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CN, CP Exceed 2019-20 Grain Revenue Entitlements

After falling below their entitlements the previous year, Canada’s two national railways both exceeded their grain movement revenue caps in 2019-20.
 
According to a release Tuesday from the Canadian Transportation Agency (CTA), Canadian National’s actual grain revenue of $933.5 million in 2019-20 was about $3.1 million above its limit, while Canadian Pacific’s grain revenue of $999.2 million was $2.1 million above.
 
For the 2018-19 crop year, CN was approximately $371,000 below its entitlement, while CP was about $764,000 below.
 
CN and CP now have 30 days to pay the amount by which they exceeded their 2019–2020 revenue entitlements, in addition to a 5% penalty of $158,531 for CN and $108,501 for CP. Regulations require these payments go to the Western Grains Research Foundation, a farmer-financed and directed organization set up to fund research that benefits Prairie farmers.
 
The two railways combined moved just over 48 million tonnes of grain in 2019-20, up 4.3% from a year earlier. The average length of haul was 965 miles – 1.4% lower than the previous crop year.
 
The Canada Transportation Act (Act) requires the CTA to determine each railway company’s annual maximum revenue entitlement, and whether each entitlement has been exceeded. The maximum revenue entitlement is a form of economic regulation that enables CN and CP to set their rates for services, provided the total amount of revenue collected from their shipments of Western grain remains below the ceiling set by the CTA.
 
Entitlements are calculated using a formula containing numerous elements, including railway labour, fuel, material, capital purchases by CN and CP and the actual tonnage of grain that was hauled and the average length of haul.
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