CPKC Penalized: Pays $2.7M After Grain Revenue Cap Breach

OTTAWA — The Canadian Transportation Agency (CTA) has ruled that Canadian Pacific Kansas City (CPKC) exceeded its maximum grain revenue entitlement for the 2024–2025 crop year, ordering it to pay over C$2.7 million in penalties and overages. The ruling comes as both CPKC and rival CN successfully moved a record 49 million metric tons of Western Canadian grain, a significant 12.1% increase in volume over the previous year.

Main Body:

In its annual determination released on December 19, the Canadian Transportation Agency (CTA) announced a split decision for Canada’s two Class I railways regarding their grain revenue caps for the 2024–2025 crop year. Canadian National’s (CN) grain revenue of C$1.45 billion came in C$5.91 million below its allowable limit. In contrast, Canadian Pacific Kansas City (CPKC) recorded grain revenue of C$1.067 billion, surpassing its entitlement by C$2.66 million. As a result, the CTA has mandated that CPKC repay the full overage amount plus a 5% penalty of C$133,012. The total sum is to be paid to the Western Grains Research Foundation, an organization focused on farmer-funded crop research, within 30 days.

The revenue rulings were set against a backdrop of a robust harvest and strong performance by the railways. Together, CN and CPKC transported 49,002,694 metric tons of Western Canadian grain, a substantial 12.1% increase from the 43.7 million metric tons moved in the prior crop year. This surge in volume underscores the critical capacity and efficiency of the rail network in connecting Canadian agricultural producers to domestic and international markets. The CTA’s Maximum Revenue Entitlement (MRE) program, which sets the revenue caps, is designed to protect grain shippers who are captive to rail service, ensuring rates remain fair even during periods of high demand.

Looking ahead, the demand on Canada’s rail network for grain transport is expected to remain high, though market dynamics are shifting. According to forecasts from Agriculture and Agri-Food Canada (AAFC) for the upcoming 2025-26 crop year, total principal field crop production is estimated to rise by 10.4% to 107 million metric tons, with Western Canada’s output projected to climb 16%. Despite this increased production, overall exports are forecast to decline by 4%, while prices for most crops are also expected to soften. This evolving landscape, coupled with ongoing investment in agricultural innovation like Manitoba’s Global Agriculture Technology Exchange (Gate), will continue to influence railway operations and future revenue entitlement calculations.

Key Takeaways

• CPKC Penalized: CPKC exceeded its federally mandated grain revenue cap by C$2.66 million and must pay this amount plus a 5% penalty to a grain research foundation.
• CN Remains Under Cap: CN’s grain revenue was C$5.91 million below its entitlement, successfully managing its pricing within regulatory limits.
• Record Grain Volume Moved: Both railways handled a 12.1% year-over-year increase in Western Canadian grain, demonstrating significant operational capacity to meet surging agricultural output.

Editor’s Analysis

This annual ruling by the CTA is more than a simple accounting exercise; it is a critical stress test of Canada’s unique rail regulation framework in a high-volume environment. The fact that one major carrier exceeded its cap, even slightly, while another operated well within it during a record shipping year, demonstrates that the MRE system is functioning as intended—providing a ceiling on revenue without stifling performance. For global shippers and commodity traders, this reinforces the reliability and regulatory oversight of the Canadian grain supply chain. As future forecasts point to even greater production, the ability of CN and CPKC to balance record demand, operational efficiency, and regulatory compliance will be a key indicator of Canada’s competitiveness in the global food market.

Frequently Asked Questions

Why was CPKC ordered to pay a penalty?

CPKC was penalized because its revenue from transporting regulated Western Canadian grain in the 2024-2025 crop year exceeded the Maximum Revenue Entitlement (MRE) set for it by the Canadian Transportation Agency. The payment includes the full overage amount plus a legally required 5% penalty.

What is the Maximum Revenue Entitlement (MRE) for grain?

The MRE is a cap on the total revenue a railway company can earn from moving regulated grain in Western Canada during a crop year (August 1 to July 31). It is calculated annually by the CTA using a formula that accounts for volume, distance, and inflation to ensure farmers have access to affordable rail service.

How much more grain was moved compared to the previous year?

A total of 49,002,694 metric tons of grain were moved, which represents a 12.1% increase in volume compared to the 43.7 million metric tons transported in the last crop year.