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The Canadian Press - ONLINE EDITION

Saskatchewan premier says time to eye shipping grain south in light of backlog

REGINA - Saskatchewan Premier Brad Wall says it might be time to look at shipping grain south through the United States instead of east and west to Canadian ports.

Wall made the comments Tuesday while voicing his frustration over a grain backlog that has left a record crop sitting in bins across the Prairies.

"While the U.S. transportation system isn't perfect, they certainly have not had the degree of trouble we've had. There seems to be greater competition, greater capacity to handle," said the premier.

"And so in addition to the option of two providers going east-west, maybe we need to look increasingly at the option of having grain move south and being part of the U.S. system to port, so we can actually serve the markets that are so important to our farmers."

Wall mused about possible incentives from the province for a north-south railroad.

It would help to diversify transportation, he said.

"If this is the new norm ... of the volumes we're seeing and we're going to continue seeing some oil on rail and potash on rail, I just fundamentally think it's time we look at every option and maybe increase the options we have for moving these commodities, not just east and west, as I say, but maybe north and south to a greater degree," said Wall.

Grain-handling companies have told the province that it may be well into 2015 before the backlog is cleared.

Saskatchewan said Monday it wants the federal government to oversee negotiations on performance agreements between grain and rail companies.

Federal legislation allows a government arbitrator to decide if a signed service agreement between a shipping company and a railway has been violated, but most grain handlers don't have such contracts. That means rail companies determine the level of service they're going to provide.

Wall says he raised the issue Monday in a phone call with Prime Minister Stephen Harper.

"I fundamentally believe he understands the urgency of the situation and how every option — including the federal government maybe having to be the bad guy — every option needs to be on the table. Or at least, at the very beginning (Ottawa needs to be) the encourager of these two groups to get together on these agreements and, if need be, the federal government to look at penalties, because it's a serious, serious situation," said Wall.

The Saskatchewan Agriculture Department has said the backlog could result in the loss of billions of dollars.

Canadian National (TSX:CNR) said in an email to The Canadian Press on Monday that it's doing it's best to move the record crop to market.

CN said its goal is return to a more normal level of winter service of 4,000-plus cars per week "as soon as extreme cold temperatures abate." It uses shorter trains during cold weather to ensure brakes can be used properly, which affects shipment capacity.

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