CN, CP would accept ‘reciprocal penalties’ in service agreements: Sask.

Canada’s big two railways have pledged to have “thousands” of additional cars taking grain to ports until at least December this year, and would also sign level-of-service pacts with grain shippers providing for “reciprocal penalties,” the Saskatchewan government says.

The provincial government, which on Feb. 12 struck a cabinet delegation to meet with grain companies and the railways on ways to clear the grain backlog on the Prairies, said it would urge the federal government to “immediately” ensure such level-of-service deals happen.

“Railway companies assured us they are ramping up to have thousands more grain cars per week taking grain to ports and this will be sustained until at least December 2014,” Economy Minister Bill Boyd, a western Saskatchewan seed grower, said Monday in a release. “Grain companies told us they could quickly move to provide service 24 hours a day if the grain reaches them.”

The province will be “closely monitoring” basis levels to ensure they are reduced as grain car movement improves, he added.

The province said it supports recent pledges by federal Agriculture Minister Gerry Ritz for new weekly reporting requirements around actual car spots, loading at country elevators, delivery of cars to ports and unloading reports at ports.

However, the province would also like to see the Canadian Transportation Agency be granted the ability to “independently investigate grain movement before a formal complaint is filed,” Highways and Infrastructure Minister Don McMorris said in the same release.

Another step, he added, would be to have grain companies sign contracts directly with farmers that also include “reciprocal financial penalties.”

The province “will be monitoring the situation on a daily basis to see if both the grain companies and the rail companies come through,” Agriculture Minister Lyle Stewart said in the same release.

Alberta’s Agriculture Minister Verlyn Olson last week urged Ottawa to legislate a new system of “immediate” financial penalties against railways that fall short of their service obligations in grain handling, noting any such penalties now available under the federal Fair Rail Freight Service Act don’t compensate farmers or grain companies, and are subject to lengthy arbitration. — Network

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