Western Grain Elevator Association

Western Grain Elevator Association

March 18, 2011 16:58 ET

WGEA Cautiously Optimistic About Rail Service Announcement

WINNIPEG, MANITOBA--(Marketwire - March 18, 2011) - The Western Grain Elevator Association (WGEA) is cautiously optimistic in the recent federal government announcement stemming from the Rail Freight Service Review.

"The announcement that legislation be drafted immediately and implemented as soon as possible is very different from the recommendations made in the Rail Freight Service Review Panel's Interim Report, and we are pleased that the government has rejected the "wait and see" approach initially proposed by the Panel," said Wade Sobkowich, Executive Director. The WGEA maintains that the effectiveness of the proposed legislation will be determined as Service Level Agreements (SLAs) are finalized and put into effect. 

The availability of SLAs to shippers is different than what has been recommended by the WGEA. "The solutions put forward by the WGEA would have placed immediate legislative and regulatory disciplines in the system, however, the direction being taken is encouraging and we look forward to trying to make this approach work," said Sobkowich, who added that WGEA members are open-minded to the possibility that arbitrated SLAs could be a workable vehicle for putting in place clear and measurable rail service levels with meaningful financial penalties being triggered when those service obligations are not met. Railways currently use financial penalties set out in tariffs as a means to incite efficient behaviour by shippers. The SLAs will have to ensure that similar penalties are applied to railways when they fail to provide acceptable service to their shippers.

"The key to arriving at fair and balanced terms and conditions within SLAs is the arbitration process for settling the terms of SLAs where negotiations are unsuccessful and for resolving disputes that may arise in the interpretation and application of the SLAs," said Sobkowich. This will need to be a binding, cost-effective process that occurs under a reasonable timeline. For grain, the arbitrators will need to be knowledgeable of issues affecting the grain handling industry to ensure that the SLAs and the interpretation of their provisions are meaningful and effective."

The WGEA is encouraged that the government recognizes that long-lasting improvements to rail service cannot occur without a change to the policy environment that allowed poor service to occur in the first place. Railways currently do not face adverse affects if they fail to provide adequate service.

"We currently have no legislative backstop to ward off poor service," explained Sobkowich. "We are facing the worst service we have ever seen at some elevators. Grain elevators across the prairies are plugged because they can't get movement. For grain shippers and farmers, new legislation to require appropriate service levels cannot come soon enough." The WGEA encourages all political parties to provide support in passing this legislation as expeditiously as possible.

The WGEA is an association of grain businesses operating in Canada, which collectively handle in excess of 90% of western Canada's bulk grain exports. Its members account for approximately 20% of railway revenues and pay annual total rail freight of over one billion dollars.

Contact Information

  • Western Grain Elevator Association
    Wade Sobkowich
    Executive Director
    204-942-6835