Back in 1897 Canadian Parliament authorized the Crowsnest Freight Rate to finance Canadian Pacific's construction through Crowsnest Pass warding off American rail interest. In exchange for government financing CP would charge low rates for shipping Western Canadian wheat East to the Great Lakes. In addition to giving them cheap rates for farm equipment heading West. The CFR was terminated in 1995.
Fast forward to the present.. The Canadian Transportation Act created in 1996 allows CTA to set a market cap on grain rates set by CN, and CP. From what I recall CN, and CP have generated revenue above caps set by the CTA a few times. CN, and CP must pay a penalty that exceeds the Maximum Revenue Entitlement plus 5% on top of MRE. The amounts that exceed the MRE go to agriculture reaserch.
So what I get from this act is just a modified version of the original CFR...This is supposedly meant to protect Western Canadian grain growers from "excessive rates". I guess I'm somewhat lost as to why this is needed as there is competition in Western Canada when it comes to shipping grain. What about farmers who are not apart of grain pools in Western Canada? Are they susceptible to this "relief"? Anyone familiar with this situation. Your input would be much appreciated..
Here's a link to a recent Railway Age article
SD60MAC9500 Back in 1897 Canadian Parliament authorized the Crowsnest Freight Rate to finance Canadian Pacific's construction through Crowsnest Pass warding off American rail interest. In exchange for government financing CP would charge low rates for shipping Western Canadian wheat East to the Great Lakes. In addition to giving them cheap rates for farm equipment heading West. The CFR was terminated in 1995. Fast forward to the present.. The Canadian Transportation Act created in 1996 allows CTA to set a market cap on grain rates set by CN, and CP. From what I recall CN, and CP have generated revenue above caps set by the CTA a few times. CN, and CP must pay a penalty that exceeds the Maximum Revenue Entitlement plus 5% on top of MRE. The amounts that exceed the MRE go to agriculture reaserch. So what I get from this act is just a modified version of the original CFR...This is supposedly meant to protect Western Canadian grain growers from "excessive rates". I guess I'm somewhat lost as to why this is needed as there is competition in Western Canada when it comes to shipping grain. What about farmers who are not apart of grain pools in Western Canada? Are they susceptible to this "relief"? Anyone familiar with this situation. Your input would be much appreciated.. Here's a link to a recent Railway Age article
Well, ya' know, the government got to protect those mean old railroads from the evils of free market competition.
There are a number of fallacies in the view of the Crownest grain rates by the Canadian Prairie farmers. At the time they were established CPR was the only railway in most of the Canadian west, and did have monopoly power. To protect against US encroachment there was a need to build another line south of the original CPR, closer to the international border, and the farmers had visions of a competitive railway. Unfortunately for the government CPR was the only railway that was available at the time. The solution was the Crowsnest Pass agreement with the CPR to accept a rate that would be a typical commercial rate if competition existed. Unfortunately nobody thought to include indexing for inflation......
Fast forward to the 1980s. The efficiencies of larger freight cars, more powerful locomotives, and then dieselization had kept the rate compensatory up to the 1950s, but then inflation took off. The original agreement only applied to the CPR as it existed about 1898, but the government unilaterally extended it to the rest of the CPR and also the other railways that formed part of CN. By the 1970s there were various bandaid programs to help the railway deal with the money-losing traffic. The eventual solution was to scrap the Crowsnest rate, but as a sop to the farmers the Maximum Revenue Entitlement was created. Note that the farmers would have been irate if it had been suggested that they sell the family farm for what it had cost in 1898 (or 1913), yet they expected the railway to haul their grain at that ancient rate.
Oh yeah I deal with this on a daily basis whenever I talk to broker's about rates. Y
They still think it only costs 90 cents to a dollar a mile to cover the costs of an OTR trucking company. This year I think our break even was 1.55 a mile for everything. They scream if they had to make a decision about getting loads covered or selling them as cheap as possible. Luckily for us anymore we're dealing with our own shipper contracts since we've got the lanes that need service. Getting loads back to the Chicago area is not a problem for almost any of our return shippers from our largest outbound areas.
Farmers being farmers and this being the 21st Century - they expect Free Shipping as does any consumer using the internet as the 'Department Store'.
Never too old to have a happy childhood!
