Court rejects CN’s appeal of service ruling

A federal court has dismissed an appeal by Canadian National Railway stemming from a service complaint filed by Louis Dreyfus Commodities in 2014.

In a Sept. 16 decision, federal court justice Wyman Webb dismissed the CN appeal with costs and upheld a previous ruling by the Canadian Transportation Agency that determined CN had failed to provide rail service to Louis Dreyfus as outlined in an agreement between the two.

“It is difficult to understand how the harsh winter (of 2013-14) could be a justification for not delivering any cars to (Louis Dreyfus) during weeks 30 to 35 (of the 2013-14 shipping season),” Webb wrote in his decision.

“There is no merit in CN’s argument that it was denied procedural fairness,” he added.

In early 2014, Louis Dreyfus filed a level-of-service complaint claiming that CN had breached its service obligations over several weeks in the spring of 2014.

Between weeks 30 and 35 of the 2013-14 shipping season, Louis Dreyfus ordered 2,392 rail cars, which were to be spotted by CN at Louis Dreyfus facilities in Glenavon, Sask., Aberdeen, Sask., Joffre, Alta., and Lyalta, Alta.

Upon review, the Canadian Transportation Agency ruled that CN failed to deliver any cars during the six-week period.

In its ruling, the agency noted that CN provided no explanation for its failure to deliver the cars, and no explanation of how cars would be allocated.

Webb’s decision acknowledged that the 2013 grain crop in Western Canada was unusually large and that the winter of 2013-14 was harsh with extremely cold temperatures.

The 2013 crop was estimated at 77 million tonnes, well above the five-year average of 57.2 million tonnes.

But the court determined that CN’s failure to deliver cars to Louis Dreyfus facilities occurred while the company was building up capacity to meet minimum weekly grain shipping volumes imposed by the federal government in March of 2014.

“During weeks 30 to 35, no cars were delivered by CN to any of (Louis Dreyfus’s) facilities,” Webb’s decision stated.

The period in question covered the first of March to mid-April.

“CN submitted to the (Canada Transportation Agency) that it quickly ramped up its grain capacity after the winter relented in the first week of March (2014), therefore, it is difficult to understand how the harsh winter could be a justification for not delivering any cars to (Louis Dreyfus) during weeks 30 to 35.”

CN spokesperson Mark Hallman said in an email that CN is disappointed in the ruling but did not intend to appeal.

It is unclear what financial penalties, if any, CN faces.

Dreyfus officials have declined to comment.

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