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Grain shippers in between legislation as rail service declines

The Fair Rail for Farmers Act is dead and the Transportation Modernization Act hasn’t become law

With rail service not meeting grain company demands, fears about a gap in remedies to deal with it have come to pass, says Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA).

Wade Sobkowich.
photo: Allan Dawson

“What we predicted is exactly coming true,” Sobkowich said Dec. 14 in an interview.

“We don’t have Bill C-49 (Transportation Modernization Act) and we no longer have Bill C-30 (Fair Rail for Farmers Act) so we are between bills and we find ourselves without really any tools in our tool box to hold the railways accountable or to bring them to provide better service to the grain industry.”

The Fair Rail for Farmers Act expired July 31, even though the WGEA and many farm groups asked that it be extended.

The legislation passed by the former Conservative government in 2014, and extended once by the current one, gave elevator companies access to extended interswitching, resulting in more rail competition between CN, CP and the American-based Burlington Northern Santa Fe.

It also allowed the federal government to order CN and CP to move specific volumes of grain if it deemed it necessary.

The government dismissed calls to extend the Fair Rail for Farmers Act because the Transportation Modernization Act was coming. It also said if there were rail service issues shippers could seek remedies under the current Canada Transportation Act.

Grain shipper and farmer hopes that the bill before the Senate would be law before Christmas have been dashed.

Meanwhile, CN, plagued by a series of derailments and caught off guard by unexpected demand from other shippers, hasn’t been able to keep up to grain car orders.

“CN service is quite poor and its car fulfilment rate in the last week was 57 per cent, but over the last two months it has averaged about 62 per cent and that is just very poor,” Sobkowich said. “With the cold weather coming up we don’t see that number getting any better. We’ve given CN latitude. They said they were trying to bring on capacity to address this issue. They recognized they had an issue. So we let it go for two months, but now we need to start elevating the profile of the issue because we don’t see those percentages going up, at least not in a sustained way in the foreseeable future and that causes great, great concern.”

If the Modernization Act was law shippers would be applying for long-haul interswitching to get CP and BN to move grain from CN lines, Sobkowich said.

The new legislation will also allow the railways to seek penalties from the railways when they fail to live up to a service agreement, but that will take time to set up, he said.

“But with long-haul interswitching we can put in an application and have the (Canadian Transportation) agency make a decision within 30 days,” Sobkowich said.

David Przednowek, CN’s director of grain marketing, says the railway has encountered “exceptional cir­cum­stances.”

In the fall of 2016 CN was setting grain-shipping records moving 5,800 cars a week. Despite its problems CN averaged 5,000 cars a week this fall, Przednowek said on the sidelines of the Fields on Wheels conference Dec. 15 in Winnipeg.

CN is also bringing on more locomotives and crews.

“In terms of locomotives the 22 AC locomotives that we bought earlier this year came online I think at the end of October,” he said. “We brought another 40 locomotives since Nov. 1. Another 40 we expect to bring on by the end of the year and there’ll be some additions as well in the month of January. In terms of crews I think we will have hired over 3,500 people over the course of the year. We’re expecting to hire another couple thousand in 2018 to handle even more growth.”

Last year CP’s performance suffered, but CN’s stellar work resulted in above-average grain movement, overall, Canada’s grain monitor, Mark Hemmes, said in an interview Dec. 15.

Grain exports from Prince Rupert are suffering because it’s served only by CN, he said.

“I think we’re probably in this for a little longer than what some people would hope for,” Hemmes said. “It’s going to go well past Christmas, but I’m sure that by the time we get into the early-spring months, late winter, things should pretty much normalize, much the same as happened with CP last year.

The difference this year versus 2013-14 crop year when a major grain backlog occurred, is now CN was up front with its problems.

One industry observer, who asked not to be named, said if CP encounters shipping problems this winter too, while CN continues to struggle, another grain-shipping crisis could occur.

That’s why the WGEA and others are pushing the Senate to quickly pass the Transportation Modernization Act. Sobkowich took that message to the Senate last week.

“We had about 10 different meetings with individual senators,” he said. “We think that they heard a pretty loud and clear message about the importance of C-49.”

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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