CN, CP exceeded grain revenue limit for 2016-17 crop year

CN and Canadian Pacific have exceeded their maximum grain revenue entitlements for crop year 2016-2017, the Canadian Transportation Agency (CTA) ruled last week.

CN's grain revenue of CA$808,213,784 was $5,773,741 above its entitlement of $802,440,043; and CP's grain revenue of CA$725,457,448 was $1,078,947 above its entitlement of $724,378,501, CTA officials said in a press release.

The Class Is have 30 days to pay the amount by which they exceeded the entitlements, in addition to a 5 percent penalty of $288,687 for CN and $53,947 for CP. Regulations require the railroads to make such payments to the Western Grains Research Foundation.

In the 2016-2017 crop year, 43,196,615 metric tons of Western grain were moved — 6.9 percent more than the volume moved during the previous crop year. The average length of haul of 953 miles was 2 miles, or 0.2 percent, higher than the previous crop year, according to the CTA.

The Canada Transportation Act requires the CTA to determine each railroad's annual maximum revenue entitlement and whether each entitlement has been exceeded. The maximum revenue entitlement is a form of economic regulation that enables CN and CP to set their own rates for services, provided the total amount of revenue collected from their shipments of Western grain remains below the ceiling set by the agency.