CN and CP face monetary penalties

CN and CP face monetary penalties
Jan 02, 2019

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The Canadian rail companies exceeded their maximum revenue entitlements for the 2017-18 crop year

By Kate Ayers
Staff Writer

The Canadian National (CN) and Canadian Pacific (CP) railway companies’ profits were above their respective maximum grain revenue entitlements (MREs) last year, the Canadian Transportation Agency (CTA) said.

Indeed, CN’s grain revenue was $1,047,285 above its entitlement and CP’s revenue was $1,500,513 above its allotment, a CTA determination found on Monday.

The rail companies must pay these amounts and a 5 per cent penalty within 30 days. The penalties equate to $52,364 for CN and $75,026 for CP, CTA’s release said. CN and CP will make the payments to the Western Grains Research Foundation, a farmer-financed and directed group that supports research to benefit Prairie producers.

Despite exceeding their MREs, the companies moved 6 per cent less grain in 2017 and 2018 than they did during the previous crop year, the release said.

In the 2017-2018 crop year, rail companies moved 40,618,285 tonnes of Canadian grain and the average haul length was 1,534 kilometres (953 miles). This distance did not change between the two crop years.

MRAs are calculated using factors outlined in the Canadian Transportation Act, including tonnage of grain hauled and average length of haul. The entitlement is a form of economic regulation that allows CN and CP to establish their own rates for services, the release said.  

However, the total profits these companies bring in from grain shipments during the crop year must remain below a ceiling set by the CTA.

The agency is an independent, quasi-judicial tribunal and regulator. It makes and enforces rules for transportation providers and users, levels the playing field among competitors and plays a role in dispute resolution, CTA’s website said.

Satephoto/iStock/Getty Images Plus photo


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