There won’t be any money changing hands between the railways and the Western Grains Research Foundation this year.
Both of the national railways earned grain hauling revenues below their revenue entitlement in crop year 2009-10.
If a rail company exceeds its cap, it is required by the Canadian Transportation Act to pay that amount, plus penalty, to the foundation.
Officials with the WGRF could not be reached for comment by the publication deadline for this article.
The 2009-10 results mark the first time since 2002-03 that one or both railways haven’t exceeded the cap, which was introduced in 2000-01 in return for allowing railways freedom to set freight rates.
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Canadian National Railway took in $463.9 million in revenue in 2009-10, which was $3.73 million below its revenue cap limit of $467.6 million.
Canadian Pacific Railway’s revenue totalled $454 million, which was $1.68 million below its cap of $455.7 million. Taken together, it can be argued that the railways left $5.41 million in potential grain-hauling revenue on the table last year.
CPR spokesperson Breanne Feigel said managing the revenue the railway is entitled to under the cap requires monitoring and adjusting to various factors that change from year to year.
“Factors that we adjust to include where grain is produced (and shipped), the volumes that we must move and commercial market conditions,” she said by e-mail.
She said the railway strives to work within the revenue entitlement cap system because that is what has been established as working best for stakeholders.
In an e-mail comment, Kelli Svendsen of CN said the railway has not only met statutory obligations under the CTA but also moved more grain last year than in any other year since the inception of the revenue cap.
She said the record breaking year is largely due to the company’s “innovative grain plan” and the work it is doing with supply chain partners.
Svendsen said all rail traffic combined in Western Canada is at record levels including grain, with year-to-date traffic volumes up by four percent as compared with the railway’s previous peak recorded in recorded in 2006.
The agency’s complete decision is posted on its website at www.cta.gc.ca under “What’s New?”
It includes a list of adjustments made by the agency to figures submitted by the railways in calculating the revenue entitlements and actual revenue for each company.
For example:
• A critical component of the revenue cap formula is how far grain is hauled on average. CPR submitted a figure of 1,477 kilometres. After review, the agency determined that CPR was including both CP and associated short-line mileage, and reduced the allowable figures to 1,474 km. As a result, CPR’s revenue cap was reduced.
• The CTA said CN failed to provide sufficient evidence for the agency to accept the company’s submission regarding the railway’s length of haul. It adjusted CN’s tonnage by 3,000 tonnes, which lowered the railway’s cap.
• There also are adjustments relating to volume rebates with specific shippers, grain movements with no recorded grain revenue, clerical errors and the trucking portion of intermodal movement.
