Canadian National Rail says moving crop shipments at record pace

CALGARY, Alberta Wed May 28, 2014 2:23pm EDT

CALGARY, Alberta May 28 (Reuters) - Canadian National Railway Co, Canada's largest rail carrier, said on Wednesday it is exceeding grain-shipment levels mandated earlier this year by the Canadian government despite a record crop that has squeezed available transportation and infrastructure.

The company said in a statement that May hopper-car deliveries to Western Canadian elevators are expected to average 5,500 per week, or 50 percent above the eight-year average and 38 percent higher than the prior record for the month.

Delays in moving the record 76-million-tonne crop have angered farmers and sparked a government order in March demanding the railways ramp up grain shipments or face penalties. But the company argues that it is moving grain at a record pace and the new rules are unnecessary.

"We have done exactly what we promised, without the need for regulatory intervention," Claude Mongeau, the company's chief executive, said in a statement. "In fact, the strength of our grain transportation performance is unprecedented ... Crop year-to-date, CN's grain volumes are 4 percent better than its previous best and 13 percent above average performance."

Mongeau said that the company's performance would have been even better, but said grain companies did not use available rail capacity in late August and early September when the massive size of the crop became clear.

The company said it is looking to move up to 6,000 hopper cars of grain per week over the summer, in part by redeploying some U.S. hopper cars to Western Canada for the next three months.

"With solid supply chain collaboration, we expect to see a crop carry-over of grain in the range of 18 million tonnes, which would be only about six million tonnes above the average despite a massive 100-year crop," Mongeau said.

A government order requires CN and Canadian Pacific Railway Ltd, Canada's second-biggest railroad, to each move 500,000 tonnes of grain per week.

Meanwhile, legislation from Canada's Conservative government making its way through the House of Commons will give it the authority to set minimum weekly levels of grain shipment in the coming years. The bill follows a government order on March 7 that required the railways to move a combined 1 million tonnes of grain each week on up to 11,000 cars.

CN shares were up 28 Canadian cents to C$65.38 in midafternoon trading on the Toronto Stock Exchange. (Reporting by Scott Haggett and Susan Taylor, editing by G Crosse)

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