
A recent report by Quorum Corporation, the federal government’s official monitor of Canada’s Prairie Grain Handling and Transportation System, has outlined how Canadian railways have adopted seasonal pricing for grain shipments, increasing freight rates by approximately 20 to 30 per cent during the fall harvest period before reducing rates later in the crop year. Per the report, both Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) are raising their rates, typically starting in the September-October period and the keeping them higher until January-February. Further, shipments to the West Coast are seeing an additional hike to the already increased rate.
For example, CN raised their freight rates by 25 per cent in September of 2024 compared to July of that year. Soon thereafter, they tacked on an 11 per cent increase in October for westbound grain, effectively raising CN’s single-car rate to the Port of Vancouver by about 36 per cent during the busy fall season. Similarly, CPKC freight rates for grain increased 31.4 percent from Aug. 1 to Oct. 31 of 2024 on grain headed for Vancouver. The Quorum report indicated that this pattern of dynamic pricing has been in use by the railways since the 2021-22 crop year.
While both CN and CPKC note that these rates remain within the limits of Canada’s Maximum Revenue Entitlement system (a federal regulation that limits the total revenue the and CPKC can earn from moving regulated western grain each crop year), Quorum’s report argues that the increased variability in rail freight pricing is adding challenges for grain exporters who are making sales when rail freight costs may change significantly before it is time to deliver. Critics also warn that efforts to redistribute grain shipments throughout the year could undermine Canada’s export competitiveness by limiting the industry’s ability to respond to seasonal market opportunities.
Further this dynamic pricing system and higher transportation costs are affecting producers as they reduce the price per tonne that grain farmers receive at the elevator in the fall while grain companies are spending more to move canola, wheat and other grains to port in first half of the crop year.
Copy of full report here.