In a bid to maximize their income under the grain revenue cap, both national railways recently increased the single car rate for hauling grain.
Canadian National Railway increased its single car rate by 1.5 percent, while the Canadian Pacific Railway rate rose by two percent.
CPR spokesperson Leah Olson said the higher tariff, which took effect in March, was posted after the railway adjusted its internal projections of tonnage and revenue for the 2003-04 crop year.
“We’re looking primarily at how our forecasts are aligning with what’s in the revenue cap and what we’re allowed to make,” she said.
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“The forecasts changed, so we changed our rates accordingly to maximize our revenue under the cap.”
CPR had reduced its single car rate by one percent at the beginning of the 2003-04 crop year. CN’s rate had been unchanged at the start of the year.
About 25 percent of prairie grain moves at the single car rate, with the majority shipped under a variety of incentives and discounts. However, those discounts are based on the single car rate, so all rates are affected by the change.
The federal government’s revenue cap, instituted in 2000, establishes maximum grain hauling revenue for each railway each year, based on an annual calculation of changes in costs, volumes and average length of haul. Both railways have come in under the cap each year.
The Canadian Transportation Agency recently determined that the cost index for the 2004-05 cap would be lower by 0.9 percent.
