In a decision handed down yesterday, the Canadian Transportation Agency ruled that the Canadian National Railway Company (CN) exceeded its maximum grain revenue of  entitlements in crop year 2022-23 by nearly $3.5 million. Its limit is $1.08 billion, the CTA said in a news release.

The Canadian Pacific Kansas City Railway Company (CPKC) exceeded it’s revenue limit by almost $3.4 million. Its revenue is capped at $940.5 million.

CN and CPKC have 30 days to pay the overage, plus a five per cent penalty.

By regulation, these payments go to the Western Grains Research Foundation, the news release added.

The railways moved some 60 per cent more grain this year than last year, with over 45.3 million tonnes freighted across the country. Last year, the trains moved 28.4 million tonnes.

The increase can mainly be attributed to recovery after the droughty 2021-22 season, CTA said.

In the last season, both railway firms also exceeded their revenue caps, chipping in $5.7 million to grain research.

Over the 2022-23 season, the bulk of grain moved went to Vancouver, with CN carrying a bit more than 15.1 million tonnes, and CPKC moving just over 15.4 million, according to the CTA’s written decision.

CN brought 4.8 million tonnes to Prince Rupert, just over 1.5 million to eastern Canada, totallying 24.2 million tonnes with an exchange switching adjustment.

CPKC brought 4.6 million tonnes to Thunder Bay, and nearly 861,000 tonnes to Eastern Canada with a total of 21.1 million tonnes moved, including the exchange switching adjustment.

—Geralyn Wichers is associate digital editor of AGCanada.com. She writes from southeastern Manitoba.

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Unifor, which represents about 360 Seaway workers across five locals in the two provinces, announced Thursday its members had voted to ratify a three-year agreement retroactive to April 1.

The maintenance, operations and clerical group of employees voted 85 per cent in favour, and the supervisory group 87 per cent in favour, of the agreement reached Oct. 29, Unifor said in a release.

The agreement provides for annual wage increases of five, four and four per cent plus a $2,000 signing bonus, the union said.

The successful ratification vote follows a strike that ran Oct. 22-30 and halted grain shipments and all other freight traffic on the waterway.

The St. Lawrence Seaway Management Corp., the not-for-profit organization in charge of Canadian seaway operations, said seaway staff and “marine industry partners” had worked since navigation restarted on the morning of Oct. 30 to clear a backlog of waiting vessels and the re-opening plan was “fully implemented” by Nov. 1.

The SLSMC said Thursday it would “continue to take measures to maximize the movement of vessels carrying essential cargo along the Seaway” in coming weeks, leading up to the end of the navigation season.

Expected closing dates for the 2023 season haven’t yet been announced. For its 2022 season, the Seaway closed on Jan. 1, 2023 on its Montreal-Lake Ontario section and Jan. 9, 2023 on the Welland Canal; both sections reopened for the 2023 season on March 22. — Glacier FarmMedia Network

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Unifor workers in both Ontario and Quebec walked off the job Sunday following a breakdown in talks between the union and the system operator, St. Lawrence Seaway Management Corp (SLSMC).

Negotiations with a federal mediator are slated to resume on Friday, but Devitt said there is little time to spare because the longer the seaway is closed, the bigger impact the strike will have.

“What we’re doing is calling on government and the parties involved to get this strike over as soon as possible.”

Devitt said storage capacity in southwestern Ontario, which is home to the province’s grain and soybean production, is limited because of the close proximity to port access. The strike is occurring at a particularity critical point in the harvest, he added.

“We’re in the last third of soybean harvest, and corn is just getting started in Ontario. It’s been a late start for the growing season and wet weather these last few weeks. We’ve got a huge amount of corn and soybeans that are either in the field or need to get to market,” he said.

“We rely on boats moving out the St. Lawrence around the world at harvest in Ontario.”

Port terminals in southwestern Ontario are filling up and deliveries are starting to be restricted.

Storage capacity is currently being used for soybeans, which means corn can’t be harvested and stored, Devitt said.

“If we don’t free up that room in the countryside from beans, we’re not going to have room for corn,” he said.

The strike’s impacts could reach beyond southwestern Ontario if it continues. The seaway usually closes during freeze-up in January, and the backlog could hit western grain shipments coming out of Thunder Bay if a resolution isn’t found before the New Year, he added.

The Canada Labour Code requires workers to continue serving bulk grain vessels at ports in the event of a strike or lockout, as was the case during the longshore workers’ strike at West Coast ports this summer.

