Western Canada- Fleet Integratin Prgram Western Canada Cvered Hpper Fleet Integratin Prgram CN is ffering a Fleet Integratin Prgram fr grain, ilseed and special crp shippers wh wish t enter agreements t supply privately wned, cvered hpper cars fr integratin int CN s Western Canadian cmmn fleet and t receive weekly alltments t rder cars frm CN s fleet fr 25-car blck shipments frm CN-served lading lcatins in Western Canada t nn-prt destinatins in the US, Eastern Canada r Western Canada. Participants will benefit frm: Year-rund supply frm CN s cmmn Western fleet fr shipping t cmmercial destinatins in US and Canada Cars incremental t general distributin frm CN s cmmn fleet Pririty in weekly car rder cnfirmatin and train service planning prcesses Having CN manage participants private cars within CN s cmmn fleet The prgram is intended t: Cntinue t add bigger cars int CN s Western hpper fleet, t maximize supply chain thrughput Be cmpatible with CN s Open Order Bk fr Western Canada grain and manifest train service design fr shipments t dmestic destinatins Facilitate reliable executin under CN s weekly Scheduled Grain Service plan Avid system inefficiencies frm free-running private cars, e.g., switching, interference at rigin General infrmatin This prgram is fr shipments frm elevatrs r lading facilities at rigins directly served by CN r by CN partner shrt lines in Manitba, Saskatchewan, Alberta and BC, that lad Wheat, Barley, Oats, Canla, Flaxseed, Special Crps, Crn r Sybeans fr shipment in cvered hppers. Prgram is fr cmmercial shipments frm these rigins mving t final destinatins in the US, Eastern Canada r Western Canada fr CN linehaul under rates published in tariffs CN 1759, CN 1243, CN 2140, CN 2156, CN 5586, CN 1761, CN 5659, CN 4013, r CN 4075. Shipments may be CN-direct mvements r interline and Rule 11 mvements ver gateways cmpliant with CN ruting prtcl. Prgram is intended fr cnsistent, year-rund shipping t balance demand fr railway assets and resurces within CN s manifest train service design. Cars are t be rdered and shipped in 25-car lts, destinatin-blcked in multiples f 25-cars. Cars cming int the prgram will be treated as railrad-prvided cars, with n mileage paid. Custmer will cntinue t be respnsible fr all bligatins under any lease custmer may have with the wner f a car, including taxes, maintenance and repairs, hatches, gates, etc. Freight rates that apply t railrad-prvided cars under CN linehaul tariffs and asset use, car rdering, and ther charges and credits that apply t railrad-prvided cars under CN 9000 Optinal Services - Carlad will apply t cars integrated r placed under prgram. Prgram is nt intended fr unit train shipping, r fr shipments t prt destinatins. Prgram is nt available fr rigins served by an interswitching carrier, r fr CN-served sidings made available fr lading f cars that are rdered thrugh and allcated by the Canadian Grain Cmmissin under sectin 87(2) f the Canada Grain Act. Car specificatin: High-capacity, jumb grain cars preferred The mdern cvered hpper car best suited fr hauling Western Canada grain has high cubic capacity t lad mre canla, barley, ats and ther light density crps, and als can carry 286,000 punds grss weight n rail ver CN s strengthened mainline netwrk. T increase the capacity f the grain lgistics system, CN has been increasing the prprtin f high-capacity jumb hpper cars in the Western grain fleet. Abut 90% f the gvernment hppers perated in CN s Western fleet are 286k GWR. 1
