Railways both below cap on Prairie grain revenue

Neither Canadian National (CN) nor Canadian Pacific (CP) Railway have made too much money from their Prairie grain handle in 2009-10.

For the first time since the 2002-03 crop year, neither of Canada’s two major railways has booked income from Prairie grain freight beyond the maximum amount allowed by the Canadian Transportation Agency (CTA).

CN’s grain revenue of $463,919,885 was $3,734,477 below its revenue cap of $467,654,362. CP’s grain revenue of $454,043,873, meanwhile, was $1,681,884 below its cap of $455,725,757.

Prairie grain revenue is down for both railways compared to the 2008-09 crop year. CN that year posted grain revenue of $479.79 million, about $683,000 over its cap, while CP came in about $1.15 million under its cap at $484.81 million.

The caps apply to revenue made from hauling Prairie grain to terminals at Vancouver, Prince Rupert, B.C., Thunder Bay, Ont. and Churchill, Man., or from hauling imported grain on its way through Canada.

In years when either railway makes more revenue than allowed by the CTA-calculated cap, it must forfeit the excess, plus a penalty, to the Western Grains Research Foundation’s (WGRF) endowment fund.

The benefit to the WGRF from revenue cap overages varies from year to year, but zero is a far cry from the fund’s take of about $67 million in the 2007-08 crop year.

That’s when the CTA recalculated what railways could claim for grain hopper car maintenance expenses, and ordered the rail revenue caps lowered accordingly.