SASKATOON – It’s going to be a bit harder to qualify for a freight rate discount from CP Rail next crop year.
The rail company has filed official notice of several minor changes to the various rate discounts it offers grain shippers.
As of Aug. 1, 1994, CP will:
nIncrease the minimum amo-unt of grain that must be shipped from an elevator to qualify for a discount.
- Eliminate a program that provided a discount for vegetable oil shipped in tank cars.
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The other national railway, CN Rail, is making no changes in its rate programs, according to documents filed with the National Transportation Agency.
The railways are required by the Western Grain Transportation Act to give public notice by Dec. 31 of their variable rate plans for the following year.
Speed up abandonment
The discounts, also known as incentive or variable rates, are designed by the railways to encourage the construction of high-throughput elevators and inland terminals across the Prairies and speed up branch line abandonment.
A number of farm groups, including the three prairie wheat pools, complain that variable rates put too much power in the hands of the railways and don’t provide any significant benefits. But the three prairie pools are among the more than 30 grain shippers participating in the rate discounts.
The railways hope that deregulation will eventually give them more freedom to offer rate discounts, including ending the requirement for seven months’ notice.
“There’s just no flexibility in the system right now,” said Jim Feeny of CN Rail. “You’re facing a great unknown when you’re setting out the conditions.”
CN provides discounts when volumes shipped from a point exceed the three-year average and when cars are loaded in blocks of 18, 20, 50 and 100 cars. The maximum total discount is $5 a tonne.
CP bases its reductions on three things – total volume shipped from an elevator, changes from previous years and block loading of 20, 25, 50 or 100 cars. It also provides a discount to offset rate increases caused by branch line abandonment. A $5 a tonne maximum applies.
Minimum tonnage
For 1994-95, the minimum tonnage for a $1 a tonne discount will be increased to 45,000 from 40,000 tonnes. Another dollar will be discounted for every tonne from 70,000 to 100,000 tonnes; this year that applies from 60,000 to 100,000 tonnes.
The rates must still be approved by the National Transportation Agency, although that is considered to be a formality.
