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AWC recommends standardized reciprocal penalties and measures to increase interswitching to improve grain transportation

(Calgary, Alberta) –The Alberta Wheat Commission (AWC) has recommended the development of standardized reciprocal penalties along with measures to increase the utilization of interswitching between rail lines as its prescription for improvements to Canada’s grain transportation system.

The recommendations are contained in AWC’s final submission to the Canada Transportation Act (CTA) Review Panel.

Under the proposals, shippers could impose charges of $150 - $250 per car per day for delayed spotting of empty railcars and $100 and $150 per car per day for delays in movement of loaded railcars, depending on seasonal demand. Both measures are equivalent to tariffs currently imposed by the railways on grain companies for system delays.

"These recommendations quantify for the first time our vision for reciprocal penalties as a tool to increase railway accountability," says AWC Chair Kent Erickson. "They will help level the playing field within the supply chain and generate efficiencies through competition."

Standardized reciprocal penalties should increase accountability by all parties in moving farmers’grain to our customers. Without this change, the lack of accountability gets forced back up the chain and onto farmers through delayed delivery opportunities and lower prices, Erickson added.

AWC recommends the penalties be implemented through either Standardized Shipper Asset Use Tariffs through the Canadian Transportation Agency or Standardized Service Level Agreements (SLAs) between shippers and carriers.

Erickson says the measures are positioned to encourage competitive behavior by the railways to drive efficiencies, lower shipper risks and ultimately develop foreign markets for Canadian exports through reliability and cost effectiveness.

To improve utilization of interswitching, AWC is proposing public funding be considered from the Building Canada Fund to increase interchange capacities combined with an interswitch tariff to monitor interchange movement. While interswitching zones have recently been increased to 160 kilometers in Canada there is little incentive to utilize the majority of interchanges that have less than 100 car capacity.

For example, 100 cars can be interchanged in Saskatoon from CN to CP or vice versa. In Calgary, where the interchange capacity is just 60 cars, the additional freight cost is up to $301 per car. Shipping through interchanges in less than 50 car blocks can cost up to $645 more per car.

"With a sufficient tariff monitoring system in place, we believe railways and shippers will have an incentive to interswitch traffic and each entity will strive towards the common goal of having a second-to-none grain transportation system."

The full text of AWC’s submission to the CTA Review Panel can be viewed at http://www.albertawheat.com/awc-submission-to-cta-review/.

The Alberta Wheat Commission is a producer-directed organization dedicated to improving the long-term profitability of Alberta’s 14,000 wheat producers www.albertawheat.com

 

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