No. H026/06
For release May 4, 2006
OTTAWA — Lawrence Cannon, Minister of Transport, Infrastructure and Communities,
today announced that the Government of Canada will retain ownership of its grain
hopper car fleet.
In November 2005, an agreement-in-principle to lease the grain hopper car fleet
to the Farmer Rail Car Coalition (FRCC) for five years was announced. The
agreement would have led to a permanent transfer at the end of that period.
However, a final agreement had not been concluded. The Government of Canada has
now decided, after due consideration, not to proceed with the transfer of the
cars to the FRCC but instead retain ownership of the fleet in order to maximize
benefits for farmers and taxpayers.
"By retaining the hopper cars, the Government of Canada will ensure clear
accountability and transparency for an efficient and effective grain handling
transportation system," said Minister Cannon. "This new deal is a better deal on
all fronts."
Amendments to the Canada Transportation Act (CTA) were introduced today in the
House of Commons to permit the Canadian Transportation Agency to adjust the
maintenance costs in the maximum revenues the railways can earn from eligible
grain shipments (revenue caps). This adjustment will apply to all hopper cars
used in regulated grain service and will more closely align the costs in the
revenue caps with the actual costs of maintaining the hopper cars in revenue cap
service. Estimates show potential savings for farmers of approximately $2.00 per
tonne.
"Farmers will benefit greatly from the government's decision to keep the cars,"
added Minister Cannon. "The amendments to the CTA will allow an adjustment to
maintenance costs in the railways' revenue caps for all hopper cars used in
regulated grain service. The savings will allow farmers to see more profits in
their business."
Taxpayers will also benefit from this decision. Each year, the government
collects between $10 and $15 million from the railways for their use of the
hopper cars in non-regulated shipments of grain and other products. By keeping
the cars, the government will continue to collect that revenue, which will be
equal to, or could exceed, the proceeds from the proposed transfer of the hopper
cars to the FRCC.
There are approximately 12,100 railway hopper cars in the Government of Canada
fleet, which form the core of rolling stock used by Canadian National Railway
and Canadian Pacific Railway to move western grain. These cars are provided at
no cost to the railways for the transportation of grain from the Prairies to the
ports of Vancouver and Prince Rupert, B.C., and Churchill, Man., for export, or
to Thunder Bay and Armstrong, Ontario, for domestic or export purposes. The
railways have day-to-day control of the cars and allocate them to grain shippers
on a commercial basis. The Government of Canada receives annual alternate-use
revenues from the railways when the cars are not used in regulated grain
service, and for fees charged when shippers do not load or unload the cars
promptly (demurrage).
With the decision to retain ownership of the fleet, the Government of Canada
will also negotiate a new operating agreement and rail car refurbishment program
with Canadian National Railway and Canadian Pacific Railway to ensure the rail
cars remain in good and safe operating condition.
- 30 -
Contact:
Cathy Cossaboom
Communications
Transport Canada, Ottawa
(613) 993-0055
Transport Canada is online at www.tc.gc.ca. Subscribe to news releases and speeches at apps.tc.gc.ca/listserv/ and keep up-to-date on the latest from Transport Canada.
This news release may be made available in alternative formats for persons with visual disabilities.
