OTTAWA - September 25, 2008 - The Canadian Transportation Agency ruled today on complaints received from six shippers that the Canadian National Railway Company (CN) was not meeting its obligations under the Canada Transportation Act to provide an adequate and reasonable (suitable) level of service for the movement of Western grain for crop year 2007-08.
The Agency found that CN has not breached its level of service obligations to the Canadian Wheat Board and Providence Grain Group Inc.
However, the Agency found that CN has failed to provide an adequate and reasonable level of service to North East Terminal Ltd., Paterson Grain, Parrish and Heimbecker Limited, and North West Terminal Ltd.
Based on the pleadings of the parties and all information submitted, the Agency determined that a performance benchmark should be applied as a basis for determining whether CN is providing an adequate and reasonable level of service. The benchmark is comprised of three components:
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Number of rail cars requested by the shipper and confirmed for delivery by the railway company. This provides shippers with certainty that they will receive a reasonably high number of rail cars based on their order;
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Timeliness and predictability of the delivery of confirmed rail cars. This takes into account the shippers' "want" date and the actual delivery date of the cars and provides the shipper with the predictability it needs for planning purposes; and
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Recognition of factors that affect railway performance such as weather, terminal unloads, excessive demand for rail cars in peak periods, operational restrictions and derailments. While shippers need a reasonable level of certainty for planning their operations, the ability of a railway to provide a level of service may be compromised for short periods of time by circumstances beyond its control and will need some time to return to adequate and reasonable service levels.
To remedy the situation for North East Terminal Ltd., Paterson Grain, Parrish and Heimbecker Limited, and North West Terminal Ltd. for crop years 2008-2009 and beyond, the Decision orders CN to provide a level of service to these four shippers as set out in the performance benchmark.
Effective immediately, CN must:
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confirm a minimum of 80 percent of the grain shippers' requested rail cars;
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deliver 90 percent of these confirmed cars on time or in the subsequent two weeks; and
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meet these performance standards on a 12-week rolling average throughout each crop year. CN is still obligated to deliver all remaining confirmed rail cars.
"The purpose of this new performance benchmark is to ensure that CN delivers an adequate and reasonable number of rails cars on a predictable basis, unless CN is able to demonstrate that exceptional circumstances prevent it from doing so. The performance benchmark specifies a required outcome but the Agency will leave the means of achieving this outcome to CN's discretion," states the Decision.
This performance-based approach builds on previous Agency Decisions dealing with breaches of level of service obligations, namely Great Northern Grain Terminals Ltd. vs CN (Decision No. 344-R-2007, July 6, 2007 ) as well as in its January 18, 2008 conditional rulings on these six complaints.
While the Agency has found that a performance-based benchmark provides a sound basis for determining if a shipper is receiving adequate and reasonable service, the benchmark established in this Decision is based on the circumstances and factors relating to the six complaints. Therefore, the remedy ordered is applicable only to the four named shippers.
The Agency encourages railway companies and grain shippers to enter into a dialogue with the goal of setting performance-based standard levels which would benefit the Western grain industry as a whole, and is prepared to assist in facilitating such a dialogue should the parties find this helpful.
The Canadian Transportation Agency is a quasi-judicial tribunal which acts like a court and is responsible for helping achieve an accessible and efficient transportation system. Its decision-making process is governed by the rules of fairness and natural justice. The Agency deals with, among other things, rate and service complaints arising in the rail industry; disputes between railway companies and other parties; applications for certificates of fitness for the proposed construction and operation of railways; approvals for railway line construction; regulated railway interswitching rates; and revenue caps for the movement of Western grain by rail.
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Copies of the Decision can be obtained by contacting the Canadian Transportation Agency.
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