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1/21/2008



Rail News: Rail Industry Trends

CN didn't meet service obligations for six grain shippers in prior crop year, feds say


The Canadian Transportation Agency (CTA) last week ruled that Canadian National Railway Co. failed to meet its service obligations to the Canadian Wheat Board (CWB) and five other western grain shippers during crop year 2006-07.

In September 2007, the CWB, North East Terminal Ltd., Parrish & Heimbecker Ltd., Paterson Grain, Providence Grain Group Inc. and North West Terminal Ltd. filed service complaints against CN with CTA pertaining to crop years 2006-07 and 2007-08. The shippers took issue with CN's 2006 decision to provide most of its advance-booked grain hopper cars in blocks of 100 and book the blocks for 42 consecutive weeks to a single destination. The car supply program essentially prevented participation by smaller shippers and those without multiple terminals, the shippers argued.

"Farmers rely on adequate rail service to move their grain to port," said CWB President and Chief Executive Officer Greg Arason in a prepared statement. "If the rail-car programs introduced by CN in 2006 had been allowed to continue, it would have had major repercussions for producers and for most of western Canada's grain shippers."

After the complaints were filed last year, CN made changes to its car supply system, such as by withdrawing the 100-car block booking program. However, CTA officials in last week's ruling expressed concern that service shortfalls continue to occur in crop year 2007-08.

The agency determined it doesn't have sufficient information at this time to rule if CN has met service obligations in the current crop year. CTA ordered CN and the six shippers to file service information covering the period between August 2007 and April 2008 so the agency can make a final determination later this year.


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