CN and CP Bottlenecks Hurting Grain Farmers

Competition by the oil industry for railway track space is causing a major backlog in grain shipments by CN and CP. That’s what grain farmers across Canada are saying as they see their bumper crops piling up at grain elevators because CN and CP can make more money hauling crude oil and other dangerous goods. This bottleneck is triggering a drop in grain prices. Shipping vessels are leaving ports empty, waiting in vain for grain shipments that aren’t arriving by rail. Grain companies are charged up to $18,000/ship in penalties for every day a ship has to sit and wait for trains to bring the grain.

Last year, grain farmers saw a 33% increase in crop yield above 2012 levels, but CN and CP aren’t responding with an adequate number of grain cars. Farmers are calling the rail service abysmal. Even when railways do fill elevator orders, only 27% of the cars are delivered on time, and railways are leaving their cars at elevators up to 11 days. Alberta’s Agriculture Minister says railway companies that fail to meet their grain-shipping commitments should pay financial penalties. The federal Agriculture Minister says the existing grain transport system is broken, calling railways the “weak link” in the supply chain. He is considering all options to fix the problem including legislation to force CN and CP to fulfill their commitments to grain farmers. Currently, the railways call almost all of the shots and aren’t penalized for breaking their grain-hauling commitments.

The federal government and the grain industry have agreed to co-fund a study of grain backlogs in an attempt to improve the situation. Unfortunately, the rail industry is not providing any funding to the study, inspite of CN and CP causing the problem in the first place. Once again, the rail transport monopolies held by CN and CP in Canada are hurting a major sector of our economy; however, at the same time stock prices for both rail giants continue to climb. Sources for this story include: CBC News, Edmonton Journal 1, Edmonton Journal 2, Edmonton Journal 3, Edmonton Journal 4.

~ by railroaded on February 25, 2014.