May 29, 2014
An Open Letter to Producers:
Louis Dreyfus Commodities Canada Ltd. Files Level of Service Complaint against CN with the CTA
Western Canadian grain producers are now mostly through seeding operations, and while Louis Dreyfus Commodities Canada Ltd. (LDC) and the rest of the industry is focused on catching up on shipments for the crop year, we would like to take this opportunity to explain LDC’s recent actions involving the Canadian National Railway Company (CN).
Like you and our other partners in the production, marketing, and transportation of grain, LDC was very dissatisfied with the rail service it received over the late fall and winter. Despite having in place a contract with CN that required it to provide LDC with a certain level of service, CN repeatedly failed to provide that service, which contributed to a major backlog of undelivered grain.
When LDC was unable to convince CN through direct discussions to meet its service obligations, LDC was left with little choice but to take legal action against CN by filing a complaint with the Canadian Transportation Agency (CTA).
LDC is aware of the often confusing debates played out in the media involving farmers, shippers, railways, Ottawa, and the various provincial governments. We are also aware that the complaint filed by LDC has been mischaracterized by some and may be misunderstood by others. This letter is meant to help clear up any misconceptions.
Put simply, through the winter of 2013/2014, CN rail service to certain LDC grain handling facilities fell well short of what CN is contractually obligated to provide.
By April 2014, this short fall amounted to several thousand rail cars. When it became clear that CN would not voluntarily comply with its service obligations, on April 14, 2014, LDC filed a level of service complaint against CN, requesting that the CTA order CN to fulfill its service obligations to LDC.
The complaint is designed to force CN to honour its contractual obligations to enable LDC to move producers’ grain to market, get the grain backlog cleared and allow the industry to focus on current crop production.
In order to obtain immediate relief and begin moving the undelivered backlog of grain, LDC’s complaint also requested that the CTA issue an “interim order” prior to making its final determination (which can take several months). The interim order requested by LDC would require CN to immediately comply with its contractual obligations while the CTA continues to consider the complaint.
On May 2, 2014, the CTA granted LDC’s request for an interim order and it ordered CN to begin providing LDC with the number of rail cars it is contractually obligated to provide.
The CTA should issue its final decision on the matter sometime within the next few months, although it could announce its decision sooner.Despite statements issued by some to the contrary, LDC has asked for nothing more than for CN to deliver the level of service it is contractually obligated to provide. LDC’s reputation with its producer partners has suffered enough. We want to help prairie producers clear out last year’s undelivered backlog and get focused on the present and the future.
We understand the urgency producers have in getting their product to market and thank you for your support and understanding during these difficult times.
Your partners at Louis Dreyfus look forward to building on our solid farm relationships and providing the market opportunities to meet your immediate and future business needs.
Louis Dreyfus Commodities Canada Ltd.