WINNIPEG – Prince Rupert could become a residual port as a result of grain transportation reforms, says a grain handling official from the northern B.C. port.
When the new freight rate regime comes into effect Aug. 1, Prince Rupert will lose the special treatment it received under the Western Grain Transportation Act.
Under a policy known as port parity, freight rates have been the same to Prince Rupert and Vancouver, even though it’s 295 kilometres further to Prince Rupert.
That will no longer be the case under the new distance-based rate structure and that could be bad news for the port’s lone grain handler.
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Clarence Roth, chief executive officer of Prince Rupert Grain Ltd., said the elimination of port parity will boost the cost of shipping grain to the port by an average of $4.50 a tonne.
Shippers in a position to choose which west coast port to use will have incentive to choose Vancouver, Roth said in an interview last week.
Speaking to the Canada Grains Council earlier, Roth had warned that loss of port parity for Prince Rupert “could cause this port to be residually used second to Thunder Bay in times of drought and low export volumes.”
However, he added, the final impact is hard to predict because there are many unanswered questions surrounding the new rate regime, including the kind of freight pooling system that’s put in place and whether the rates will reflect some of the lower costs of moving cars around at the Prince Rupert terminal.
Many major players in the grain industry have a lot at stake in seeing grain volumes maintained at Prince Rupert. The terminal is owned by a consortium of the six major grain handling companies.
Rupert is closer to Japan and China, so there are ocean freight savings for customers.
And CN Rail, which operates the only rail line serving the northern port, would also have an interest in keeping grain moving.
Roth said PRG has talked to the railway about what could be done to ensure viability of the port. Since the new rate scale sets out maximum rates, CN could reduce its rate to Prince Rupert to remain competitive with Vancouver.
Adjust rates
“They theoretically could adjust it, particularly from points where they could get multiple car loadings and so on,” said Roth.
CN spokesperson Jim Feeny said the railway is “fully aware” of the concerns over Prince Rupert but is still in the process of establishing its rate scale for 1995-96.
“Certainly it’s in our best interest to keep the port competitive,” he said, adding the railway is meeting with officials from PRG and the Canadian Wheat Board to see what can be done.
In the last three crop years, an average of 4.9 million tonnes of grain has been shipped through Prince Rupert, compared with 13.3 million tones at Vancouver.
