September 17, 2014 / 10:34 PM / 4 years ago

UPDATE 1-Canada says will fine CN Rail for failure to ship enough grain

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By David Ljunggren

OTTAWA, Sept 17 (Reuters) - The Canadian government will fine Canadian National Railway Co for failing to meet minimum weekly grain volumes under an official order demanding railways ramp up grain shipments or face penalties, a spokeswoman for Transport Minister Lisa Raitt said on Wednesday.

The maximum weekly fine is C$100,000 ($91,100) and Raitt will decide the amount, the spokeswoman said. A spokesman for CN Rail said any such move would be unfounded.

In March, Raitt and Agriculture Minister Gerry Ritz ordered Canadian National and rival Canadian Pacific Railway Ltd to each move 500,000 tonnes of grain per week in an effort to unclog the shipping bottlenecks that followed record 2013 wheat and canola harvests.

Last month, the government slightly increased the minimum volume to 536,250 tonnes a week for each firm. Canada is the world’s third largest exporter of wheat.

“As CN was not able to meet the minimum volume requirements, the minister has decided to issue administrative monetary penalties to the company,” said Raitt spokeswoman Jana Regimbal.

Canadian National said the firm had not met the weekly minimums because there was not enough grain in the system.

“CN’s weekly demand has been less than 5,000 cars per week on average for the last several weeks - i.e., below the level required to meet the new (government) target,” said Mark Hallman, a CN Rail spokesman.

Ottawa clamped down on the railway companies after they angered farmers last winter by delivering insufficient numbers of cars to crop elevators. The railways have said they did the best they could given the circumstances.

“Our government is hopeful that CN and all members of the rail logistics supply chain will embrace being part of the solution as opposed to being entrenched in the problems of the past,” Ritz said in a statement on Wednesday.

$1=$1.10 Canadian Additional reporting by Jeffrey Hodgson in Toronto; editing by Chris Reese and G Crosse

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