The SLSMC has sought a ruling from the Canada Industrial Relations Board (CIRB) on whether that Labour Code rule applies to seaway workers in this case.

SLSMC vice-president Jean Aubry-Morin said via email Tuesday that no deadline has yet been announced for the CIRB to rule on the matter.

— Alex McCuaig reports for the Western Producer from Medicine Hat, Alta. Includes files from Dave Bedard of AGCanada.com.

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Bill C-47, the government’s budget implementation bill — which was first read April 20 in the House of Commons and got third reading in the Senate and royal assent on June 22 — includes amendments to section 127 of the Canada Transportation Act, extending rail interswitching radius within the Prairies to 160 km, up from 30 currently.

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul — that is, if the point of origin or destination of a “continuous movement of traffic” within the Prairie provinces is also within the given radius of an interchange between two companies’ rail lines.

In other words, as the Western Grain Elevator Association — which declared its support for the provision in a release Tuesday — said, it “gives shippers in all sectors who are physically located on a single rail line, the ability to automatically seek competing service and rates from an alternate carrier.”

The 18-month pilot expansion “is expected to bring about an increased level of competition among railway service providers, and represents an incremental gain for supply chains and the Canadian economy more broadly,” the WGEA said.

The budget bill calls for the interswitching pilot to come into effect on the 90th day after the bill received royal assent — that is, Sept. 20.

The previous Conservative government had set up a temporary extension of the interswitching radius to 160 km in 2014, but that extension was sunsetted in 2016.

The Railway Association of Canada, which represents almost 60 railways including Canadian National Railway and CPKC, in March ripped the current Liberal government’s plan as a resurrection of a “failed policy” that was “misguided and harmful to Canada’s supply chains.”

A number of farmer groups disagreed, launching a campaign this spring called “Flip The Switch,” calling for the budget provision to be boosted even further to a five-year pilot and a 500-km interswitching distance.

The Flip The Switch campaign partners, in a separate statement Thursday, said they “look forward to working with the government over the next 18 months to develop a path that leads to the extension of the distance and the permanent integration of this policy into Canada’s transportation framework.”

For its part, the WGEA said Tuesday that when the 18-month pilot is done, it plans to ask the federal government to make the expansion permanent, “regardless of how often physical interchanges occur.”

The association said it would also ask for an increase to the radius, so as “to give all shippers at least one other competitive shipping option.”

The interswitching provision “recognizes that competitive tension is one of the basic tenets of a well-functioning marketplace,” WGEA executive director Wade Sobkowich said.

“Shippers prefer to use the rail carrier that services their facility first and foremost, however, the provision offers an alternative when service or freight rates are less than adequate.” –– Glacier FarmMedia Network

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CP, however, is questioning the TSB’s conclusions about the braking performance of the train involved, saying those conclusions are “based on inappropriate extrapolation of data and unsupported inferences.”

The TSB on Thursday released its report into the Feb. 4, 2019 crash near Field, B.C., in which two of three locomotives and 99 cars from a 112-car train of loaded grain hopper cars derailed and crashed in steep mountain terrain, killing the three members of the train’s relief crew.

“This tragic accident demonstrates, once again, that uncontrolled movements of rolling stock continue to pose a significant safety risk to railway operations in Canada,” TSB chair Kathy Fox said Thursday in a release.

“It is obvious that more must be done to reduce the risks to railway employees and the Canadian public, reduce preventable loss of life, and increase the safety and resilience of this vital part of the Canadian supply chain.”

The TSB, in its report, calls on Transport Canada to establish “enhanced test standards and requirements for time-based maintenance” of brake cylinders on freight cars operating on steep descending grades in cold ambient temperatures.

It also calls on the transport department to require Canadian railways to “develop and implement a schedule for the installation of automatic parking brakes on freight cars,” putting a priority on retrofits for cars used in “bulk commodity unit trains in mountain grade territory.”

It also asks Transport Canada to require CP “demonstrate that its safety management system can effectively identify hazards arising from operations using all available information, including employee hazard reports and data trends; assess the associated risks; and implement mitigation measures and validate that they are effective.”

According to the TSB’s report, the train was westbound on CP’s Laggan subdivision, which runs from Calgary to Field, about 20 km west of Lake Louise. It started to descend the Field Hill just after 9:30 p.m. on Feb. 3, and while on the “steepest part of the grade,” it wasn’t able to keep its speed below at or below the 15-mph limit.

When the train reached 21 mph, the crew, following operating procedure, stopped the train using its emergency brakes at Partridge, B.C., with about nine miles of steep descending grade still to go. Brake cylinder pressure retaining valves were then set on 84 cars in the train.

