A decision expected to be released by the Canadian Transportation Agency this week could be a defining moment for the future of small grain companies and producer car shippers.
“This is huge,” said Ian McCreary, a Canadian Wheat Board director who has worked for years on rail issues.
“It will determine whether or not single-point shippers can be competitive with large concentrated companies in an industry that is becoming more concentrated.”
The agency is scheduled to release July 6 its ruling on a level of service complaint by Great Northern Grain of Nampa, Alta., against Canadian National Railway.
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The complaint alleges that shipping programs and rules implemented this year by CN discriminate against small and single-point shippers.
For example, the railway gives preference to facilities that commit to ship 100-car trains for 42 consecutive weeks, something that’s impossible for small shippers.
CN said its programs are designed to create more efficiencies and to reward companies that make major investments to improve their grain handling systems.
Some shippers have warned that if the CN programs are approved by the agency, they could be forced out of business.
Bruce Horner, chief executive officer of GNG, said a favourable ruling should result in better service and enable small companies to survive and expand their businesses.
A decision in favour of CN would be a different story.
“Our business will stagnate and we’ll have to switch to more value-added products or get out of the game and do something different,” he said.
McCreary said it will be disastrous if the agency rejects the complaint.
“That would say that under the current (Canada Transportation) act, shippers have no rights to receive service,” he said. “Then we’d have a lot more reason to argue for major changes to the act.”
Conversely, a ruling in favour of GNG would not only resolve the company’s specific service issues, it would also establish the principle that the railways are accountable to pick up grain from all facilities without bias and are not allowed to use their market power to decide on an arbitrary basis who gets service and who doesn’t.
He didn’t want to predict the outcome of the case.
“I’ve been confident about CTA cases before and been wrong, but we went into this on the grounds that we had a very good case and we still believe that.”
The wheat board worked closely with GNG in preparing the case for the CTA. In addition, 19 prairie grain industry stakeholders, including shippers, farm organizations, producer car groups, the government of Albert and the CWB, filed interventions supporting GNG.
Horner said that ironically in the four months since the complaint was filed CN has provided what he described as steady service to the company’s Nampa elevator, located south of Peace River.
“They haven’t been bad during this time period, but unfortunately you can’t have this time period all the time,” he said with a laugh.
The CTA held no public hearings on the case and will base its decision on written submissions from GNG, CN and the intervenors.
In its submission, CN defended its service to the GNG elevator at Nampa, and said that’s the only issue the agency should consider.
“The agency cannot be asked … to rule on the level of service being provided by CN to all grain customers generally or to specific categories of shippers in particular,” it said.
In its application GNG asked the agency to: establish a maximum car block of 50 cars; halt CN’s practice of auctioning cars to the highest bidder; require CN to maintain a fleet adequate to serve small shippers; order CN to make 50 percent of its cars available outside of advance booking programs and allow shippers to trade cars among themselves.
