Proposed Railway Service Legislation a Small Step with Potential Pitfalls, says NFU

Saskatoon, SK—“Today’s announcement of impending legislation to mandate service agreements between railways and shippers indicates that the federal government finally recognizes the need for regulation of the rail sector,” says Terry Boehm, National Farmers Union President.

“New legislation will allow shippers to enter into level of service agreements with the railways on a confidential commercial basis,” notes Boehm “However, with each shipper negotiating individually with essentially two oligopolistic railways in a confidential contract, how much power will the shipper really have?” he questions.

“The great worry of relying on the non-transparent system envisioned in this legislation is that it could easily result in shippers bidding against each other for railway service. It would be particularly disconcerting to see a defacto bid car system established to give access to rail car service for the grains industry, with the result being increased costs to grain producers,” he cautions.

Boehm identifies two critical elements for a transportation system from a shipper’s perspective: service and price. “This legislation will mask the costs of transport services, and it does nothing to address a long-standing problem that has railways profiting by well over a hundred million dollars a year in the shipment of western grains alone – far beyond industry standards,” asserts Boehm.

Boehm hopes the government will finally institute a costing review of the railways as a next step to address these excess profits on the backs of farmers. “It would be real progress if famers see reduced freight rates,” he declares. “After all, in recent years railways have externalized costs onto farmers by cutting branch lines drastically and by servicing very few shipping points, which has resulted in increased trucking and storage costs for farmers.”

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For more information:

Terry Boehm, NFU President: (306) 255-2880 or (306) 257-3689