SASKATOON — The railways won’t face financial penalties for failing to meet grain car unload targets at Canadian ports.
At a sometimes heated meeting in Winnipeg March 15, the Senior Grain Transportation Committee decided not to pursue sanctions against the railways, as allowed in the Western Grain Transportation Act.
The committee also voted to allow grain companies to bring additional rail cars into the common grain fleet and receive some benefits for doing so.
However a Grain Transportation Agency official said March 21 that proposal needs further study.
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“There are quite a few implications to doing that and we feel that without a more thorough consultation with the trade it would be premature,” said Bruce McFadden, the agency’s director of operations.
On the issue of railway performance, the committee accepted the railways’ argument that their failure to meet the targets is due to factors beyond their control, including an unusual mix of crops and sales, bad weather and labor disputes.
“There was a recognition that this has been an extraordinary year,” said CN Rail spokesman Jim Feeny.
Heavy demand not anticipated
He said the railways, like others in the industry, couldn’t have anticipated the unusual demands on the system, particularly the heavy movement to the U.S., where rail car turnaround time is significantly longer.
But that recognition wasn’t unanimous. The vote was 9 to 5, with numerous abstensions among the 26 committee members. After the meeting, some participants were still unhappy with the decision.
One participant, who spoke on condition of anonymity, said the railways made a decision to accept the U.S. business without first making sure they had enough cars. That may be profitable for the railways, he said, but “they left the trade high and dry and sucking air.”
The railways say they need flexibility to respond to customers’ demands, and this year that has meant moving large volumes to the U.S, a movement not included in official unload targets.
But GTA administrator Peter Thomson said the railways are required by law to move grain to Canadian ports in return for payments and subsidies under the WGTA, while the U.S. movement is strictly commercial.
“Frankly, I see a distinction between the two movements,” he said. “But the two of them got kind of blended (at the SGTC meeting) and that may not be the best way to hold the carriers responsible.”
He said a “very rough” estimate is that for every tonne of grain shipped to the U.S., the railways could have unloaded two tonnes at Canadian ports, due to the difference in car cycle times.
A special subcommittee of the SGTC will review the whole idea of setting performance targets and whether sanctions and rewards are appropriate.
Targets are currently based on sales and are expressed largely in terms of unloads of the six major grains at Canadian ports. Ken Motiuk, a Mundare, Alta., farmer and vice-chair of the SGTC, said targets should be re-assessed in light of “current marketing realities” like increased sales to the U.S.
