Canada sets grain shipment minimums for railways amid bottleneck

Canada's government takes the unusual step of introducing tough new railway regulations aimed at easing a grain bottleneck that has sent the price of oat future contracts soaring to record highs.

The government will require Canadian National (CNI -0.5%) and Canadian Pacific (CP -1.5%) railways to ship at least 500K metric tons of grains, equivalent to about 5,500 railcars, each week; if they fail to meet the targets, they will be charged C$100K for each day they aren't in compliance.

The two railways are each currently moving ~2,500 cars/week of grain, a rate that is set to rise by ~500 cars/week until the government's quota has been met.

The legislation comes as a record grain crop remains stuck in grain elevators across western Canada amid rail-shipping delays resulting from several issues, including harsh weather conditions.

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Comments (5)
  • dancing duke
    , contributor
    Comments (184) | Send Message
    This is more than stupid for a government who can not get any think done.
    The last time they ran a railroad , CNR, it was probably the worst run one in North America. That is why they privatized it.
    They should stick to what they know best and that is doing nothing.
    They are experts at it.
    7 Mar 2014, 04:28 PM Reply Like
  • James Sands
    , contributor
    Comments (2752) | Send Message
    What is causing the bottlenecks? Unwillingness to spend capex as a priority - are we seeing a standoff between private/public.....
    7 Mar 2014, 05:40 PM Reply Like
  • Davin Research
    , contributor
    Comments (289) | Send Message
    Why on earth do they think this is a good idea?
    7 Mar 2014, 11:58 PM Reply Like
  • Hendershott
    , contributor
    Comments (1891) | Send Message
    The trains are full of crude, but we need food too. Ag is important to the Canadian economy along with oil production.
    8 Mar 2014, 05:44 PM Reply Like
  • User 10766601
    , contributor
    Comments (2) | Send Message
    the rail companies are purposely storing grain cars....they are not caring about anything but higher end revenue through container traffic.....that is where they are making their money and not caring about the real purpose of rail transport....the bulk commodity....and those in need of bulk such as Europe, Africa, Asia.....the farmers are screaming about this and they had a bumper crop last year and I know for fact they ran out of room to store their grain and thus keeping it stored on the ground as their bins and the elevators they bring it to are absolutely full. The rail companies (shareholders) need to start being real....meaning being a real human entity and stop thinking high profits....they are making much is enough?
    11 Mar 2014, 03:13 AM Reply Like
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