CN's Mongeau: Grain supply chain needs the right accountability framework

Canada's grain handling and transportation system can only efficiently move more grain to market if commercial incentives align the supply chain and all chain participants are held accountable for their performance, said CN President and Chief Executive Officer Claude Mongeau yesterday during an address to the Winnipeg Chamber of Commerce.

"The challenges the grain supply is facing stem from extreme circumstances — a huge, 100-year crop and the winter of a lifetime. We can only move forward on a sound footing if the grain handling and transportation system is driven by the right incentives and accountability framework," he said, according to a press release. "Deeper supply chain collaboration and end-to-end coordination must be based on commercial and economic realities."

"Punishing" railroads with re-regulation will not help ensure more grain is moved, now or in the future, Mongeau believes. The Fair Rail for Grain Farmers Act recently proposed by the Canadian government — which would mandate the amount of grain railroads must transport each week and expand shippers' options to access different railroads — would instill more government control of the grain sector than seen for decades and turn back the clock on the significant gains obtained by farmers and other rail shippers, he said.

One of the principal challenges facing the grain transportation and handling system: the lack of proper coordination across the supply chain, Mongeau said. Due to the Canadian Wheat Board's changed role, the grain sector is experiencing growing pains in coordinating all pieces in the supply chain, from grain marketing strategies to grain handling.

Grain elevator companies ultimately are setting unrealistic expectations, yet have been vocally trying to single out railroads as the only party that needs to step up its performance to meet the harvest's challenge, Mongeau said. The federal government should either continue down the path of deregulating the grain handling and transportation system — a commercial approach that's been successful for the past 30 years — or decide to "cast the regulatory net" squarely on all supply chain participants, he believes.

"Ensuring proper coordination of the grain handling and transportation system through a regulatory approach would require the government to also regulate grain elevator companies for the benefit of Canadian farmers," Mongeau said.