“CN has structured its rates to create an economic incentive for customers to acquire, over time, more robust tank cars that meet the higher safety standard of the more recent CPC-1232 design,” spokesman Mark Hallman told the Grand Forks Herald.
“[W]e price crude differently for different car types. . . . The CPC-1232 is our favorite car when it comes to pricing or attracting business,” CN Chief Marketing Officer J.J. Ruest said at a Feb. 10 conference
CN did not comment on the specifics of the rate increase, but a Canadian crude oil shipper told the newspaper that CN was charging up to 5% more to move some DOT-111 cars. The shipper said the additional freight charges could impact the cost structure of CBR, which is now a major method of moving crude oil from areas under-served by pipelines, such as the North Dakota’s Bakken region and Canada’s Alberta oil sands.
CN’s Hallman said the economic incentive for customers to use safer tank cars applied to all its routes. The railroad supports AAR and RSICTC (Railway Supply Institute Committee on Tank Cars) appeals to the U.S. PHMSA (Pipeline and Hazardous Materials Safety Administration) for a rulemaking retrofitting or phasing out pre-CPC-1232 DOT-111 cars and improving standards for new tank cars.
The newspaper said that oil traders “are concerned that CN may set a precedent that is quickly followed.”
CP soon after announced that it, too, would impose a surcharge to move pre-CPC 1232 tank cars.