A decision by Ottawa to impose fines against Canada’s largest railway company for failing to move more than 5,000 rail cars of grain a week are unfounded, according to officials from Canadian National Railway.
That’s because there is no longer enough grain in the commercial handling system to fill that many cars.
“Any government penalties against CN in connection with its transportation of western Canadian grain would be unfounded, given that it’s the current balance of the grain supply chain that has not allowed us to meet the government’s order-In-council minimum grain volume requirement,” CN said in a Sept. 17 statement.
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“CN’s weekly demand has been less than 5,000 cars per week on average for the last several weeks … below the level required to meet the new OIC target of 536,250 metric tonnes per week.”
Ottawa announced Sept. 17 that it would impose a fine against CN for the railway’s failure to meet minimum weekly grain hauling targets outlined in a federal order.
The order, imposed by Ottawa earlier this year, requires each of Canada’s two major railway companies to move 5,000 cars of grain and oilseed per week — the equivalent of 536,250 tonnes per week, or face fines as high as $100,000 per day.
Officials from Transport Canada said Sept. 17 that the size of the fine to be levied against CN had not been determined.
The penalty will be based on the number of weeks CN has failed to meet the minimum shipping requirement, officials said.
“As CN was not able to meet the minimum volume requirements, the minister has decided to issue administrative monetary penalties to the company,” said Jana Régimbald, a spokesperson for transport minister Lisa Raitt.
“Our government introduced and passed legislation that put into place clear and achievable solutions to ensure grain and other commodities move efficiently to market,” added federal agriculture minister Gerry Ritz in a written statement.
“Using all means available, our government will continue to defend farmers and all shippers to ensure that our economy is well served by Canada’s rail logistics system.”
After learning of Ottawa’s intention to impose a fine, CN issued a statement suggesting that monetary penalties against the company are unfounded.
Commercial grain stocks at country grain elevators are currently at low levels, CN said.
Farmers across the West have not been delivering as much grain because harvest is late and damp conditions across the West have delayed combining operations and deliveries of recently harvested crops.
According to the Canadian Grain Commission, producer deliveries in the first week of September totalled 923,000 tonnes, down from 970,000 tonnes the previous week.
Under the federal order, Canada’s major railways companies — CN and Canadian Pacific Railway — are required to move nearly 1.1 million tonnes of grain per week.
“Country elevator stocks have been in-line with the five-year average since the beginning of the new crop year,” CN said.
“This means there is ample storage room available for farmers to deliver their grain in the Prairies.”
CN went on to suggest that the terminal operations at Prince Rupert, B.C., recently closed for a week to perform annual maintenance.
Grain terminals in Vancouver, which are nearly full according to CN, have not been working weekend shifts, CN added.
“Both these factors affected CN’s volumes,” the company said.
