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CTA Ruling Helps Maintain Rail Competition Near Winnipeg

Paterson Grain has won its fight to continue being served directly by the American-based BNSF Railway Company (BN) at its Lilyfield elevator near Winnipeg.

Feb. 9 the Canadian Transportation Agency (CTA) ruled against Canadian National Railway Company’s (CN) efforts to block BN’s access via a rail car interchange with CN.

“This upholds the rights we have to an interchange and the prescribed rates under an interchange and prevents CN from setting a commercial rate thereby eliminating competition,” Keith Bruch, Paterson Grain’s vice-president of grain operations said in an interview last week.

Had CN won, it would have been able to set rates where it liked, he said. “Our view is they (CN) would set it at a point to make BN uncompetitive as a shipping alternative.”

Had the Lilyfield elevator lost access to BN, it still could ship grain with CN or CP, but having access to all three means more competition and better rail rates, Bruch said. “BN gets us into certain customers that are harder and more expensive to get to through the other carriers,” he said.

Paterson told the CTA CN and BN have agreements on running rights and interswitching going back to 1912 and 1913. Under those arrangements Paterson has exported grain cars to the United States for many years.

Paterson also said before building its $17 million Lilyfield elevator, CN agreed Paterson would have full rail access interswitching with BN.

The Canadian Wheat Board (CWB), which was granted intervener status, told the CTA that Winnipeg North is the only place in Canada it can originate BN cars at a CN station and it’s because of interswitching. Without access to BN there would be less railway competition, the CWB said.CN argued because of several changes, including the fact that it’s now accessing the Lilyfield elevator on Canadian Pacific Railway tracks and interchanged cars are not spotted at the place where CN and BN’s tracks connect, interchange regulations under the transportation act no longer apply.

The CTA disagreed, pointing out that having “a competitive, economic and efficient” transportation system is among the goals of the Canada Transportation Act.

“(T)he intention of the interswitching provisions is to provide shippers with greater access to competitive service,” the CTA stated in its 20-page written decision.

The ruling pleased the CWB. “We need as much car supply as we can possibly get in the system,” CWB spokeswoman Maureen Fitzhenry said in an earlier interview. “So if BNSF is effectively prevented from getting grain at those switching areas that just takes out that much more car supply. We moved 130,000 tonnes into the U. S. down that corridor last year (2007) and plan to do a similar amount this year. And this is the only feasible place we can use American carriers to move grain into the U. S.”

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