Western Canada- Fleet Integratin Prgram CN will give first preference under Western Canada Fleet Integratin Prgram t bids fr integrating high-capacity, jumb cars (>5100 cu ft, 286k GWR, maximum 60 ft length). Fr this car type, CN will entertain bids frm participants t enter int agreements with terms expiring beynd July 31, 2015. If the prgram is nt fully subscribed by bids fr high-capacity jumb cars, CN will cnsider (but nt necessarily accept) bids fr integrating lwer capacity hpper cars, and nly fr agreements with terms that expire July 31, 2015. CN will give lwer preference t bids t integrate cars with 286k GWR but <5100 cu ft capacity, and lwest preference t lwer capacity cars. Mechanical cnditin and ther specificatins f cars must be acceptable t CN and suitable fr use within the Western Canadian cmmn grain fleet, e.g. steel cnstructin, gravity unlad, trugh hatches, standard utlets and gates. N aluminum cars will be accepted int the prgram. Cars prvided will cnfrm t the requirements f regulating authrities in the US and Canada, including but nt limited t the American Assciatin f Railrads, the Federal Railway Administratin, Transprt Canada and the Transprtatin Safety Bard. Bidder will prvide builder s specificatins fr the cars, and facilitate mechanical inspectin f the cars n request f CN prir t delivery t CN lines. CN reserves the right t reject frm prgram any car based n mechanical cnditin r repair histry, r that is therwise deemed unsuitable fr peratin in the Fleet Integratin Prgram. Prgram ffering & bidding guidelines Custmers are invited t make bids t participate in the Fleet Integratin Prgram. During March 2014, custmers have the ptin t bid cars int the Fleet Integratin Prgram fr a term starting April 1, 2014 thrugh July 31, 2015, r t bid high-capacity jumb cars int the prgram fr a lnger term starting April 1, 2014 ending beynd July 31, 2015. CN will accept up t a maximum f 800 private cars t be integrated int CN s fleet under the bid prcess described belw. Successful bidders agree t enter int a Fleet Integratin Agreement with CN. Bidding: Yu may begin submitting bids n February 24, 2014. Yu may submit bids t the attentin f Market Manager, Fleet Integratin Prgram by fax: 204-934- 7375 r by email: greg.ken@cn.ca. N bids will be accepted later than 3:00 PM Muntain Standard Time n Friday, March 7, 2014. Participatin will be awarded up t the prgram maximum. Custmers with successful bids will receive electrnic cnfirmatin that their bid has been accepted n later than 3:00 PM Muntain Standard Time n Friday, March 14, 2014. The maximum bid fr different car specificatins fr participatin in the prgram is set as fllws: US$525 per car per Perid, fr cars with grss weight n rail capacity f 286,000 lb and with cubic capacity equal t r greater than 5100 cubic ft capacity but nt greater than 5300 cubic ft capacity, maximum 60 ft length. US$225 per car per Perid, fr cars with grss weight n rail capacity f 286,000 lb and with cubic capacity equal t r greater than 4500 cubic ft capacity but less than 5100 cubic ft capacity, maximum 60 ft length. US$100 per car per Perid, fr cars with grss weight n rail capacity equal t r greater than 263,000 lb but less than 286,000 lb and with cubic capacity equal t r greater than 4500 cubic ft capacity but less than 5100 cubic ft capacity, maximum 60 ft length. Each bid must cntain the fllwing infrmatin: Cmpany name 2
Western Canada- Fleet Integratin Prgram Ttal number f cars, descriptin f the cars yu are bidding t place in the prgram (including car markings, grss weight n rail capacity, tare weight, cubic capacity, hatch and gate design), and the builder s specificatins fr the cars. Date by which cars will be delivered t CN fr fleet integratin and prpsed term (start and end dates fr fleet integratin agreement). Car Utilizatin Fee bid amunt in US dllars per car per Perid fr each car desired t be placed in the prgram Strage lcatin fr cars being integrated Phne and fax numbers and email address f a cntact CN reserves the right t: Nt accept any r all valid bids r prtins theref Limit the number f cars accepted int the integrated fleet t any ne party t a maximum f 25% f the ttal cars that CN is ffering t integrate, but reserves the right t award cars abve r belw this level Reject, at any time during bidding r the term f an agreement, any car that is deemed t be unsuitable fr service fr reasns f mechanical cnditin r regulatry nn-cmpliance. Cars must be placed in the Fleet Integratin Prgram fr a term until July 31, 2015 at a minimum. If yu need t end yur participatin in the prgram after this minimum duratin but prir yur cmmitted