The big three grain companies have sided with Canadian National Railway in its dispute with small grain shippers.
Viterra, James Richardson International and Cargill have asked the Canadian Transportation Agency to reject the shippers’ level of service complaint against the rail company.
The big three say CN’s contentious car awards programs that encourage the weekly shipment of 100-car unit trains will make for a more efficient, flexible and cost-effective handling and transportation system.
If the agency agrees to the changes requested by the small shippers, users of the system will be worse off, they warn.
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“Cargill is concerned that the extent and type of remedies being sought … may have a negative impact on overall efficiency in the system and thereby act to constrain, rather than enhance, overall capacity for grain shippers,” said Tom Cascisa, the company’s senior transportation manager.
The companies also say they have invested heavily in grain handling facilities able to load and ship 100 car trains, and that investment will be put at risk if the complaint is upheld.
“The lack of access to an adequate supply of cars for the movement of grain … will negatively impact JRI’s business and to that extent its financial performance,” said a brief submitted to the agency by JRI lawyer Maria Rehner.
The complaint by a group of small shippers and the Canadian Wheat Board alleges that CN has failed to comply with an earlier CTA decision ordering the railway to alter its car allocation programs.
The shippers said CN’s programs freeze them out of the advance booking program, force them to rely on unpredictable weekly general car allocations and put them at an unfair disadvantage to the big shippers.
They want the CTA to order CN to distribute 50 percent of its cars through general allocation, set a maximum of 50-car blocks for advance awards and end the practice of auctioning cars to the highest bidder.
In its submission to the agency, Viterra urged the agency to reject those requests for the following reasons:
- Arbitrarily setting a fixed number of general allocation cars each week would reduce the railways’ and grain companies’ flexibility and ability to plan ahead.
- The greatest efficiencies are gained through 100 or 112 car unit trains.
- Auctioning cars allows shippers to ensure they can meet their shipping obligations and companies can choose whether to participate.
“The (suggested remedies) would not add efficiency nor add to capacity,” said Viterra chief operating officer Fran Malecha.
“It is the use of the 100-112 car units that result in better cycle times and in turn greater capacity, in which all system participants will benefit.”
Trent Weber, director of transportation and marketing for the Inland Terminal Group, said small shippers support efficiency and don’t object to shipping grain in 100-car unit trains.
In fact, many of the inland terminals can and do ship 100-car trains.
“Our concern is when you lock in allocations only to those companies that have multiple 100-car facilities and can do it 42 weeks in a row,” he said.
Weber noted that when CN voluntarily suspended its 100-car program for 2007-08, the railway said the same benefits and efficiencies would be attained by building 100-car trains in other ways.
Weber also disagreed with the argument that since the big companies have invested millions of dollars in building a network of 100-car elevators, they should be rewarded with a competitive advantage.
“At the end of the day, the inland terminals have also spent millions of dollars,” he said.
“Our elevators cost as much as theirs.”
CN says it has followed the letter and spirit of the earlier CTA order by making its advance car awards program more accessible to all shippers, providing more information on its allocation procedures and fully meeting shippers’ requirements.
The CTA is scheduled to issue its decision on the complaint by Jan. 19.