With the inbound crew’s shift over, a relief crew was called in to complete the trip to Field, but that crew was delayed in arriving until about 12:20 a.m., by which time the temperature was -28 C and the train’s air brake system “had been leaking compressed air, reducing the brakes’ capacity to hold the train on the steep grade,” the TSB said.

The brake cylinders’ leakage, the TSB said, was “a situation made worse by their age and condition, and exposure to extreme cold temperatures over time” and “after being stationary on the hill for around three hours, air leakage reached a critical threshold and the brakes could no longer hold the train on the steep grade.”

Before the relief crew could start the process to get the train underway again, the train “began to creep forward, gradually accelerating uncontrolled down the steep grade.” The TSB said the relief conductor and conductor trainee left the cab at that point planning to apply hand brakes to try and stop or slow the train but were instead called back to the cab moments later by the engineer for their safety.

The train was able to make its way around back-to-back reverse curves, but eventually accelerated to 53 mph, “was not able to negotiate” a sharp curve right before the Kicking Horse River bridge, and derailed.

The TSB said it identified “a number of safety deficiencies” contributing to the crash, including the “degradation” of air brake systems in extreme cold temperatures; the “limitations” of current train brake test methodologies to account for such conditions; and the need for “additional physical defences” to prevent such uncontrolled movements.

Crew training, the TSB said, was “not specific to the unique operating conditions of the Laggan subdivision. The board also called out the “inadequacy of experience of employees supervising mountain-grade operations on this subdivision.”

The TSB also pointed to a “need for better identification of hazards through reporting, data trend analysis, and risk assessments under CP’s safety management system to support risk mitigation measures.”

‘Fully-trained’

CP, in its statement Thursday, replied that both the locomotive engineers of the inbound crew and the relief crew were “fully-trained, qualified and certified, and were well-experienced in the handling of trains on mountain grades,” and the trainmaster was also “a qualified locomotive engineer with experience on mountain grades.”

Both crews and the trainmaster “agreed on the appropriate steps to be taken in line with existing procedure,” CP said, adding that operating procedure for that specific hill was based on practices set up following “previous incidents” over two decades earlier. “This was not an issue of training and/or experience.”

CP, in Thursday’s statement, said the TSB “has erroneously concluded, based on inappropriate extrapolation of data and unsupported inferences, that the involved train exhibited poor braking performance.”

The board’s report, the company said, confirms the train “was fully functional, met all industry standards and passed all regulatory brake test inspections.”

CP further said its safety management system meets regulations and there were “no systemic hazards that were not appropriately addressed” by that system, including Field Hill train braking performance.

Given “the gravity of this incident and the tragic loss of life, it was extremely disappointing that the TSB misrepresented the facts at today’s news conference and misunderstood key facts about the incident in its report,” the company said.

CP said Thursday it would be talking to the TSB directly about those “inaccuracies and misrepresentations,” and also noted the crash is still the subject of a preliminary inquiry by RCMP. — Glacier FarmMedia Network

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The BDI settled Tuesday at 2,011 points, the highest level for the ocean freight rate indicator since January 2014. The BDI has been on a steady uptrend since hitting a two-and-a-half year low of 595 points in February.

The BDI is compiled daily by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea, including grain.

Solid demand for capesize vessels moving iron ore from Brazil has been a main driver for the index, according to industry reports. The smaller panamax class, which is often used to ship grain, is being pulled up with the larger capsize vessels as iron ore shippers facing a tight spot market are reportedly booking more panamax ships.

The panamax index on Tuesday hit 2,052 points, its highest point since December 2013.

Higher freight rates can hinder Canadian grain exports by heightening the freight disadvantage the country often faces internationally due to its distance from major demand centres, such as Asia and Europe, compared to its competitors.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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The New York firm announced Tuesday it became a member of the Investment Industry Regulatory Organization of Canada (IIROC) effective May 17, clearing the company to offer its own exchange-traded financial products in all Canadian provinces.

Services now offered in Canada include financial futures clearing and execution, over-the-counter (OTC) execution, commodity risk management planning and market intelligence in agriculture as well as foreign exchange, energy, metals, interest rates and global payments services.

The company said its Canadian arm operates a Toronto office plus a “secondary” office in Montreal serving English-, French- and Spanish-speaking customers.

Ernesto Rambaldini, CEO for INTL FCStone Financial (Canada) , said the company is no stranger to the Canadian market, already covering over one million acres of farmland in Western Canada via its Know-Risk Crop Marketing services.

