The Canadian Transportation Agency has released the information they'll be looking at in determining the Maximum Revenue Entitlement (MRE) for the railways in 2023-24.

The Maximum Revenue Entitlement limits the overall revenue earned by CN and CP for shipping grain, if the railways go over that cap they must pay a penalty to the Western Grains Research Foundation (WGRF). 

In determining the MRE the CTA will consider the Volume-Related Composite Price Index (VRCPI)  an inflation factor based on the forecasted prices for railway labour, fuel, material, and capital purchases.

For the new crop year, the VRCPI for CN Rail is at 1.8 ( an increase of 12 per cent ) and 1.7 for CP ( an increase of 5 per cent).

The CTA notes that much of this year's price differential (the difference between the forecasted and actual price increases) is directly linked to unexpectedly high fuel and related material costs in 2022.

Last year, the Agency's fuel model projected just over 30% increases in railway fuel costs, however, the actual costs rose by more than 63% a key factor in the dramatic increase was the diesel fuel shortage in North America and increased global demand.