Canadian Pacific Railway Ltd. is calling for an end to a government-imposed limit on revenues the country’s two major railroads can make hauling grain in Western Canada, a measure designed to protect farmers from soaring shipping costs. “The removal of the [regulation] would allow for increased investment, capacity, and overall competitiveness in the grain supply chain,†said CP, noting commodity prices have risen by 166 per cent since 2000 while the railway’s freight rates have gone up by less than 6 per cent. “Canadian rail rates are the lowest in the world.†CP said removing the cap would allow it to replace its fleet of 5,500 grain cars – which average 35 years old – with new hoppers that can carry 25 per cent more grain per train. “Removing the grain revenue entitlement is a risky proposition,†said Wade Sobkowich, president of the Western Grain Elevator Association, which includes Cargill Ltd. and Richardson International Ltd. The grain group said the rule does not prevent railways from moving more grain, nor investing in hopper cars. The rule, they say, simply limits the amount the railways can charge per tonne – not the overall amount of revenue it can make from moving crops – and ensures the rise in freight rates is in line with inflation. “There is no evidence to show that shippers would get better service if it were eliminated. In fact, there is existing evidence that poor service and insufficient capacity would remain,†Mr. Sobkowich said. Claude Mongeau, CN’s chief executive officer, told the Globe and Mail last year the revenue rule discouraged spending on its grain operations. Mark Hallman, a CN spokesman, said the Montreal-based company had not yet made its submission to the review panel, and would not elaborate on its contents nor comment on the freight rate regulation. “CN’s submission to the panel will focus on what is required, including the proper regulatory regime, to help all sectors contribute to Canada’s trade and economic growth, and on the importance of a commercial environment to sustain investments and innovation,†Mr. Hallman said in a statement.
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