A new take on unit trains - CN $2.6M mystery U.S. trips never unloaded biodiesel

[pfs]

"A CBC News investigation has uncovered a cross-border mystery involving unexplained shipments of biodiesel tanker cars that were sent back and forth numerous times between Canada and the U.S. by CN Rail but were never unloaded.

According to leaked internal CN documents, the rail company stood to make $2.6 million for the effort."

http://www.cbc.ca/news/canada/story/2012/11/30/cn-biodiesel-mystery-shipment.html

[cv_acr]

Yeah this is really weird. And I live where this movement is/was happening.

A note: CN trains 503 and 504 mentioned in the article are regular, daily transfers (manifest) between Sarnia and Port Huron. They're not unit trains specifically to handle these shipments. Any cars simply ping-ponging between these points would naturally end up on these trains. Of course 503/504 can often be healthy trains even without an extra 60-80 cars that the article alleges. Plus there's another transfer, 501, and several other through freights work at Sarnia and Port Huron. There's lots of ways to cycle cars across the border pretty quickly if you wanted to.

Not actually being involved in any of this, the way I read it CN is just performing the job their client requested. WHY the client would want to continually ship product across the border with no destination is beyond me.

There's truckloads of strangeness here, but I don't read it as the railway scamming their customers into high shipping charges.

[lock4244]

CN really seems to be playing fast and loose with the 500 series symbols. There are 3 or 4 different ones being used on Mac - Oshawa jobs, and then there was that 596 out of Capreol. Guess it was handy 503/504 already existed in the service.

[cv_acr]

Not sure what you mean by that Mike. The 500s are all local trains. Around Sarnia there are several 500-series that are all yard to yard transfers:
501, 503, 504 between Sarnia and Port Huron, and 509 between Sarnia and London.

A number of 300-series (inter-division road freights) also do lifts and set-outs at Sarnia and/or Port Huron.

Any road switchers and local jobs would also be in the 500 series. That's exactly what this number range is for.

[Scottl]

Maybe it is the tip of the iceberg of a plan to increase the exports of both countries.  It does, as long as you don't mention the import part.  There have been signs the economy is starting to improve... 

[lock4244]

Not sure what you mean by that Mike. The 500s are all local trains. Around Sarnia there are several 500-series that are all yard to yard transfers:
501, 503, 504 between Sarnia and Port Huron, and 509 between Sarnia and London.

A number of 300-series (inter-division road freights) also do lifts and set-outs at Sarnia and/or Port Huron.

Any road switchers and local jobs would also be in the 500 series. That's exactly what this number range is for.

Wasn't aware that 500's were used on transfers, just the local/roadswitcher assignments. Here (Hogtown) the transfers used to be KO-10 and so forth. I guess they've changed the designations. They run the odd 570 out of Belleville for Mac, which is not exactly a local assignment but yard to yard transfer for overflow traffic makes sense. They also ran at least one 596 Capreol - Mac that was again, not a local and likely overflow that could be a yard to yard transfer... of almost 300 miles! They run a few 571's a month between Mac - Oshawa - Mac, too.

[cv_acr]

Well the 596 is a little outside of the pattern, but if they had an extra train that needed to run from Capreol to Toronto they could have reused the symbol from a Capreol-Sudbury area roadswitcher. Exceptions pop up all over if it's an X596 vs. L596.

[lock4244]

Well the 596 is a little outside of the pattern, but if they had an extra train that needed to run from Capreol to Toronto they could have reused the symbol from a Capreol-Sudbury area roadswitcher. Exceptions pop up all over if it's an X596 vs. L596.

It was an L596.

[pfs]

Apparently there were tax credits of 1 USD per Gallon on biodesiel per H.R. 4213 (I did not read the law, I read enough of them already that effect more 'important 'things') during the time frame of the shipments.

I agree that CN is and was acting as a 'common carrier'  , the real scam was the tax credits. However , they knew that they were a knowing participant to something that was not 'normal or likely legit'. Then again if a customer asks them to do something odd but they are paying, they are in the business of moving units for customers.


Back on the train aspect , assume a conservative 23000 Gallons per Car and per the story 70 Units per Train (again conservative).

23000x70 = 1,610,000.00 of tax credit per move for the 'manufacturer'.

I can see some motivation there.

[cv_acr]

Here's the follow-up to the original story:

http://www.cbc.ca/news/canada/story/2012/12/19/mystery-biodiesel-train-credits.html

Basically, the bio-diesel company was re-importing the fuel into the US under different identification numbers each time to scam the system for tax credits by exploiting some legal loophole.

CN basically just fulfilled their obligations as a common-carrier transportation provider.

[jagged ben]

Sheesh.  If it's not legally fraud then the law was written extremely poorly.  It's certainly fraud according to common sense.  We probably could have figured this from the beginning.

[Philip H]

Sheesh.  If it's not legally fraud then the law was written extremely poorly.  It's certainly fraud according to common sense.  We probably could have figured this from the beginning.

Welcome to the world of modern politics!