The Canadian Canola Growers Association (CCGA) announced today that it has filed a Level of Service Complaint with the Canadian Transportation Agency, contending that Canadian National Railway and Canadian Pacific Railway did not fulfill their common carrier obligations for the movement of Western Canadian grains and oilseeds this crop year.
“The breakdown of the Western Canadian rail transportation system this year is completely unacceptable for grain producers,” says Brett Halstead, President of CCGA and a farmer from Nokomis, Saskatchewan. “Ultimately, it is farmers who are bearing the cost of this supply chain failure.”
CCGA has filed its complaint referencing sections 113 through 116 of the Canada Transportation Act, which states that the railways shall provide “adequate and suitable” accommodation for all traffic presented to it for carriage.
“The 2013-14 shipping record shows just how inadequate the railways have been in meeting the needs of grain shippers,” says Halstead. “Farmers simply cannot tolerate a repeat of this year’s events.”
Halstead cites a number of consequences farmers are facing as a result, including, unprecedented carryout stocks that will negatively impact the markets for several years to come; a sustained wide basis; and a potential shrinking or loss of international markets due to perceived vulnerability and ineffectiveness of the Canadian supply chain.
“A Level of Service complaint is a serious undertaking, but in the face of the dismal rail system performance it is farmers’ only recourse,” says Rick White, CEO of CCGA. “The railways cannot continue to restrict the commercial success of the Canadian grain sector and the broader national economy to fit their business plans or their historic approach to operations.”
CTA could order the railways to increase locomotive capacity, car allotment, more crews or even mandate an investment in tracks— Rick White, CEO of CCGA
The Canadian Transportation Agency will investigate the complaint and issue a determination within 120 days of receiving the complaint.
“We have compelling arguments that the railways have failed in their statutory service obligations, and we are asking the Agency for a decision,” says White. “This complaint is about clarifying the statutory obligations of the railways to provide suitable and adequate service, now and for the future.”
White says that the Canadian Transportation Agency has several options within its scope and could, following a positive ruling, order the railways to change any number of aspects to increase rail capacity. “CTA could order the railways to increase locomotive capacity, car allotment, more crews or even mandate an investment in tracks,” White says.
He adds that a positive ruling by the CTA on this service level complaint would force the railways to move past referring to how they’ve done vs. a five year average, and instead look to the future and how they will meet increasing capacity demands going forward.
While the CTA has 120 days to make a ruling and order changes, White expects legal challenges from the railways to draw out the process.