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Grain shippers file new case against CN

Six western Canadian grain shippers have launched
new level-of-service complaints against Canadian National
Railway (CN), which they say has failed to comply with the spirit of a recent
Canadian Transportation Agency (CTA) ruling.

The shippers — Winnipeg grain handlers Paterson Grain and Parrish & Heimbecker, Alberta’s Providence Grain Group, Saskatchewan’s North West Terminal and North East Terminal and the Canadian Wheat Board — say the outcome of the case will have “major implications” for
grain transportation in Canada.

The first of the complaints were filed with the CTA Wednesday by North East Terminal and the CWB. The CTA had ruled in July that CN had failed to fulfill its

obligations to Great Northern Grain, a northern Alberta inland
grain terminal.

“Farmers and most of Western Canada’s grain shippers
continue to be left at a disadvantage from ongoing, system-wide
service shortfalls at CN,” said CWB president and CEO Greg
Arason in a release today, noting that four meetings with CN since the CTA’s July
ruling have not reached a satisfactory outcome.

“Minor changes” made recently by CN will not
result in enough flexibility to efficiently move farmers’ grain
to port, he added.

CN hasn’t yet made an official public response to the shippers’ announcement today, although CN spokesman Jim Feeny was quoted by Reuters saying the company believes it has complied with the July ruling and is “surprised and disappointed” by the shippers’ action.

The grain shippers are asking the CTA
for an interim order to suspend CN’s advance-products program
(which will award rail cars to bidders September 6) until a
resolution can be found. The companies have also asked for a mediated solution.

The CTA found in July that problems with CN’s rail car
distribution program were “systemic in nature,” not isolated to its dealings with Great Northern.

The CTA also found that CN’s current rail car distribution
practices “have resulted in the replacement of a reasonably
accessible, transparent, user-needs based car allocation process
with a more restricted, less transparent regime that does not
provide an adequate level of services for grain shippers.”

Garnet Ferguson, general manager of North East Terminal
at Wadena, Sask. (southeast of Saskatoon), said a meaningful dialogue had not occurred with
CN since July. “The changes that CN has made amount to nothing more than
tinkering,” Ferguson said in a statement.

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 cannot
forward-book into a single rail corridor for consecutive weeks,
and thus can’t participate in GX100, the companies said. They can
participate in a cash-bid program for cars (“GT PRO”) but the shippers said the program is limited because they may not get the
cars they bid for during high-demand periods.

The shippers involved in today’s CTA filing are asking that the
100-car requirement be eliminated in favour of 50-car offerings, and that 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.

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