Federal Court adds some competition to the transportation system
By Harry Siemens, www.SiemensSays.com
While not the full cup, the Western Canadian Wheat growers are pleased with federal court decision upholding competitive rail measure. Last week, the Voice reported on how the biggest railway in the world, BNSF, used competition, incentives, and market devices to get the freight moving. All novel ideas for much of the transportation system in Western Canada.
The Wheat Growers says the Federal Court decision released this week which upheld a ruling giving Parrish & Heimbecker, Limited (P & H) the ability to gain competitive access to BNSF Railway on its grain shipments to the United States, is a start and a move in the right direction.
The initial ruling by the Canadian Transportation Agency (CTA), issued on May 1, 2013, ordered Canadian Pacific Railway (CP) to interchange traffic with the BNSF Railway at the interswitching rate prescribed by regulation under the Canada Transportation Act. Under the Act, shippers can apply for goods to be shipped at an interswitching rate whenever their shipping point is located within a specified distance of an interchange with another railway. Initial, government set the distance at 30 km at the time of the CTA ruling, but has since increased to 160 km for grain and other shippers in western Canada, following passage of the Fair Rail for Grain Farmers Act last year.
The one also designed to get the botched up grain traffic moving to market in a more timely manner.
The CTA decision and Federal Court ruling applies to shipments from the Parrish & Heimbecker elevator at Milk River, AB, about 20 km from the CP interchange with BNSF at the border crossing at Coutts, AB.
Other shippers within 160 km of the interchange will also be able to take advantage of an interswitching rate, which does vary depending on the distance to the interchange.
Wheat Growers president, Levi Wood of Regina, Sk says by the Federal Court upholding the Agency decision, the interswitching provision introduces a modest but important element of competition in the rail sector.
Wood says the Decision by the Agency gives P & H the ability to ship grain on the CP track to the Coutts interchange at the prescribed interswitching rate of $315 per car (approximately $3.50 per tonne) which is far below the commercial rate that CP wished to charge of $1,373 per car (approximately $15.25 per tonne).
"The difference in rates of almost $12 per tonne improves the return on shipments to the U.S. market and gives P & H the ability to offer better prices to Canadian farmers," says Wood. “Other shippers within the 160 km interswitching distance will also benefit from this ruling. Having the interswitching provision improves our industry's competitiveness, while providing adequate compensation to the Canadian railway for its portion of the haul."
The Wheat Growers says the CTA made a similar ruling in a case that involves Richardson and its application to gain access to an interswitching rate on grain shipments from its elevator on a CN line near Letellier, to an interchange with BNSF Railway at the border crossing at Emerson. CN has appealed that ruling. The Wheat Growers hope the Federal Court ruling in the P & H case will establish a precedent and give Richardson and other companies the ability to access the BNSF network at competitive rates.
"The Wheat Growers applaud P & H and Richardson for taking these costly actions that ultimately serve them and the interests of farmers," says Wood.
When asked why the two railways in Canada are so reluctant at letting more competition into the transportation mix, instead of less, Wheat Growers executive director Blair Rutter says CP and CN buck this because it introduces competition.
“No surprise there – no business likes it when their customer can go to a competitor at a reduced cost and/or get better service,” says Rutter. “The Canadian railways want as little competition as possible -- it allows them to haul other commodities first (especially those that are at risk of going by truck) and haul grain when it suits them.”
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