CTA report: CP fell below, CN climbed above grain revenue cap in latest crop year

The Canadian Transportation Agency (CTA) recently determined that Canadian Pacific was under and CN was over the federally set grain revenue caps for the 2013-14 crop year. The Class Is moved 18.8 percent more grain in the crop year.

CP's grain revenue of $623.6 million was $1,653,714 below its cap and CN's grain revenue of $672.1 million was nearly $5 million above its cap.
 
CN now has 30 days to pay the amount by which it exceeded the cap, in addition to a 5 percent penalty of $249,096, CTA officials said in a press release. Government regulations stipulate that such payments must be made to the Western Grains Research Foundation, a farmer-financed and directed organization that funds research benefitting Prairie farmers.

In the crop year, 38,461,953 tons of Western grain were moved, with an average length of haul of 945 miles, one mile higher than the previous crop year, CTA officials said.

The Canada Transportation Act requires the CTA to set each railroad's maximum revenue cap annually and determine whether each cap was exceeded. The cap 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 remains below the ceiling set by the agency, CTA officials said.

CN is reviewing the CTA's calculations. Western Canadian grain is the only commodity CN transports that is subject to a revenue cap imposed by government legislation, CN officials said in an emailed statement.

The railroad moved strong volumes of western export grains in the 2013-14 crop year – 19.2 million metric tons — which was 20 percent greater than the tonnage moved in the previous crop year and the five-year average of 16 million metric tons, and 12 percent greater than the previous best tonnage under the revenue cap regime of 17.1 million metric tons set in 2011-12, they said.

"CN is fully in sync with the grain supply in Western Canada, where end-to-end balance has been restored, and continues its record-setting grain movements in the 2014-15 crop year," CN officials said.