When farm groups complain that rail freight rates for grain are too high, Canadian National Railway has a standard response.
Freight charges here, the company says, compare favourably with those elsewhere in the world, particularly in the United States.
On three separate occasions in the past few months, different CN spokespersons have made that point in stories published in The Western Producer.
For example, in an interview in late April, CN’s Jim Feeny strongly rejected suggestions that rates are too high.
“They are not exorbitant,” he said.
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“They are the lowest in the world and comparably much lower than moving product from the central U.S. to tidewater.”
Critics of the railways say that may be true, but that only supports their view that farmers are better off under a regulated rail environment than in the largely unregulated environment of the U.S.
“It’s a case where we can use their data to support our own arguments,” said Ian McCreary, a CWB farmer director and expert on rail issues.
“The reason rates are lower here is the fact that we have a revenue cap. If our system was deregulated, as the railways want, our rates would go up without a doubt, and the U.S. rates are the evidence.”
In Montana, McCreary added, farmers are “even madder” about rail rates and service than they are here.
Comparing freight rates on either side of the border is a bit like comparing grain prices – in other words, open to interpretation.
Figures provided by CN comparing several similar length hauls on either side of the border indicate that rates here are 19 to 46 percent lower than in the U.S.
Here are the numbers provided by the railway. (The rates are expressed in Canadian dollars per mile for 110-plus car shuttle trains in the U.S. and 100-plus car blocks in Canada.)
- Shelby, Montana, to Seattle, Washington, $4.21. Williston, North Dakota, to Seattle $3.98 (Burlington Northern Santa Fe railway).
- Edmonton to Vancouver $3.23, Saskatoon to Vancouver $3.23 (CN).
- Edmonton to Prince Rupert $2.26. Saskatoon to Prince Rupert $2.41 (CN).
Mark Hemmes, head of the federal grain monitoring agency, took issue with some of those comparisons, but agreed that, in general, rates are lower north of the border.
He also credited that to the differences between Canadian and U.S. grain transportation rules.
“It’s fair to say the reason rates are lower here is regulation.”
He noted that rates in Western Canada for commodities like coal, forest products and chemicals, which aren’t regulated like grain, have increased significantly in recent years.
“I think it’s clear the regulatory environment, particularly the revenue cap, keeps grain rates in check,” he said.
Hemmes said rates are only one part of the equation, with service issues like timeliness, dependability and accountability equally important for shippers.
That’s hard to measure, but he said his impression from talking to shippers on both sides of the border is that the level of service is roughly the same.
Hemmes said one notable difference is that in the U.S. grain is marketed generically, making it easier to handle and transport in large blocks and shuttle trains, which qualify for significant discounts to published tariffs. There are similar discounts in Canada, but the more differentiated nature of Canadian grain exports limits those movements.
Asked whether Canadian or American farmers are better served, he said it’s difficult to judge.
“It is true that farmers here depend far more on the rail transportation system than do U.S. farmers,” he said.
Evan Hayes, of Soda Springs, Idaho, is president of the National Barley Growers Association and a director of the Alliance for Rail Competition (ARC), a Washington-based lobby group representing rail shippers.
He said he’s paying at least 40 percent more in freight costs now than five years ago. As for rail service, it all depends on where you are and when you want to ship.
“Right now it’s fine,” he said. “But when you get down to crunch time, at harvest, in heavy shipping areas, service has been really lacking.”
ARC has been trying for years to convince the U.S. Congress to pass railway legislation to ensure effective competition, reasonable rates, consistent service and fair treatment for small shippers.
Bills are before the House of Representatives and the Senate and must be passed before the end of the current Congress Dec. 31. Hayes emphasized U.S. farmers and shippers don’t want Canadin-style rules.
“These aren’t efforts to regulate the railways. They are efforts to play fair,” he said.
ARC wants the Surface Transportation Board to do a better job of refereeing between shippers and rail companies, with the top priority being the introduction of a final-offer arbitration system.
