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Troubles in transportation resurface

by Paul Beingessner
Canadian farmer, writer

(Tuesday, Nov. 25, 2003 -- CropChoice guest commentary) -- After a decade of turbulence, grain transportation across both the Canadian and American prairies has been mostly a non-issue in this new millenium. The decade of the nineties saw a revolution in grain transportation in western Canada, mirroring, to some extent, the changes that overtook the American west in the 1980s. Freight rates were deregulated, incentive rates drove elevator consolidation, branch lines were abandoned and short line railways sprang up.

The regulatory regime in the U.S. favored the railroads at the expense of farmers and other shippers. In Canada, the environment was initially somewhat more favorable for the formation of short lines on grain dependent branch lines. In the end though, the railways have been able to substantially increase the profits they make from handling grain. While they still complain regularly about issues like fuel taxes, the fact is that Jean Chretien's Liberal government allowed the railways to gain the upper hand in many ways.

Farmers and the grain industry have been fairly quiet about rail transportation for some time now. Partly, this reflects the fact that Canada's regulator of transportation, the Canada Transportation Agency, has left little doubt in many minds that it believes the current situation needs little tweaking. The classic example of this was the three level of service complaints Naber Seeds brought to the Agency against CN. Naber won every case, but the remedies advanced by the Agency did nothing to solve the problem. The one remedy that would have shaken things up, granting running rights to a competitor, was declared a non-starter by the Agency.

Farm groups also have wearied of the constant battles over transportation. Couple this with three successive years of smaller crops and the system has scarcely been tested. Even the news media have largely forgotten about the wheel that no longer squeaks.

In truth, though, all is not quiet on the western front. Problems this year center on the supply of rail cars that CP Rail has made available for grain movement since the beginning of the crop year. Initially, grain companies with facilities on CP lines were complaining bitterly about their inability to move grain. Elevators on CN lines did not appear to have the same troubles.

Industry insiders say that CP was caught unprepared for the beginning of grain movement. Summer maintenance programs were not completed on the western prairies and these contributed to slow movement. In addition, it is claimed that CP had not anticipated that harvest would finish as early as it did, and so did not have adequate car supply and power available at the start.

The greatest hardship caused by CP in all this has no doubt accrued to producer car shippers. Some producer car loading facilities on CP lines waited nearly three months for their first cars. Several that I spoke to complained that they had already lost business as farmers grew tired of waiting for cars that never came and instead took grain to elevators, forfeiting the advantages that producer cars bring.

Producer cars have enjoyed a resurgence on the prairies. As grain companies have consolidated to a small number of points, producers have rediscovered the cost savings producer cars can bring. The Canadian Grain Commission and Canadian Wheat Board projected that producer car orders would top 10,000 this year. The uniformly good grades across the prairies have made producer cars an attractive option.

Given the slow pace of movement on CP lines, this target now seems unlikely. What is galling to producer car users on CP lines is the relative ease of shipping on CN lines. A farmer ordering a car for delivery to a point on CN could, at least recently, expect to have that car in a matter of weeks. Some farmers on CP lines tell me they have already waited three months.

It is puzzling that shippers on CP lines have not gone public prior to this with their concerns. Despite their day-to-day involvement in grain transportation, many of those involved with the new producer car facilities seem to lack understanding of how the system works. When cars do not come, they tend to point fingers randomly at the three players that affect producer cars - the Canadian Grain Commission, the CWB and the railway. Many farmers have put tremendous effort into saving branch lines and opening producer car loading facilities. They should not fail at this point because of an inability to serve their customers. Someone must be held accountable.

(c) Paul Beingessner (306) 868-4734 phone 868-2009 fax