Inside Logistics

Wheat growers want rail competition

Railways need to lose their entitlement attitude, says assocation


April 17, 2014
by MM&D Online Staff

SASKATOON, Saskatchewan—Canadian wheat farmers are calling on the federal government to bring about more competition in the western Canadian rail sector.

The Western Canadian Wheat Growers Association reacted to comments made by CN CEO Claude Mongeau in a speech in Winnipeg on April 9.  Mr. Mongeau spoke out strongly against a provision in Bill C-30 that would give shippers modest improved access to US railways, referring to it as “poaching”.

“What Mr. Mongeau calls poaching, we call competition,” says Levi Wood, president of the association.  “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 wheat growers say. According to a Globe & Mail story on 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.

Grain shippers have experienced poor railway service for years, the association says. Currently there is a backlog of nearly 70,000 rail car orders from grain shippers, representing more than 6 million tonnes of grain. 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.”