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What’s fair for grain farmers is by implication less fair for every other business that uses the rails to move goods

Jim Young/Reuters

Ship traffic on the St. Lawrence Seaway more than doubled in May and Lake Superior's Port of Thunder Bay had its busiest month in 16 years as railways and grain handlers scrambled to clear the 2013 harvest of wheat, canola and other grains that was stuck in elevators and on farms after a severe winter.

"It was the worst [winter] we've ever seen in many many years," said Tim Heney, chief executive officer of the Port of Thunder Bay, which was was ice-bound and unable to receive ships until April 21, a month later than usual.

Ice breakers escorted the first few convoys of grain ships that left the port, which handles 22 per cent of the country's grain, he said. Despite the slow start, the port loaded 70 ships and moved 1.3 million tonnes of grain in May, a 90-per-cent increase over the five-year average.

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Thunder Bay is the largest grain handling facility in North America, with eight terminals owned by seven companies, including Canada Malting Co. and Cargill Ltd.

Richardson International Ltd. recently doubled its crop handling ability at the port by reopening the terminal it acquired from Viterra Inc. last year. To handle the boost in grain volume, the port added about 100 to its 300-person work force this spring, Mr. Heney said.

The port, which received 3,000 grain rail cars last week, handles a third of Saskatchewan's crop, 68 per cent of Manitoba's and 7 per cent of Alberta's.

The St. Lawrence Seaway – which connects the North American interior with the Atlantic Ocean and global ports – saw 44 domestic ships and 26 ocean-going vessels, the most since 2000.

Greg Wight, CEO of St. Catharines, Ont.-based Algoma Central Corp., said he expects the company's fleet of more than two dozen ships will be working "flat-out" for the rest of the year. The company is boosting its grain handling capacity by re-fitting two ships, and will take delivery of a new vessel in July, Mr. Wight said.

The 2013 harvest was 50-per-cent larger than average, due to good weather and improved growing methods. But the heavy harvest preceded a severe winter that forced railways to run slower, shorter trains for safety reasons. Many farmers, especially in Manitoba, sold very little of their crop, and faced a cash crisis as they tried to buy seed and fertilizer for the next season.

Grain companies and farmers accused the railways of cutting costs to please shareholders while giving priority to more lucrative lines of business, such as oil and intermodal shipping. The railways said extreme cold and the huge crop made it impossible to move grain quickly between the elevators and the ports.

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The federal government sided with the grain industry and passed a law requiring the country's two major railroads, Canadian Pacific Railway Ltd. and Canadian National Railway Co., to move a combined one million tonnes of grain each week until August 3 or face a fine of $100,000 a day. The law, which expires in mid-2016, also expands the geographic rights of shippers to use another railway.

For some in the grain industry, the law and the increased shipments came too late.

Canadian Canola Growers Association, which represents more than 43,000 farmers, and Louis Dreyfus Commodities Canada Ltd. have made service complaints with the federal regulator against the railways.

CN spokesman Mark Hallman called the new rules "ill-advised and unwarranted."

He said the railway moved 5,500 carloads of grain in May, 38 per cent more than the best May on record, and is aiming for 6,000 cars a week in the summer.

Despite the record crop, Mr. Hallman said the amount of grain carried over from last season is expected to be about 18 million tonnes, just 6 million tonnes above the average.

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