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The Canadian Transportation Agency (CTA) has announced its determination of the Volume-Related Composite Price Index (VRCPI) for CN at 1.4202 and for Canadian Pacific at 1.4205 for the 2020-21 crop year as of Aug. 1.
This year's determination represents a decrease in the VRCPI over the last crop year of -2.04 percent for CN and -7.22 percent for CP, CTA officials said in a press release.
The index is used in determining CN's and CP's maximum revenue entitlement (MRE) for the movement of western grain. The MRE is a limit on the overall revenue that can be earned by CN and CP for shipping regulated grain.
Changes in the new year's index stem primarily from expected declines in fuel and labor costs. The larger decline in CP's VRCPI is attributed to the inclusion of debt raised for the purposes of share buyback. This activity is accounted for in determining both railroads' cost of capital, which is part of the VRCPI calculation, CTA officials said.