Know-Risk is offered in partnership with Irricana, Alta.-based crop marketing, agronomy and consulting firm Decisive Farming, with which FCStone has had a strategic alliance in place since 2013.

INTL FCStone also already has “a significant footprint” in Canada providing hedging services to commercial grain companies, Rambaldini said Tuesday in a release.

Its new IIROC membership, he said, “will allow us to provide a more holistic offering to these agricultural producers as well as other commercial players in need of risk management tools.”

The company will also be able to cater directly to institutional investors such as pension funds, hedge funds, index funds, and commodity trading advisors (CTAs) “looking for exposure in the commodity space,” he added.

INTL FCStone bills itself as one of the largest U.S.- based commercial brokerage firms, working with companies producing and processing corn, wheat and soybeans as well as sugar, coffee, dairy, lumber, cotton and crude oil.

Its services include commodity risk management, hedging, cash grain brokerage and other marketing services for suppliers, traders, elevators and end-users such as processors.

Other divisions within the company offer merchandising services in products such as biodiesel feedstock, distillers grains (DDGs), protein meals and other feed ingredients, and grain freight brokerage services including car acquisition and rate and traffic assistance. — Glacier FarmMedia Network

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The Canadian Transportation Agency (CTA) on Wednesday announced it will set the volume-related composite price index (VRCPI) at 1.4197 for the 2018-19 crop year starting Aug. 1, a hike of 2.8 per cent.

The new VRCPI is to be applied when the CTA rules on the maximum grain revenue entitlements (MREs) for 2018-19 for Canadian National Railway and Canadian Pacific Railway (CN, CP) by Dec. 31, 2019 at the latest.

One of several factors used to set the annual MREs, the index is an inflation factor reflecting a “composite” of forecast prices for the railways’ labour, fuel, material and capital purchases.

The CTA said Wednesday the next VRCPI increase is based in part on a 3.2 per cent increase in forecasted prices for railway inputs in 2018–19.

Those forecast price hikes include “modest” increases in labour and material components. Projected increases in fuel costs and “railway investments” are seen factoring in “more robustly,” the agency said.

Offsetting those price increases, however, is a 0.4 per cent decrease the CTA reached by replacing its 2017 railway input price forecasts with actual data, and by revising its forecasts for 2018.

The annual MREs for CN and CP are calculated each year using a formula based on total grain tonnage and average length of haul, along with the VRCPI.

Any overages CN and CP make on Prairie grain in a given crop year, plus penalties, are paid into the Western Grains Research Foundation’s endowment fund, income from which is directed to research work.

The CTA in December found both railways overshot their 2016-17 MREs by a combined $6.85 million. — AGCanada.com Network

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A proposed “Transportation 2030” package of rail reforms, pledged last November by Transport Minister Marc Garneau, is expected to introduce reciprocal penalties and other measures meant to improve accountability in grain handling.

A spokesperson for Garneau on May 5 told the Manitoba Co-operator the minister is “committed to introducing legislation this spring.”

The House of Commons’ notice paper for Monday, May 15 calls for Garneau to introduce “An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts,” though no details were given on that bill’s content.

Either way, according to the Alberta Wheat Commission, coming out of a recent meeting with representatives from Transport Canada, the Transportation 2030 legislation “would be unlikely to pass before the House rises this June,” or until the fall at the earliest.

“We appreciate the government’s commitment to introduce legislation that will ensure a more responsive, competitive and accountable rail system in Canada,” AWC chairman Kevin Auch said in a release Monday.

“But the current railway accountability measures must stay place in the meantime,” he said, referring to Bill C-30, the Fair Rail for Grain Farmers Act, which was set up by the previous Conservative administration in 2014 and is due to sunset Aug. 1 this year.

Extending C-30 “will ensure we avoid a repeat of the transportation backlog that caused farmers billions of dollars in lost revenue during the fall and winter of 2013,” Auch said.

“Grain farmers have seen the positive impact of the emergency measures put in place in 2014,” Grain Growers of Canada president Jeff Nielsen said in a separate release Monday.

“We urge Transportation Minister Garneau to extend the provisions, particularly those related to interswitching, until the Transportation 2030 legislation is enacted.”

The 2014 bill, which was most recently granted an extension last year, extended interswitching rights up to 160 km for grain and all other commodities moved by shippers in the three Prairie provinces.

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul. The CTA otherwise allows shippers to use interswitching for only up to a 30-km radius.

C-30’s provisions also allow the government, if need be, to order a railway to pay compensation for expenses incurred by a shipper or affected party, in cases where a railway is found to have fallen short on level-of-service obligations.

