An inherent bias against small shippers is unavoidable in the railway system, said two members of a small shippers panel at Grain World.
The system pays railways to run the biggest trains the farthest rather than smaller trains to closer destinations.
“That is the policy that we have with our revenue cap,” said Jerry Klassen of commodity trading company GAP SA Feb. 25.
“The more grain you can move, the more they earn,” he said. “There’s an incentive to move large trains.”
Small shippers found their planned shipments falling months behind schedule during the 2013-14 rail crisis, with problems continuing even after the railways began hauling record amounts of grain cars.
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The record levels helped pull grain out of big elevators into 150-car trains to the West Coast.
However, farmers and companies trying to ship smaller amounts to the United States still found themselves waiting.
Ryan McKnight of Linear Grain said the Canadian system does not have a car bid system like in the U.S. that would give small shippers an option to pay more to get the railways to move grain in a direction other that the east-west corridor.
“They (U.S.) have a system of rail freight rationing, where cars trade in a secondary market and sometimes they trade at a premium and sometimes at a discount,” said McKnight.
The system creates incentives that can change a grain company’s behaviour, but the Canadian situation seems to shut down some grain routes.
CWB used delivery rationing to balance car supply and grain movement when it was in charge of organizing wheat exports. However, that delivery rationing system was eliminated along with the CWB monopoly without creating a U.S.-style alternative.
“There is no price-rationing mechanism to ration the demand for rail freight in Canada right now,” said McKnight.
Audience member and Portage la Prairie farmer Jim Pallister highlighted a Canadian success story: the general allowance of large grain trucks.
“One thing we’ve really gotten right in Western Canada, and I don’t know if we fully appreciate it, is the way the prairie provinces came together on those super-Bs,” said Pallister.
“It’s big. It’s a common market. I never, when they built crushing plants in Yorkton, thought that we’d be shipping canola (by truck) from southern Manitoba to Yorkton, but it works. It’s too bad our American friends couldn’t get that together.”
Some U.S. states allow super-Bs and some don’t, which means cross-border shipping with that size of truck is a risky business.
