UPDATE 3-Canada railways step up service as govt eyes tackling grain backlog

Mon Feb 24, 2014 7:57pm EST
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By Rod Nickel

WINNIPEG, Manitoba Feb 24 (Reuters) - Canada's two big railways are stepping up service to reduce a backlog of grain shipments that have delayed exports and pushed oat prices to record highs, but the Canadian government said it may still step in with new regulations.

Record crops of wheat and canola, along with frigid weather, overwhelmed Canadian National Railway Co and Canadian Pacific Railway Ltd, resulting in overdue orders for tens of thousands of grain cars.

The railways said they are preparing to add thousands more cars per week to transport grain to ports. The expanded service would last at least until December, CP spokesman Ed Greenberg said, while a CN spokesman did not confirm how long it would continue.

But Canadian Agriculture Minister Gerry Ritz, who met Monday with the railways and grain companies, left the meeting unimpressed and told reporters he is considering new regulations to speed the flow of grain from western farm regions to ports. In some areas, rail cars are sitting on track awaiting locomotives and crews, he told reporters.

"That seems to be the problem in capacity, not necessarily cars, but the ability to move them from where they should be spotted to the port," he said.

Ritz said railway officials "fudged" their commitment to dedicating more grain cars when he spoke with them, by saying it depended on factors like where the grain was headed.

Canada is the world's biggest canola exporter, and usually the No. 2 wheat exporter, but the bottlenecks have left crops land-locked.   Continued...