C-30 also allows the government, if need be, to bring back mandatory minimum grain handles for both of the Big Two railways, on pain of administrative monetary penalties (AMPs) if the minimums aren’t met.

“Failing to extend Bill C-30 without new legislation being passed will severely impede the efficiency and reliability of the grain handling system and harm western Canadian producers,” three Saskatchewan farm groups said Tuesday in a separate letter to Garneau.

“Provisions in Bill C-30 such as increased interswitching distances and minimum grain volume movements are some of the only tools producers have to increase competition in the industry and hold the railways accountable,” said the groups, including Sask Wheat, Sask Barley and the Agricultural Producers Association of Saskatchewan (APAS).

The groups said they hope there is “still an opportunity for new legislation to be introduced and passed before the House adjourns for the summer.

“However, as time continues to pass, we are looking for a commitment from the Government to ensure that Bill C-30 will be extended if passing new legislation is not a feasible option.” –– AGCanada.com Network

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Pulse Canada, Grain Growers of Canada and Alberta’s crop commissions on Tuesday called on the federal government to extend provisions from the previous government’s Bill C-30.

Sunset clauses in C-30, billed as the Fair Rail for Grain Farmers Act when passed in 2014, would see the bill’s provisions end effective Aug. 1 this year — unless said clauses are postponed via resolutions passed in Parliament.

Meant to improve grain traffic from Prairie elevators to West Coast and Great Lakes/St. Lawrence ports in the wake of rail logjams in early 2014, C-30 extended interswitching rights up to 160 km for grain and all other commodities moved by shippers in the three Prairie provinces.

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul. The Canada Transportation Act (CTA) had previously allowed shippers to use interswitching for only up to a 30-km radius.

Ninety-four per cent of grain elevators are served by just one railway and the previous 30-km limit allowed just 14 elevators in that service radius to make a deal with a competing rail line, be it in Canada or the U.S.

The previous government said in 2014 that extending the interswitching limit to 160 km brought the number of eligible elevators up to 150.

Evidence is piling up that extended interswitching has directly benefited shippers, Pulse Canada CEO Gordon Bacon said in a statement Tuesday.

“Some companies are noting lower prices on certain routings,” he said, “and in cases where railways have lost business due to competition, they are actively campaigning to get it back by offering rate reductions and improved levels of service.”

The reductions in freight rates depend on the routing involved, Pulse Canada said, but the “most common” reduction it’s heard is around 20 per cent.

However, extended interswitching in many cases also allows shippers more leverage in getting rail car capacity where needed, Pulse Canada said.

“Placing car orders with a competing railway through interswitching will often make the serving railway reverse their position on car supply and provide incremental car supply to avoid the loss in market share,” the pulse industry group said via email.

“In these cases, freight rates are secondary to acquiring needed capacity for shippers.”

Pulse and special crops shippers have “only recently begun” to consider interswitching, Pulse Canada said, but “early signals” suggest those provisions are “starting to have the desired effect on behaviour.”

“It’s important to note that the measure of success of extended interswitching is not in how many times it is used, but rather its effectiveness in creating competitive forces,” Bacon said.

“There’s a lot of emphasis being placed on need for evidence that shippers have used the provision, but we need to move beyond that measure. When the desired outcome is a change in behaviour, success will mean the use of this provision is the exception to the rule.”

Pulse Canada and the grain groups made their statements in response to the February release of a major public review of the CTA.

The review, led by former Tory cabinet minister David Emerson, had called for an end to the extended interswitching rule and to the maximum revenue entitlement (MRE) that caps how much Prairie grain revenue Canada’s big two railways can keep each year.

Postponing C-30’s sunset would also buy time for government and industry to “review, assess and enter a constructive dialogue” on changes to the CTA, Pulse Canada said.

Mike Ammeter, the chairman of Alberta Barley, urged Transport Minister Marc Garneau to extend C-30’s provisions within Bill C-30 “while a long-term solution for improving our rail transportation system is developed.”

Extended interswitching and C-30’s other provisions would “keep railways more accountable for poor performance,” he said Tuesday in a separate release.

Garneau, speaking recently to the House of Commons’ transport committee, said the CTA review recommendations were complicating the government’s decision on whether to renew C-30’s provisions.

The expanded interswitching rule already survived a major court challenge in mid-January, when Canadian Pacific Railway’s September 2015 appeal against the expanded rule was dismissed at the Supreme Court of Canada. — AGCanada.com Network

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