Canadian government backtracks on hopper cars transfer deal

Canadian government backtracks on hopper cars transfer deal    The recently elected new government of Canada has withdrawn the previous regime’s agreement to transfer about 12,000 grain hopper cars to the Farmer Rail Car Coalition (FRCC).
   November’s agreement, which marked the end of three years due diligence to review the FRCC’s October 2002 proposal to acquire the cars, would have seen the fleet transfer permanently to the FRCC after a five-year lease period.
   “The government of Canada has now decided, after due consideration, not to proceed with the transfer of the cars to the FRCC, but instead retain ownership of the fleet in order to maximize benefits for farmers and taxpayers,” Transport Canada said in a statement.
   “By retaining the hopper cars, the government of Canada will ensure clear accountability and transparency for an efficient and effective grain handling transportation system,” said Lawrence Cannon, Canada’s Minister of Transport, Infrastructure and Communities. “This new deal is a better deal on all fronts.”
   The FRCC, which includes members from western grain producer groups, agricultural associations and rural government organizations, said it expects a “significant backlash” from its members over the decision.
   “We felt we had a decision with the former government, but it seems the Conservative’s want to overturn all of the Liberal’s initiatives,” said Sinclair Harrison, president of the FRCC.
   “The thing that concerns us is that they say they will take care of the maintenance of the fleet but don’t mention any replacements. The reason we started this whole thing over 10 years ago was to make sure there is capacity to move grain in the future,” Harrison said. “The responsibility to replace the fleet will stay with the railroads. If and when they do replace them that will increase the freight rates and hurt the farmers.”
   Harrison told American Shipper the FRCC will hold a conference call this afternoon to decide its reaction. “We haven’t seen the detail yet and governments have been known to change their minds,” he said.
   In a related development, the Canada Transportation Act (CTA) was amended Thursday to allow the Canadian Transportation Agency to adjust the maintenance costs in the maximum revenues the railways can earn from eligible grain shipments (revenue caps). This adjustment will apply to all hopper cars used in regulated grain service. Transport Canada estimates potential savings for farmers of approximately C$2 ($1.80) per ton.
   “Farmers will benefit greatly from the government’s decision to keep the cars,” Cannon added. “The amendments to the CTA will allow an adjustment to maintenance costs in the railways’ revenue caps for all hopper cars used in regulated grain service. The savings will allow farmers to see more profits in their business.”