Canadian National Railway (CN) didn’t meet its legal obligations for rail service to six Prairie grain shippers during the 2006-07 crop year, the Canadian Transportation Agency ruled Friday.
But while the six shippers call that much a “milestone victory” toward fairness in rail car supply, the transport regulator said it can’t yet rule whether CN also fell short of standards in 2007-08, until it gets service information from both CN and the shippers.
The ruling follows level-of-service complaints filed with the CTA in September by the Canadian Wheat Board and five of Western Canada’s smaller grain handling companies.
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The complainants, who also included North East Terminal, Parrish and Heimbecker, Paterson Grain, Providence Grain Group and North West Terminal, said CN failed and continues to fail to provide adequate rail service for western grain for both 2006-07 and 2007-08.
In a release Friday, the CWB quoted the CTA ruling as saying “CN seriously failed to meet stated general car allocation needs. The records in this respect points to a chronic service failure… (and the) agency finds that over this period, CN breached its statutory service obligations.”
The CTA also said in Friday’s decision that it had concerns over this year’s “continuing service shortfalls,” but will need service information from all seven parties for between August 2007 and April 2008, filed to the agency by Feb. 11, before it can rule on adequacy of service.
CN, which hasn’t yet released an official reply, told Reuters it would co-operate in supplying the extra information. But it also called the CTA’s Friday ruling a reiteration of an earlier CTA ruling against the railway in July 2007. CN said Friday it has already made the changes the agency asked for at that time.
“Captive shippers”
“It is a shame that we were forced to appeal to the CTA in order to ensure that CN Rail complied with its legal obligation to provide all grain shippers with adequate service,” said Keith Bruch, vice-president of operations for Paterson Grain, in the CWB’s release. “But the railways have the advantage of captive shippers on their lines.”
The shippers’ complaint followed another level-of-service complaint last year by a northern Alberta firm, Great Northern Grain. CTA in that case ruled in July that problems with CN’s rail car distribution program were “systemic in nature,” not isolated to GNG.
“GNG won its case, but other shippers continued to be left at a disadvantage from system-wide service shortfalls,” the CWB said Friday, hence the complaint it brought to the CTA in September.
The CTA found in the GNG case that CN’s rail car distribution practices “have resulted in the replacement of a reasonably accessible, transparent, user-needs based (rail) car allocation process with a more restricted, less transparent regime that does not provide an adequate level of services for grain shippers.”
In July 2006, the shippers said, CN completely removed its 50-car products (“GT Secure”) for yearly advance bookings and offered only 100-car units (“GX100”), which must essentially be booked for 42 consecutive weeks to secure supply.
CN then re-introduced the GT Secure program after a level-of-service complaint was filed in March 2007, but with only a limited supply of 50-car blocks that “does not satisfy shippers’ concerns,” the companies said.
Smaller companies and single-point shippers couldn’t forward-book into a single rail corridor for consecutive weeks, and thus couldn’t participate in GX100, the companies said. They could take part in a cash-bid program for cars (“GT PRO”) but the shippers said that program was limited because they may not get the cars they bid for during high-demand periods.
GX100 “essentially prevented participation by smaller shippers and those without multiple terminals,” the CWB said Friday. “It also failed to satisfy the diverse needs of Prairie farmers in moving their grain to port.”
The shippers now want the 100-car requirement be eliminated in favour of 50-car offerings, and the practice of auctioning cars to the highest bidder to be discontinued. They also want CN to distribute at least 50 per cent of its rail car fleet as general weekly distribution.
The shippers had also wanted an interim order to suspend CN’s advance-products program, but the CTA in October 2007 ruled that the railway’s program could go ahead while the agency considered the shippers’ complaint.
