The Canadian Wheat Board

The Canadian Wheat Board
North East Terminal Ltd.

Parrish & Heimbecker Ltd.

Paterson Grain

Providence Grain Group Inc.

North West Terminal Ltd.

January 18, 2008 18:47 ET

Rail Case a Major Victory for Grain Shippers and Farmers

WINNIPEG, MANITOBA--(Marketwire - Jan. 18, 2008) - A ruling today by the Canadian Transportation Agency (CTA) is a milestone victory in the pursuit of fairness for rail car supply, say six grain shippers who launched complaints against CN Rail.

The CTA has ruled that, during the 2006-07 crop year, CN breached its legal obligations to provide adequate rail service.

"CN seriously failed to meet stated general car allocation needs. The records in this respect points to a chronic service failure..., " the CTA decision reads. "The Agency finds that over this period, CN breached its statutory service obligations."

The level-of-service complaints were filed in September 2007 by the Canadian Wheat Board (CWB), North East Terminal Ltd, Parrish & Heimbecker Ltd., Paterson Grain, Providence Grain Group Inc. and North West Terminal Ltd. The governments of all three Prairie provinces intervened in support of the shippers.

At issue was CN's 2006 decision to provide most of its advance-booked grain hopper cars in blocks of 100, booked for 42 consecutive weeks to a single destination (the GX100 program). This system essentially prevented participation by smaller shippers and those without multiple terminals. It also failed to satisfy the diverse needs of Prairie farmers in moving their grain to port.

"The strong action taken by our group has had positive results," said CWB President and CEO Greg Arason. "Farmers rely on adequate rail service to move their grain to port. If the rail car programs introduced by CN in 2006 had been allowed to continue, it would have had major repercussions for producers and for most of Western Canada's grain shippers."

In reaction to the level-of-service complaints being filed, CN Rail made changes to its railcar supply system, including withdrawal of the contentious GX100 program. The CTA, with its ruling, issued an order for those changes to continue during 2007-08. It has requested further information from all parties by February 11 before a determination can be made with respect to the current crop year.

"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, a division of Paterson Global Foods. "But the railways have the advantage of captive shippers on their lines."

"Bringing forward these complaints is no small undertaking," Bruch added. "To succeed against the railways takes persistence, time, money and legal resources far beyond the capabilities of a single smaller grain shipper or individual farmer."

The same group of shippers, along with Great Sandhills Terminal, Prairie West Terminal, South West Terminal and Weyburn Inland Terminal, also actively supported a level-of service case against CN Rail on the same issue, launched in March 2007 by Great Northern Grain Ltd. (GNG), an inland terminal in the Peace River district of Alberta. GNG won its case, but other shippers continued to be left at a disadvantage from system-wide service shortfalls, leading to the more recent level-of-service case against CN Rail.

For more information, please see the attached backgrounder and visit http://www.cwb.ca/public/en/hot/rail/ , which includes a link to the CTA ruling.

Background

- In July 2006, CN removed its 50-car products (called "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. After a level-of-service complaint was filed by Great Northern Grain in March 2007, CN re-introduced the GT Secure program, but with only a limited supply of 50-car blocks that did not satisfy shippers' concerns.

- Because smaller companies and those without multiple terminals cannot forward-book to a single destination for consecutive weeks, they could not participate in the GX100 program.

- The new level-of-service complaints were filed in September 2007. Shippers argued that changes implemented by CN to that point were "tinkering" that did not provide equal and accessible rail service for all shippers.

- In November 2007, CN discontinued offering the GX100 as well as several other contentious aspects of its railcar ordering and supply system.

- Legislation is now working its way through Parliament that may help address some of the power imbalance between railways and shippers/farmers. Bill C-8, an Act to amend the Canada Transportation Act, has received all-party support in the House of Commons. The bill is expected to pass third reading once Parliament resumes sitting at the end of January and then move on to the Senate. Transport Canada has committed to a service review of the railways within 30 days of Bill C-8 becoming law.

Contact Information

  • The Canadian Wheat Board
    Maureen Fitzhenry
    CWB media relations manager
    (204) 983-3101 or Cell: (204) 227-6927
    or
    Inland Terminal Group
    Trent Weber
    Director of Transportation & Marketing
    (204) 926-8559 or Cell: (204) 782-3225