Railways overshoot grain revenue limits for the last crop year

Canada’s two big railways will pay $5.6 million for exceeding the maximum revenue cap for hauling Prairie grain.

CN Rail and CP Rail overshot their maximum revenue entitlements (MREs) for the year by $3,170,615 and $2,170,010 respectively, the Canadian Transportation Agency ruled last month.

The overages, plus a five per cent penalty, are payable to the Western Grains Research Foundation.

MREs are calculated using a formula factoring in their grain handles, average length of haul, and an inflation index reflecting costs for labour, fuel, materials and capital purchases. CN’s and CP’s allowable MREs for the past crop year were $930 million and $997 million respectively. CN’s qualifying Prairie grain movements in 2019-20 totalled 23.5 million tonnes, while CP’s was 24.5 million. Their average lengths of haul came in at 1,013 and 918 miles respectively, and their combined grain handle was up 4.3 per cent on the year.

In 2018-19, both CN and CP came in below their MREs, after both booking overages of seven figures above their revenue caps during each of the previous four crop years.

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