Commodities: CN, six shippers disagree on grain car program’s merits

Six Canadian grain shippers sought emergency relief from the Canadian Transportation Agency (CTA) last month after Canadian National Railway Co. introduced a grain-car allocation program.

Launched Feb. 1, the program creates a system under which grain is “pushed” from origin instead of “pulled” to destination, preventing an efficient matching of rail-car supply to ocean vessel arrival, the shippers claim.

The program also “removes accountability for the railway, as CN ultimately determines which grain elevators it services in a particular week,” the Canadian Wheat Board (CWB), North East Terminals Ltd., Parrish & Heimbecker Ltd., Paterson Grain, Providence Grain Group Inc. and North West Terminals Ltd. said in a CTA filing.

“The new system forces us to guess at our rail-car orders, risking the wrong grain moving to port at the wrong times,” said CWB Chief Operating Officer Ward Weisensel in a prepared statement. “This risks congesting port terminals and costing farmers millions of extra dollars in shipping penalties — not to mention the damage to Canada’s reputation as a reliable supplier of grain to its customers.”

CN is disappointed the CWB chose to air its arguments in the media while the issue was before the CTA, says CN spokesman Bryan Tucker.

“The CWB has deliberately chosen to mischaracterize CN’s car-ordering program, [which] provides for origin-specific demand and forward demand at the shipper’s option,” he says, adding that the program will improve operational planning and is not an allocation system.

In January, the CTA ruled that CN breached its legal obligations to provide adequate rail service to the six shippers during crop year 2006-07. The agency has asked the Class I to provide more information before assessing the railroad’s performance in the current crop year.