Canada’s two largest railway companies have gone over their grain revenue limits despite moving less volume.
With the end of 2018, the Canadian Transportation Agency (CTA) found that Canadian National Railway (CN) and Canadian Pacific Railway (CP) each exceeded their maximum grain revenue entitlement (MRE) for the 2017-18 crop year, which ended on June 30.
In a release from the CTA, CN’s revenue was slightly more than $1 million over its entitlement of about $787 million while CP went over its nearly $708 million entitlement by over $1.5 million. All of this while both companies transported six per cent less grain to port — about 40.6 metric tonnes — than in the previous crop year.
“The MRE’s purpose is to place a ceiling on the total amount of revenue that CN and CP can earn from the movement of regulated grain and should not have any impact on grain delivery,” explained Trinh Phan, CTA media relations officer in an email.
The revenue cap was legislated back in 2000 as way to balance giving the railways the opportunity to set their own shipping rates instead of imposing a ceiling on those rates. While CP has exceeded its cap for the last four crop years, CN has gone over the cap for the last five — including eclipsing the limit in three of those years by $5 million or more.
Both railway companies have until the end of January to forward those excess revenue amounts to the Western Grains Research Foundation (WGRF) — as per legislation — along with an additional five per cent penalty. For CP that amounts to an extra $75,000 while CN will add on another $52,000, all of which will help fund further research and development for the farmer-directed WGRF.
CP did respond to a request for comment, however, the company only provided a prepared statement from Murray Hamilton, assistant vice-president of grain sales and marketing, that was issued in early December and failed to address the revenue issue or the lack of volume delivery.
There was no response from CN by press time to a request to speak on the subject.
The Canadian Transportation Agency is an independent, quasi-judicial tribunal and regulator which has, with respect to all matters necessary for the exercise of its jurisdiction, all the powers of a superior court.