CN Rail CEO sees grain backlog extending into 2015

TORONTO (Reuters) — A record-shattering Canadian harvest, combined with one of the most frigid winters in decades, has created a grain-handling backlog that will not be cleared until next year, the head of Canadian National Railway said on Wednesday.

“It will take more than the summer, continue into fall, into next year,” Claude Mongeau, chief executive of the country’s biggest railway, told Reuters.

Delays in moving the 76 million tonne crop have angered farmers and prompted Canada’s Conservative government to issue an order for railroads to dramatically ramp up their shipments or face penalties.

That move, along with a break in the extreme winter chill, has helped CN Rail spot an average 4,320 grain hopper cars over the last two weeks, up from an average 2,964 cars per week in February, the company said earlier this week. Spotting means to place a rail car in position for loading or unloading.

Ottawa also plans to draft legislation later this year to make sure railroads deliver grain shipments in a timely way, a move Mongeau opposes.

“Threatening to add legislation … would be a very grave mistake for the government to make,” he said.

“Penalties don’t move traffic … Finger-pointing and exaggeration and blaming of railroads is not constructive. You don’t do regulation in the heat of moment.”

The provinces of Alberta and Saskatchewan are also asking the government to pull together legislation so that competing rail companies can use each other’s tracks, a practice called running rights.

Mongeau said being forced to share tracks would be “very damaging to the rail industry” because it would complicate logistics and add to problems in an already challenging environment.

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