(Reuters circulated the following story by Roberta Rampton on September 25.)
WINNIPEG — Canadian National Railway, Canada’s largest railway, breached its service obligations to four small grain shippers last year, the Canadian Transportation Agency said on Thursday.
The transportation regulator said the railway failed to provide enough rail cars in a timely fashion to Paterson Grain, Parrish and Heimbecker Ltd, North East Terminal Ltd and North West Terminal Ltd during the year ended July 31, 2008.
In the future, the CTA said CN Rail would have to meet prescribed performance standards for the four shippers.
“The purpose of this new performance benchmark is to ensure that CN delivers an adequate and reasonable number of rail cars on a predictable basis, unless CN is able to demonstrate that exceptional circumstances prevent it from doing so,” the CTA said in its decisions.
The agency said the railway provided adequate service during the year to the Canadian Wheat Board and Providence Grain Group Inc, which were part of the complaint.
Canadian National said the four small shippers represent only about 5 percent of its grain business, and it was happy the regulators had rejected the complaint of the wheat board, which is responsible for far more volume.
The railway was committed to working with all the shippers to make sure their service needs were met, Canadian National spokeswoman Kelli Svendsen said.
The CWB, one of the world’s largest grain exporters, is evaluating whether it will appeal the decision, Chief Operating Officer Ward Weisensel told reporters.
Weisensel said the CTA’s new benchmark sets a positive precedent for service from Canadian National to all grain shippers.
“It would be prudent on their part to be following this decision closely,” he said Weisensel.
The CTA also said railways and grain shippers should negotiate performance standards for the industry, and said it would help facilitate discussions.
Rail service is a long-standing issue for Canada’s grain industry, which relies on two national carriers to ship grain from the Prairies, one of the world’s largest exporting regions, to ports more than 1,000 km (600 miles) away.
Canadian law compels CN and Canadian Pacific Railway (CP.TO: Quote, Profile, Research, Stock Buzz) to provide adequate service to shippers. The system has been gradually deregulated since 1996.
The CWB and small shippers said CP Rail has provided much better customer service than CN Rail.
This was the second complaint in two years against CN launched by the CWB and small grain shippers. The CTA previously ruled that the railway failed to provide adequate service during the year ended July 31, 2007.
Canadian National has since changed its rail car programs to address complaints, the CTA said.
The shippers said service has improved since January, but said they would closely watch CN’s service during the upcoming peak grain shipment period following harvest.
“The rubber really hits the road for October, November, December,” Weisensel said.