The savings that can be realized on maintenance costs for the federal grain hopper fleet may be greater than previously publicized, says the head of the Farmer Rail Car Coalition.
A report released last year by the Canadian Transportation Agency estimated the maintenance cost embedded in the rail revenue cap in the 2003-04 crop year worked out to $4,329 per car per year.
That’s the figure that has been widely used in discussions about the future of the hopper cars.
But FRCC president Sinclair Harrison said that during a grain industry meeting with CTA officials in Winnipeg last week it was made clear that number covers only the use of those cars to haul statutory grains in Western Canada.
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That movement represented about 90 percent of the hopper car fleet activity at the time the calculation was done. The remaining 10 percent involved such things as movements to the United States or Eastern Canada or non-grain movement.
“If you’re looking at 100 percent of the movement, you’d add about 10 percent to get the total cost per car per year,” he said.
Jim Riegle of the CTA’s grain division said in an interview if the calculation covered 100 percent of the fleet’s use, the maintenance cost would be an estimated $4,810 per car per year.
The FRCC has said the 12,400 federal hopper cars can be maintained at an average cost of about $1,500 per car per year, for a total annual cost of $18.6 million.
At the original estimate of $4,329, annual maintenance costs work out to $53.7 million. Based on the $4,810 estimate, the annual cost increases to $59.6 million.
The savings to farmers work out to roughly $41 million per year based on that higher estimate, up from about $35 million using the lower figure.
The question of maintenance savings has been key in the debate over the future of the cars, with some groups expressing doubt about the numbers being used by the CTA and the FRCC.
The CTA has completed an analysis of the actual amount spent by the railway on maintaining the federal grain cars.
Riegle said that report has been given to Transport Canada, which will decide if it will be made public.
