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Fertilizer Industry Proposes Processes For Disputed Rail Rates

“Most of our plants are captive to one shipper.”


The fertilizer industry has proposed a Commercial Dispute Resolution model for dealing with quarrels with the railways over freight rates, says Roger Larson, president of the Canadian Fertilizer Institute.

“Most of our plants are captive to one shipper,” Mr. Larson told the Ottawa chapter of the Chartered Institute of Logistics and Transportation, noting regulation is needed to compensate for the lack of competition.

The performance of CN and CP in hauling unit trains of potash and sulphur to West Coast ports “is good and sometimes excellent” despite complicated operations into the Vancouverarea ports, he added.

The situation is not as bright in North American deliveries, he continued, because commodities move in small car lots to many destinations with high seasonal variation, he explained. As well, there are more security delays at the United States border.

The carriers have resisted the CDR proposal, which has been made in various versions during the last few years. Mr. Larson says his group and other shippers will continue pressing Ottawa and the railways on the issue.

American railroads are backing the opposition to the plan because they’re opposed to any restrictions on their capacity to charge customers, he added. However the Democratic Party control of Congress and the White House will likely lead to changes in American policy.

Rates are just one contentious area between the industry and the carriers, he said. Fertilizer companies face a determined bid by the railways to get out of hauling ammonia and chlorine cars because of the toxic nature of the products.CNand CP have added extra tariffs on the products while American railroads have raised rates and are trying to get out of their common carrier obligations so they don’t have to handle them.

In response, the fertilizer industry is working on development of a new tank car that will be less prone to leaks, even in derailments. The U. S. fertilizer industry has offered to set up a $1 billion insurance fund to cover costs associated with leaks. It has developed a new placard to designate tank cars carrying ammonia or chlorine.

CFI has a program to educate firefighters and other first responders on the precautions they should take if either commodity is involved in an accident, Larson added.

He also said that Canadian fertilizer shipments by rail encounter more delays entering the United States because of new security rules than are shipments of fertilizers arriving at American ports from overseas.

As well, government regulations that limit the number of hours truck drivers can be on the road are complicating the delivery of fertilizers to farmers, he said. The industry has proposed a fatigue management system as an alternative to hours of service regulations and it hopes the government will agree to changes.

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