REGINA, Sask. — It’s about to get much more expensive to ship grain by rail in Western Canada, as the federal government has decided to sell its fleet of grain hopper cars.
Traditionally, the government owned 13,000 grain cars, making them available to the railways free of charge. Farmers had to pay for maintenance of the cars through the freight rate structure, but once the cars are sold, the full cost of ownership including depreciation will fall on the shippers.
"The free ride is over," says University of Manitoba economist, Barry Prentice. From here on in, we have to pay for the cars. The question is, how much and who controls the fleet?"
The grain freight revenue cap is slated to be increased to reflect the additional costs incurred by the railways, should they bid on the cars of lease them from a third party.
"So shippers will see higher rates regardless of who buys them," Canadian Wheat Board transportation analyst, Charray Dutka, tells local media.
The Farmer Rail Car Coalition has suggested it is interested in bidding on the rail cars. Canadian Pacific and Canadian National are taking a wait and see approach.
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