CN Rail and CP Rail exceed grain revenue max despite drop in grain shipping

GATINEAU, Que. – The Canadian Transportation Agency says the country's two major railways exceeded their maximum revenue entitlements for grain in 2017-18, despite shipping less of the stuff than last year.

Canadian National Railway Co. reaped $1.05 million more than its entitlement of $787.01 million in 2017-18. Canadian Pacific Railway Ltd. took in $1.5 million beyond its entitlement of $707.99 million.

The agency says CN and CP have 30 days to pay back the excess revenue, on top of a five per cent penalty of $52,000 for CN and $75,000 for CP. The payments will go to the Western Grains Research Foundation, which funds research for Prairie farmers.

The wide-ranging Transportation Modernization Act that came into effect last May adjusted the maximum revenue entitlement system, which places a ceiling on total revenue to be earned from moving grain by rail in any crop year. CN Rail has said the system was a disincentive to invest in grain cars until the revisions.

The Canadian Transportation Agency also says CN and CP carried six per cent less grain over the past crop year than in 2016-17, moving 40,618,285 tonnes.

CN and CP have both said they believe beefed-up inventories of locomotives, hopper cars and extra staff will help to prevent a repeat of last winter's grain-shipping backlog, set in motion by frigid conditions that inhibited the hauling of crops to market and hurt farmers' bottom lines.

Companies in this story: (TSX:CNR, TSX:CP)