20 March 2008
CPR Warns Coal Customer of Higher Freight Rates
Canadian Pacific Railway Ltd. is warning that a disgruntled
customer, Elk Valley Coal Partnership, could face higher freight rates to move coal from southeastern British Columbia to the Port of
Vancouver.
"I would have no reason to believe that [freight] prices should go down when the price of selling coal has doubled over the course
of the last year or so", CPR chief executive officer Fred Green said yesterday during an investment webcast.
"My expectation is that our prices should go up".
In January, Elk Valley filed a submission to Canada's Competition Policy Review Panel, alleging that it is the victim of
"monopolistic rail services".
Calgary-based Elk Valley complained that it is getting a raw deal "due to the exercise of railway market power"
by CPR in southeast British Columbia and Canadian National Railway Co. in Alberta.
But Mr. Green said Calgary-based CPR is being fair and flexible, saying he doesn't wish to "go
toe-to-toe" against Elk Valley, preferring that CPR be viewed as a valuable "partner" in the coal supply
chain.
"We lowered our prices during the very difficult times" of the coal industry in the late 1980s, he said.
"That is not a base upon which people should compare pricing".
CPR and Montreal-based CN both said wicked winter weather slowed operations in general, including coal shipments, in the
first quarter.
Extreme cold in the West and huge snowfalls in the East caused the problems, said James Foote, CN's executive
vice-president of sales and marketing.
The wintry blasts prompted Walter Spracklin, an analyst at RBC Dominion Securities Inc., to reduce his first-quarter
profit forecast for both railways.
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