Canada might impose rules in rail shipment tiff

Fri Jun 22, 2012 7:02pm EDT
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By Randall Palmer and Alex Paterson

OTTAWA (Reuters) - The Canadian government will probably have to impose new rules on railways and their customers after four months of negotiations failed to find a formula to get grain shippers and other customers the service levels they demand.

At issue are complaints from customers that the railways fine them if their shipments are not ready on time, but the railways themselves do not face penalties if they fail to get rail cars to the customers on time.

The two sides spent four months in a government-sponsored committee trying to develop both a template for service agreements and a dispute resolution process that could be used commercially.

"While some progress was made, the committee ultimately could not agree on a commercial package," the panel's "facilitator," former Alberta Treasurer Jim Dinning said in his report, issued late on Friday.

Canada's two main railways, Canadian National Railway Co and Canadian Pacific Railway Ltd, haul about 30 million tons combined of Western Canada grain annually, according to the Canadian Transportation Agency, as well as large volumes of coal, fertilizer and industrial and consumer goods.

Railways impose fines for late shipments as part of their efforts to keep tightly managed rolling stock running efficiently across their networks and provide cars where needed.

Rail transportation has long been a sensitive issue for farmers, since Western Canada has no river freight system to move grain the long distances between the Prairies and ports.

While the two sides did not come to a template agreement, Dinning offered one on his own; one which would allow the railroads to be penalized financially for lateness, but only in certain circumstances.   Continued...