MikeInPlano SD60MAC9500 Back in 1897 Canadian Parliament authorized the Crowsnest Freight Rate to finance Canadian Pacific's construction through Crowsnest Pass warding off American rail interest. In exchange for government financing CP would charge low rates for shipping Western Canadian wheat East to the Great Lakes. In addition to giving them cheap rates for farm equipment heading West. The CFR was terminated in 1995. Fast forward to the present.. The Canadian Transportation Act created in 1996 allows CTA to set a market cap on grain rates set by CN, and CP. From what I recall CN, and CP have generated revenue above caps set by the CTA a few times. CN, and CP must pay a penalty that exceeds the Maximum Revenue Entitlement plus 5% on top of MRE. The amounts that exceed the MRE go to agriculture reaserch. So what I get from this act is just a modified version of the original CFR...This is supposedly meant to protect Western Canadian grain growers from "excessive rates". I guess I'm somewhat lost as to why this is needed as there is competition in Western Canada when it comes to shipping grain. What about farmers who are not apart of grain pools in Western Canada? Are they susceptible to this "relief"? Anyone familiar with this situation. Your input would be much appreciated.. Here's a link to a recent Railway Age article Well, ya' know, the government got to protect those mean old railroads from the evils of free market competition.
But now they are penalizing railroads for being efficient, thereby indirectly helping truckers.
This taking of "excess" profits is very confusing. Even though it is Canadian law I wonder if such a law would have survived a test in the USA courts? That being said does this take back include any revenue gained from US operations such as grain shipments to the gulf coast?
Suspect that the paper companies of CN in the USA might insulate CN from take backs?
Lithonia OperatorBut now they are penalizing railroads for being efficient, thereby indirectly helping truckers.
This isn't about 'penalizing' railroads as much as finding an opportunity to look like benefiting 'farmers'. (Or powerful agricultural constituencies pretending to be 'farmers', but let's not go there yet.) I suspect that if greyhounds' research went back into the pre-1900 government and ICC decades he would find many examples of populist pandering or quid pro quos far more glaring and far more confiscatory in intent...
more confusion. Does this take back go to the farmers or does it go to the Canadian government or Province?
blue streak 1 more confusion. Does this takeback go to the farmers or does it go to the Canadian government or Province?
more confusion. Does this takeback go to the farmers or does it go to the Canadian government or Province?
https://westerngrains.com/
I don't know if some percentage is extracted for the Government's having administered the system and assured that the railroads comply with payment.
I find it interesting that the government still mandates that the railroads timely transport every ton of grain tendered to them (as under a common-carrier requirement) and that the final total comes as a surprise to the railroads after the end of the year. If there is any warning that rates or revenue are too high, or costs might be disallowed or 'adjusted', I see no indication of it, at least not by reading the government's own material on the program, as here (click the link for the 'guide' as the first thing you do there):
https://otc-cta.gc.ca/eng/western-grain-maximum-revenue-entitlement-program
I'd recommend that it you have direct questions about the program, you call the official government Railway, Rail Shipper and Community Help Line:
https://otc-cta.gc.ca/eng/railway-rail-shipper-and-community-help-linehttps://otc-cta.gc.ca/eng/railway-rail-shipper-and-community-help-line
(although I uncharitably suspect the actual service location to be closer to Bollywood than Ottawa, judging by the picture for the video!)
Should get rid of the Agreement and allow pricing based on supply and demand to reign free. Back in 1897 the CPR was the only game in town.. today we have CN as well as branches from American railways into Canada,regional railways, and trucking.
Ulrich Should get rid of the Agreement and allow pricing based on supply and demand to reign free. Back in 1897 the CPR was the only game in town.. today we have CN as well as branches from American railways into Canada,regional railways, and trucking.
Maybe CN & CP should haul a million tons or so back to the elevators for free.
Farmers complain and more importantly, they all turn out to vote.
CN and CP are both investing hundreds of millions of $$$ in new grain car fleets right now, so they are obviously making healthy profits from hauling Canadian grain.
From a politician's standpoint, why rock the boat on this one?
Greetings from Alberta
-an Articulate Malcontent
The Act serves the government's purposes because it allows the rails to make money, and when the rails step over the line, which they do for whatever reason (the grain won't get itself to the ships!), the government can show the other constituency, the agri-businesses, that they have the clout, and the observance, to claw back anything not due to the rails, plus a very....VERY....modest penalty. Everybody wins!
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