Farmers are saving money and seeing grain flow faster because of a new era of co-operation between Canadian National Railway and the Canadian Wheat Board, say leaders of both organizations.
But while both sides agree that further cost savings are possible by future collaboration, they still politely agree to disagree about CN’s desire to operate without strict regulatory controls.
“We need to move away from the regulatory bent that is dominating the grain,” said CN president and chief executive officer, Claude Mongeau, in a speech in Winnipeg Feb. 17.
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“I don’t know of a regulated utility that is good at innovation.”
In his speech and afterward in comments to reporters, Mongeau stressed major advances in CN’s grain car performance since moving to a more transparent process, in which his company shares information with customers like the wheat board in exchange for access to their information.
The result is better matching of grain, railways and port facilities, he said.
“Railroads are offering good service to farmers, farmers have good rates and I think the future is more in a commercial framework than in trying to go back to re-regulation,” said Mongeau to reporters.
But Ward Weisensel, chief operating officer of the CWB, said his organization believes the railways should not be allowed to operate free of special regulatory structures that recognize their market dominance.
“We have a Canada Transportation Act in Canada which regulates the railways for a good reason,” said Weisensel to reporters.
We don’t have acts that regulate many other industries. We have that act because there’s a recognition that railways have market power, more so than other industries in the Canadian marketplace.”
But the overall relationship between CN and the CWB appeared warm, with Weisensel praising Mongeau in comments to the crowd before Mongeau’s speech.
“Claude’s focus, to improve service to customers, as a railway was evident from the start,” said Weisensel.
“He told us customer service would be a priority for CN and he has delivered on that promise…. Under Claude, CN has quickly moved to a much more collaborative model, which we greatly appreciate.”
Mongeau said transportation efficiency gains could mean more to farmers than crop production gains, and results have already been seen from CN’s move to “open order book” operations and programs like the Scheduled Grain Plan.
Mongeau said CN rail cars have hit their daily targets 86 percent of the time in the last year and are now reaching 90 percent. In the past, the railway would judge its performance by the week, but now does it daily.
“This is a transformational innovation,” said Mongeau in his speech.
“I have yet to hear anybody in grain country tell me this is not the right way to go.”
CN’s performance is particularly notable, Weisensel said to reporters afterwards because many of its lines were affected by flooding this year, yet its share of CWB shipments has increased by seven percent this crop year.
Canadian Pacific Railway, on the other hand, has lost share and earned the ire of the CWB.
“We have had our struggles with CP this crop year to date, as have many, many organizations operating in grain right now,” said Weisensel.
But with CN the relationship is healthy, even if the two organizations don’t agree on further deregulation or re-regulation.
“I respect his views, but I think our views are well-founded. That said, that has not hindered our ability to move forward on a very positive commercial relationship,” said Weisensel.
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