Canada lifts minimum grain haul order

OREANDA-NEWS. Canadian lawmakers lifted a requirement that the country's two main railroads ship minimum quantities of grain, but they said the order could be reinstated at any time.

A year ago the Canadian government mandated minimum volume grain shipments to protect the country's grain industry. Canadian National and its competitor Canadian Pacific were required to move a minimum 536,250 short tons (486,432 metric tonnes) of grain products/week or face financial penalties.

After the harsh winter of 2013-2014 and a large grain harvest Canadian carriers developed a backlog of grain shipments. The regulations levied fines of up to C\$100,000/week (US\$90,000/week) for failing to meet the requirements. Canadian officials said that requiring a minimum volume continues to be an option.

Transport minister Lisa Raitt said, "I am pleased that the government's action requiring minimum volumes had its intended effect and that the movement of grain by rail is once again running at a rate that contributes to strong economic growth." The government will still work with shippers and producers to ensure that the efficiency of the supply chain improves, she said.

Grain shipments from western Canadian ports rose by 31pc under the order, and were 25pc higher than the five-year average. The two railroads exceeded minimum transport requirements by 5.5mn t. Provisions in the law that expanded customer switching allowed shippers access to more rail lines and farmers to retain the right to negotiate delivery contract penalties.

A 7 March 2014 order mandated the minimum volumes, later extended in the May 2014 Fair Rail for Grain Farmers Act. Other regulations required new volume reporting, clarifications in service agreements and extended the limit for rail inter-switching from 30km to 160km in Prairie provinces.