Government of Canada will retain ownership of grain hopper car fleet

by Canadian Shipper

OTTAWA, Ont.–The Government of Canada will retain ownership of its grain hopper car fleet.

In November 2005, an agreement-in-principle to lease the grain hopper car fleet to the Farmer Rail Car Coalition (FRCC) for five years was announced. The agreement would have led to a permanent transfer at the end of that period. However, a final agreement had not been concluded. The Government of Canada has now decided, after due consideration, not to proceed with the transfer of the cars to the FRCC but instead retain ownership of the fleet in order to maximize benefits for farmers and taxpayers.

“By retaining the hopper cars, the Government of Canada will ensure clear accountability and transparency for an efficient and effective grain handling transportation system,” Lawrence Cannon, Minister of Transport, Infrastructure and Communities, said in a release. “This new deal is a better deal on all fronts.”

Amendments to the Canada Transportation Act (CTA) were also introduced in the House of Commons to permit the Canadian Transportation Agency to adjust the maintenance costs in the maximum revenues the railways can earn from eligible grain shipments (revenue caps). This adjustment will apply to all hopper cars used in regulated grain service and will more closely align the costs in the revenue caps with the actual costs of maintaining the hopper cars in revenue cap service. Estimates show potential savings for farmers of approximately $2.00 per tonne.

“Farmers will benefit greatly from the government’s decision to keep the cars,” added Minister Cannon. “The amendments to the CTA will allow an adjustment to maintenance costs in the railways’ revenue caps for all hopper cars used in regulated grain service. The savings will allow farmers to see more profits in their business.”

Taxpayers will also benefit from this decision, Cannon said. Each year, the government collects between $10 and $15 million from the railways for their use of the hopper cars in non-regulated shipments of grain and other products. By keeping the cars, the government will continue to collect that revenue, which will be equal to, or could exceed, the proceeds from the proposed transfer of the hopper cars to the FRCC.

There are approximately 12,100 railway hopper cars in the Government of Canada fleet, which form the core of rolling stock used by Canadian National Railway and Canadian Pacific Railway to move western grain. These cars are provided at no cost to the railways for the transportation of grain from the Prairies to the ports of Vancouver and Prince Rupert, B.C., and Churchill, Man., for export, or to Thunder Bay and Armstrong, Ontario, for domestic or export purposes. The railways have day-to-day control of the cars and allocate them to grain shippers on a commercial basis. The Government of Canada receives annual alternate-use revenues from the railways when the cars are not used in regulated grain service, and for fees charged when shippers do not load or unload the cars promptly (demurrage).

With the decision to retain ownership of the fleet, the Government of Canada will also negotiate a new operating agreement and rail car refurbishment program with Canadian National Railway and Canadian Pacific Railway to ensure the rail cars remain in good and safe operating condition.

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