Washington District of Columbia USA - Less than two months after the passage of Canada's Fair Rail for Grain Farmers Act, regulators south of the border are taking action to clear a similar backlog in grain shipments across the U.S. Midwest.
 
The U.S. Surface Transportation Board is requiring Calgary-based Canadian Pacific Railway and BNSF Railway to submit plans to address the backlog by this Friday and begin filing weekly updates.
 
Regulators said both railroads have made some progress in reducing their backlogs of grain car orders, but many grain elevators still have little space available and another harvest season is fast approaching.
 
The backlog has meant many farmers in North Dakota, South Dakota, and Montana aren't getting paid for their crops.
 
"The Board remains very concerned about the limited time period until the next harvest, the large quantities of grain yet to be moved, and the railroads' paths toward meeting their respective commitments," regulators said in their order, issued last Friday.
 
Critics blame increased crude oil and freight shipments for the delays, but the railroads have said a brutally cold winter and rail congestion in Chicago caused the backlog.
 
Canadian Pacific spokesperson Ed Greenberg said the company is still in the process of looking through the STB order but expects to respond to the agency soon.
 
"CP is actively taking steps to address ongoing congestion issues in the Midwest," Greenberg said.
 
"We are improving the velocity of our trains and effective utilization of our rail car fleet as we work on a day-to-day basis with our customers across our U.S. network."
 
The order is the first move U.S. regulators have taken to address the grain backlog, but the Canadian government has been active on the file for months.
 
The Fair Rail for Grain Farmers Act, which was passed in May, requires CP and Canadian National Railway to each ship 500,000 metric tonnes of grain each week or face penalties of as much as $100,000 per day.
 
It also strengthens service level agreements between shippers and the railways and farmers' contracts with grain companies and allows shippers to be compensated for any expenses incurred as a result of the railways' failure to meet their level of service obligations.
 
In an emailed statement, Agriculture Minister Gerry Ritz said the legislation is working.
 
"The railways are meeting the prescribed volume targets for grain movement, and our Government continues to monitor the supply chain through increased reporting requirements," Ritz said.
 
"As prescribed in Bill C-30, all parties in the supply chain will meet each summer to ensure the system is prepared to handle what will be required for all bulk commodities over the following year."
 
CP declined to provide figures, but CN spokesperson Mark Hallman said the railway's hopper car deliveries to western Canadian grain elevators in May averaged 5,500 carloads per week, 50 percent more than the eight-year historical average, and 38 percent more than the best May ever.
 
In a release dated 28 May 2014, CN CEO Claude Mongeau said he told Ritz in February, before legislated grain volumes were imposed, that the railway would be able to reach 5,500 carloads as soon as the cold weather abated and the Port of Thunder Bay opened for business.
 
"We have done exactly what we promised, without the need for regulatory intervention," Mongeau said.
 
Alberta Federation of Agriculture president Lynn Jacobson said it's true that grain is now moving well, but he doesn't buy the argument that regulation was never needed.
 
He said farmers have lost "hundreds of millions of dollars" because they weren't able to sell their crops earlier in the year, when prices were stronger.
 
"The railways are saying, we can move this tonnage, see, we're doing it. But moving the tonnage at the right time of the year is the important part. Otherwise, we're no farther ahead," Jacobson said.

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