to U.S. railways, referring to it as “poaching”.

“What Mr. Mongeau calls poaching, we call competition,” says Levi Wood, President of the Wheat Growers. “Sadly, Mr. Mongeau seems to think no one else should have the opportunity to haul our grain, no matter how badly his company performs.” 

Hunter Harrison, CEO of Canadian Pacific Railway has also displayed a poor attitude toward shipping grain, the association said.According to a Globe & Mail story of March 12, Mr. Harrison spoke to a New York audience of the importance of intermodal shipments: “Because that’s one commodity that we’re sensitive to,” Mr. Harrison said. “If you miss, you miss. It’s not like grain or it’s not like coal, [where] if you’re a little bit late you’re still going to haul it.”

“Only companies with monopolies or near monopolies can get away with such an entitlement attitude,” says Jim Wickett, Chair of the Wheat Growers. “Parliament needs to give the railways an attitude adjustment.”

The Wheat Growers note that CN and CP effectively operate side-by-side monopolies in western Canada. Only seven of the 342 grain elevators on the prairies have direct access to both CN and CP. The expanded interswitching provision, now contemplated in Bill C-30, the Fair Rail for Grain Farmers Act, would give about 40 of those elevators improved ability to access the shipping services of BNSF Railway.

The association said grain shippers have experienced poor railway service for years. Currently there is a backlog of nearly 70,000 rail car orders from grain shippers, representing more than 6 million tonnes of grain. That grain is backed up and sitting in farmers’ yards when it should be in customers’ hands. The shipping backlog has resulted in artificially depressed prices to farmers that some market analysts are saying will last into 2015. The Wheat Growers have conservatively estimated bottom-line losses to farmers to be $2 billion and counting.

The Wheat Growers have recommended several measures that would bring about more competition and more shipping capacity in the western rail network, including expanded running rights. 

“CN and CP have first dibs on our business,” says Wood. “But if they are unwilling or unable to give us good service, then other railways should be given a crack at it.”

The Wheat Growers have called for several pro-competitive measures to be implemented as part of changes to Canada’s rail transportation legislation. One of those recommendations is to give the Canadian Transportation Agency authorization to call out for more shipping capacity (locomotives, crews, cars or trains) whenever the backlog in grain shipping orders reaches a predetermined level. The Wheat Growers see this provision as a means to ensure there is ample “reserve capacity” in the network to meet our needs whenever there is a large crop or heavy customer demand.

The association has also recommended the running rights provisions of the Canada Transportation Act be amended to give other railway operators the right to solicit business from shippers in a running rights application. In a 2001 decision, the Agency ruled that the existing provisions do not give other railway operators any traffic solicitation rights. The Wheat Growers believe the adoption of such a provision would add competition and shipping capacity. For example, such a provision might give OmniTRAX greater ability to get grain and other goods in position to ship out of the Port of Churchill as soon as the shipping season starts. OmniTRAX was one of the railway operators denied traffic solicitation rights in its 2001 running rights application. 

The association is also seeking amendments to Bill C-30 that would give the shippers the ability to obtain reciprocal penalties as part of a contractual service agreement with the railways. Currently the legislation does not explicitly state that penalty provisions are among the terms that can be arbitrated in shipper arbitration applications to the Agency.

Further details on the above proposals were contained in the Wheat Grower submission on Bill C-30 to the House of Commons Standing Committee on Agriculture and Agri-Food. A copy of that submission can be obtained by contacting Executive Director, Blair Rutter at 204-256-2353.

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