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Canadian reforms to assist movement of grains

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Dry Bulk,

As reported by Reuters, Canada has approved freight reforms that will provide more options for shippers with limited transportation choices.

The reforms are intended to help grains and other crops move more quickly to market after transport problems hampered both Canadian National Railway Co (CN) and smaller rival Canadian Pacific Railway Ltd (CP) during the winter – the second major backlog in the past five years.

Railways cited harsh winter conditions and a need for more locomotives and staff as the reason for tardy service. The backlog crimped cash flow for farmers and generated shipping penalties for grain exporters in the world’s largest exporting country of canola and rapeseed.

Grain industry officials said the new law will help balance the relationship between farmers and railways by allowing shippers to seek penalties against railways for poor service, and giving a new remedy to shippers that only have access to service from either CN or CP.

Shippers will be allowed to make greater use of inter-switching, a system of transferring cars from one railway’s line to the line of another, that grain sellers say adds needed rail competition.

The law will also include for the first time soybeans — a fast-expanding crop — in the federal government’s system of calculating limits on revenues that railways can earn hauling crops.

That system will also change to give CN and CP incentive to upgrade their grain fleets, with each railroad now given credit for its own capital investments.

“It was really a disincentive (previously) for railroads to invest in grain cars,” CN’s Chief Financial Officer, Ghislain Houle, told an investment conference on Wednesday. “That now fixes it.”

CN’s interim CEO has previously said the company would get 1000 new hopper cars for 2019 and 2020, if the law was changed. Cereals Canada President, Cam Dahl, said in a statement the legislation would: “provide for better commercial accountability in the grain transportation system.”

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Dry bulk freight news Grain cargo news