Citing poor service during Winter 1996-97, the Canadian Wheat Board sues CP Rail for $45 million

CALGARY (Dec. 24) — Canadian Pacific Railway said it will “defend itself vigorously” against a $45-million lawsuit filed yesterday by the Canadian Wheat Board.

The CWB, the world’s largest seller of wheat, filed the suit to reclaim over 1.5 million tons in lost grain sales early last year. Shipments were delayed from January to March of 1997 due to severe weather and mechanical failures which caused dozens of ships to wait weeks in Vancouver for grain to arrive.

The suit filed in the Federal Court of Canada details costs and expenses (which include demurrage, additional carrying charges, and loss of premium prices) totaling over $25 million, and a claim for $20 million for financial losses relating to the loss of business, and injury to economic relations, good will, and reputation. Wheat values were at near-record highs in December 1996, but prices have since dropped to their lowest point in 27 years.

The action follows about 10 weeks of Canadian Transportation Agency hearings held earlier this year to investigate a CWB level-of-service complaint about the railway during Winter 1996-97, when severe weather and avalanches hindered the flow of goods.

However, last fall the CTA ruled that CP Rail did not give grain shipments headed to Vancouver “a reasonable share” of the railway’s capacity at the time.

CPR wanted to settle the matter through non-binding mediation, according to Rick Sallee, vice-president of agri-products at the railway. Canadian National Railway Co. settled with the CWB earlier this year for an undisclosed amount.

Salle defended the railway’s service during a winter that saw especially harsh weather and avalanches that covered the rail lines.

He said the CTA agreed that frequent, severe weather in many regions of Canada and the U.S. slowed shipments of all commodities, and that due to the effects of harsh weather, industry guidelines for grain car unloads at the Port of Vancouver could not possibly have been met.

He noted that since Spring 1997, the railway has provided and delivered more than enough grain cars to meet targets in all corridors, while port unloads have frequently not met targets.