Saskatchewan short lines say new car allocation policies will do nothing to improve communication or service to short-line operators and producer car loaders.
However, they say the new rules will limit the number of unfilled car orders on the order books of Canadian National Railway and Canadian Pacific Railway, which will leave the impression that rail car backlogs at producer car loading sites are at a manageable level.
“As far as these new order system are concerned, they’re just designed to make (CN and CP) look good,” said a spokesperson for the Saskatchewan Shortline Railway Association (SSRA).
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“Right now, we don’t know how many cars we’re getting from week to week, or even when we’re getting them, until a train pulls in.
“If CN and CP want us to restrict our orders to four weeks, then why can’t they provide us with a schedule, four weeks out, telling us how many cars we’re getting and when we can expect them? It’s just a one-sided arrangement to make their own (car order backlog) numbers look better.”
CN and CP established their new rail car allocations policies earlier this year, effectively limiting the number of car orders that shippers can place.
CP will cap the number of orders from any producer car loading site or shipping facility at four times the facility’s total car spot capacity.
New orders will be accepted as those car orders are filled.
CN’s new rules are similar, but they limit car order requests at two week’s worth of shippers’ capacity.
Under CN’s system, total car order requests by a large grain shipper must not exceed two weeks’ worth of the shipper’s maximum base car allocation.
Outstanding producer cars orders must not exceed twice the car spot capacity of the loading site.
CN’s new rules include limits on the number of car order requests that will be received by the railway during periods when the demand for rail cars exceeds the supply.
“Ultimately, these changes are intended to promote more effective communication of week-to-week priorities among grain shippers, operators of unloading facilities and CN,” CN said in a Nov. 21 email explaining the new policies.
CN said the new provisions will also reduce “phantom” car orders, in which shippers request more cars than they actually need.
SSRA members who contacted The Western Producer in early December said the concept of phantom cars is misleading.
They said some shippers may have placed excess or speculative car orders, but short-line railway companies have never placed “phantom car” orders.
Instead, there were unfilled car orders, which were unfilled, severely delayed and eventually cancelled because of lack of service and lost sales opportunities.
“These phantom car orders that they talked about never existed,” said an SSRA member who spoke on the condition that his name be withheld.
“On our line, there were (many) orders that disappeared, but they weren’t phantom orders. They were orders that were lost or cancelled because we were so far behind that farmers were getting out of contracts and making alternative deals to truck their grain elsewhere.”
Rail service to many short lines has improved since last winter, but shipping programs are still four months behind or more.
CWB, which depends on producer car grain to meet its overseas sales obligations, is now rumoured to be trucking grain from some producer car loading sites because rail service to those sites is either too slow or unpredictable.
Short-line operators in Saskatchewan also expressed disappointment at Ottawa’s decision to extend minimum volume requirements until March 28.
Short-line operators and producer car loaders say federal regulations that require Class 1 carriers to haul minimum weekly tonnages have prompted CN and CP to haul more grain from highly efficient main-line elevator locations.
At the same time, service to smaller shippers located on branch lines or short-line locations has suffered.
“We were disappointed but not surprised by Ottawa’s decision,” another SSRA spokesperson said.
“It seemed to us that the CTA selected its presenters very carefully,” when the Canada Transportation Agency was consulting with grain shippers to determine whether minimum volume requirements should be retained, the SSRA source said.
Ottawa’s new rail regulations, which were announced Nov. 29, require CN and CP to haul 200,000 to 465,000 tones of grain per week.
The railways are also expected to submit winter contingency plans and service plans explaining how service will be provided to short-line railways and producer car shippers.
However, officials from Transport Canada confirmed a Dec. 2 email that monetary penalties won’t be imposed on CN and CP if they fail to submit service plans or submit incomplete plans.
“At present, there is no penalty for non-compliance,” the email said.
The SSRA representatives said Ottawa’s expectation of service plans is nothing more than lip service to producer car shippers and short lines without the threat of penalties of enforcement.
“There’s nothing in the new regulations that will do anything for us,” the SSRA source said.
The Canadian Grain Commission has placed 4,100 orders for producer cars with CN and CP as of Dec. 4.
Another 7,600 applications have yet to be processed.
Contact brian.cross@producer.com
