The Canadian Transportation Agency has officially reduced a key component of the railway revenue cap to reflect lower costs for rail car maintenance.
The result is expected to be freight savings for 2007-08 of at least $2 a tonne for shippers and farmers.
The agency last week announced an interim volume-related composite price index for the 2007-08 crop year of 1.0884.
That’s down from the previously announced figure of 1.1611.
The index, adjusted annually, reflects an inflation factor to cover increases in labour, fuel, material and capital inputs incurred by the two national rail companies. It’s set relative to the 2000-01 crop year, which is deemed to be 1.0.
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After the original 2007-08 index number was established in April, the government asked the agency to adjust the figure, after the passage of Bill C-11, which dealt with hopper car maintenance.
Prompted by arguments put forward by the Farmer Rail Car Coalition as part of its unsuccessful attempt to buy the federal fleet of hopper cars, the government decided the railways were being overpaid by nearly $3,000 per car per year for maintenance.
In announcing the adjustment to the index, the agency said the number was determined to be $2 per tonne after an “extensive analysis” by agency staff.
A final index figure will be determined by January 2008 and applied retroactively to the entire 2007-08 crop year.
