Western Grain Elevator Association

Western Grain Elevator Association

February 28, 2011 11:54 ET

WGEA: Poor Rail Service Continues

WINNIPEG, MANITOBA--(Marketwire - Feb. 28, 2011) - The Western Grain Elevator Association (WGEA) reports that Canadian Pacific Railway (CP) continues to provide extremely poor service, despite the imminent release of the Rail Freight Service Review Panel's Final Report.

"We expected the upcoming release of the Rail Service Report to result in improved service by the railways in an attempt to counter the serious performance concerns uncovered by the Review Panel." said Wade Sobkowich, Executive Director of the WGEA. "However, this is not the case. Since August 1 2010, cars required versus car orders accepted by CP, on a weekly basis, have averaged only 65%." The WGEA reports that when combining both the car order acceptance level and car spotting performance, CP has been providing less than 30% of the required cars on time. CP service is currently at the lowest level experienced by WGEA members in their collective memory and clearly underscores the need for legislative change.

The proposal from the WGEA to the Rail Service Review Panel advocates that legislative change is required first and foremost as the catalyst for creating disciplines in the system to ensure adequate service levels are established and sustained. The amendments sought by the WGEA would set a base expectation for rail service and meaningful penalties to be paid to shippers where those levels of service were not met. "The only sustainable solution lies in creating a legislated disincentive for poor performance that is significant enough to ensure it doesn't happen in the first place, similar in nature to the various penalties that the railways impose on shippers to manage efficient behavior" continued Sobkowich. "A sustainable system of meaningful performance measurements and related penalties that improve service for all players in the system is required. A sustainable solution of this nature cannot be negotiated on a commercial basis in the absence of underlying legislation, given the imbalance in negotiating power between shippers and railways."

CP's quarterly report released on January 26, 2011 shows an increase in service to all sectors except the grain sector, which has actually experienced a reduction in service from the same period in 2009. In fact, CP booked 17.5% less grain cars in this 12 week period of 2010 than in the same quarter in 2009. This equates to the equivalent of 8,626 cars difference from the previous year. At an approximate rate of $350 per metric tonne and an average volume of 90 metric tonnes per railcar, the value of farmers' product not moved equates to approximately $272 million dollars.

"If the railways are genuine in their intent to provide adequate service, then the legislative provisions we are proposing will never be used. They would only come into effect if the railway fails to perform," said Sobkowich.

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