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Rail News: Federal Legislation & Regulation

Canadian government adopts measures to get more export grain moving by rail

Canada Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz on Friday announced new measures the Canadian government will undertake to help prompt the movement of more export grain by rail.

This year’s Western Canadian grain crop is 50 percent higher than the annual average, a volume that's placing pressure on the region's grain handling and transportation system.

The Canadian government will set minimum volumes of export grain that CN and Canadian Pacific must move and require the railroads to report their weekly shipments to Raitt. CN and CP also will be required to increase the volumes they move each week, over a period of four weeks, to a combined target of 1 million metric tons per week — more than doubling the volume currently being moved, Raitt and Ritz said in a press release.

The federal order places legal obligations on the railroads and sets penalties for non-compliance at up to $100,000 per day.

“For the past several months, the bumper crop of grain produced in Canada has not been moving fast enough to Canadian ports. This issue affects more than just our farmers — it affects trade and Canada’s ability to supply our markets around the world," said Raitt. "We are taking this action to more than double grain shipments in order to preserve the integrity of Canada’s transportation system and our reputation as a global supplier."

CN plans to "do its part" to meet the challenge of moving the 100-year record grain crop, officials at the Class I said in a prepared statement. However, the railroad will need to move 10 million more tons of export grain, or 50 percent more than for any other crop, and moving this year's record grain crop has been more difficult because of extreme winter conditions, CN officials said.

"No supply chain in the world can reasonably be expected to handle a 10 million ton increase in traffic on such short notice. It takes eight months to on-board and train a crew member, and seven to eight months to acquire cars and locomotives," said CN President and Chief Executive Officer Claude Mongeau.

CN's assessment shows that an upper limit of about 5,500 cars per week may be achievable — as soon as weather conditions permit — if all members of the supply chain work closely together, he said.

"We all have to recognize that the challenge we jointly face is unprecedented, and it will require a new level of collaboration to succeed," said Mongeau.

Ritz also announced that the government plans to introduce legislation when Parliament returns to establish measures that will help ensure "Canada maintains a world-class logistics system that gets agricultural products to market more efficiently," he said.

However, Mongeau believes more regulation governing grain transportation is "both ill-advised and seriously counter-productive."

"More regulation would lead to adversarial relationships within the supply chain, at a time when collaboration is essential," he said. "Sound policy calls for exactly the opposite: a more collaborative and commercial framework is what Canada needs to support a world-class grain growing sector."

Contact Progressive Railroading editorial staff.

More News from 3/10/2014