Canadian Grain Industry Pushing for Market-Driven Rail Reform

Canadian railways, including the country’s two biggest Canadian National Railway (CN) and Canadian Pacific Railway Ltd. (CN), are welcoming the elimination of the imposed minimum grain volumes, stating that it gives the companies greater flexibility and reduces operating restrictions.

The regulations were enacted in response to complaints by farmers and grain handlers claiming that poor rail service was bottlenecking grain shipments to foreign buyers and damaging the country’s reputation as a reliable source of grain and trading partner. The rail companies countered that the harsh winter forced them to run shorter trains at slower speeds for safety reasons.

The country’s Western Grain Elevator Association, which represents major grain handling companies including Viterra and Cargill, is urging the government in its review of the Transportation Act, to create a system that better links railway service levels to demand. The group is also seeking the ability to reach contract with railways that specify weekly car orders, and the use of a government arbitrator to settle disputes.

In the long term, Wade Sobkowich, executive director of the Western Grain Elevator Association states it is necessary for the country to create permanent measures to replace the minimum shipment thresholds that would ensure Canada shifts to a demand-based logistics system, and away from one that depends on the availability of rail cars. However, this cannot be achieved with the railway networks as they stand now. Capacity must be increased in order to expand the country’s economy.