CN seeks new dialogue on future of Prairie rail network

by Canadian Shipper

Canadian National has re-instituted a moratorium on grain-dependent branch line abandonments in Western Canada. The moratorium will remain in force in Manitoba, Saskatchewan and Alberta while CN and provincial governments seek a consensus on how to balance road and rail components of the Prairie grain transportation network.
“It’s time to look at different solutions and that’s the message CN is taking to provincial governments on the Prairies.

CN has already told provincial governments that the company is prepared to work with them and local communities to find innovative ways of sharing the acquisition and operating costs of proposed grain-hauling short lines. This would enhance the economic viability of rail transportation of grain and could spell the difference between success or failure of a short-line venture,” said Paul M. Tellier, president and chief executive officer of CN.

Tellier said that forced-access running rights, such as those being proposed by Denver based OmniTRAX Inc., would imperil light-density lines on the Prairies. CN’s moratorium and branch-line proposals come at a time when low international grain prices pose a significant income challenge to Prairie farmers.

“There is only a certain amount of traffic on these lines,” said Tellier. “Forced access would divide already marginal revenues between two carriers. Operating costs would also increase because of duplication of service. In the end light-density grain dependent branch lines would be pushed from marginal viability into non-viability,” he said.

One proposal is being advanced by the Prairie Alliance For the Future (PAFF), a cooperative that would operate 1,600 kilometres of CN grain lines in Manitoba and Saskatchewan. PAFF, a coalition of rail workers, unions, farmers and rural communities, is expected to present CN later this week with an initial proposal on how it plans to operate a low-cost grain network based on leased rail lines and hired-by-the-mile locomotives. PAFF wants to secure the long term future of these lines by creating a low-cost rail system to move grain from local communities to CN’s main line network.

Tellier said CN is prepared to negotiate access to its network on commercial terms and based on a core set of principles articulated in CN’s October 2000 submission to the Canada Transportation Act Review Panel. Any access proposal must ensure the economic integrity of the rail system is preserved without subsidies, and must include access reciprocity (if a short-line has access to CN’s network, CN must have the same right of access to the short-line), full cost recovery for CN and commercial arbitration of access fee disputes, and common carrier obligations for any railroad applying for running rights over a Class 1 carrier.

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