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CN and CP exceed grain revenue entitlements

08 Jan 2019

CANADA: The Canadian Transportation Agency has ruled that Canadian National and Canadian Pacific exceeded their maximum grain revenue entitlements for the crop year running from August 2017 to July 2018.

The Canada Transportation Act requires the CTA to set an annual limit to the average revenue per tonne which the two federally-regulated railways can generate from grain traffic to Thunder Bay, Armstrong, Churchill or ports in British Columbia from anywhere west of Thunder Bay or Armstrong in Ontario. This is intended to provide shipping price protection for farmers.

The railways’ entitlements are calculated using a formula which includes the tonnage of grain hauled, the average length of haul and forecast price changes for labour, fuel, material and capital purchases.

CN’s grain revenue in 2017-18 of C$788 062 078 was 0·13% above its entitlement, while its average haul was 1 620 km, and CP’s grain revenue of C$709 499 416 was 0·21% above entitlement and its average haul 1 441 km.

The two railways must now pay the Western Grains Research Foundation the amount by which they exceeded their entitlements, plus 5%.

CP and CN moved 40 618 285 tonnes of Western grain in 2017–18, 6·0% down on the previous crop year. The average length of haul was unchanged.