term, the fllwing prvisins will apply: Yu must prvide CN with ninety (90) days advance ntice f the dispsitin lcatin and date yu intend that the cars be remved frm the integrated fleet. This date can be n earlier than the later f either July 31, 2015 r the date when 75% f the term f a lnger-term fleet integratin agreement has been cmpleted. Yu will nt be allwed t place any rders under the prgram during the full Perid prir t the date yu intend the cars t be remved frm the integrated fleet. Yu will be inviced fr C$400 per car switching fee fr early cancellatins, and an amunt equal t: the number f cars t be remved, times the number f remaining Perids in the agreement, times the Car Utilizatin Fee After the date that yu intend the cars be remved frm the integrated fleet, CN will pay yu US$14 per day per car until the car is returned t yu. If yu lack demand t place car rders under the prgram fr an extended perid f time but wish t remain in the prgram, CN may cntinue t use yur private cars. Yu will be paid the Car Utilizatin Fee, less a C$100 per car rder cancellatin fee. If ttal demand falls fr CN s Western fleet, and if yu reduce car rders belw the number f cars alltted per Perid, we are nt bligated t cntinue using yur fleet f cars and may stre cars at yur strage facility. If yu are unable t prvide strage facilities, yu will als be subject t car strage charges. Car Ordering and Supply frm Integrated Fleet Under the Fleet Integratin Prgram, CN will distribute cars frm the integrated fleet and plan train service t spt cars accrding t the fllwing prvisins: Custmers will receive 1 car alltment per Perid fr each car accepted and integrated int the fleet: Example: 100 cars accepted in prgram equals 100 car alltments per Perid 3
Western Canada- Fleet Integratin Prgram Perids : defined as 4-week intervals in spring, summer and fall seasns (Grain Weeks 52 t 19, and 40 t 51) and 5-week intervals in winter seasn (Grain Weeks 20 t 39). Lnger Perids accunt f lnger car cycles during winter perating cnditins. Cars alltted fr a Perid must be rdered weekly and spread cnsistently thrughut the Perid. Car rders placed in ne week must be in multiples f 25 cars, placed at n mre than ne rigin, up t that rigin s car spt capacity, fr shipment in 25-car lts, destinatin-blcked in multiples f 25-cars.. Car rders must be submitted t CN thrugh the Grain Car Order ebusiness tl by 1:00 PM Central Time n Tuesdays, cnsistent with the Western Canada grain car rdering prvisins in CN 9000. Grain car rder request must specify rigin lading facility, desired want date, destinatin crridr, destinatin, cmmdity, number f railcars, and reference cdes t track prgram cmpliance. Eligible crridrs are EC Eastern Canada, UE US via Eastern Gateways, UW US via Western Gateways (in BC), and WC Western Canada. CN service targets Finalizatin: CN will target cnfirmatin f car rder request and plan service during r prir t the week f the want date r during the fllwing week and will pay the participant a Service Plan Incentive fee f C$100 per car if the car rder request is nt cnfirmed and service planned fr within that time frame. Order requests nt cnfirmed will be waitlisted, carried frward and planned fr placement in a subsequent week. Placement: CN will target placement at rigin, r at interchange fr rigins served by CN partner shrt lines, within the week f the planned service date r by Tuesday 23:59 lcal time f the fllwing week and will pay the participant the Balanced Perfrmance Incentive fee in CN 9000 item 5700 f C$100 per car fr late placement if the cars are nt placed within that time frame. Fee will nt apply fr cars placed n time and rejected fr mechanical r safety reasns. Shrtfalled rders (nt placed during planned week) will be carried frward and re-planned fr placement in subsequent week. If yu change lading lcatin r destinatin crridr after finalizatin, nce a car rder request has been cnfirmed and service has been planned by CN, we will d ur best t accmmdate yur request but will nt be subject t Balanced Perfrmance Incentive fr nn-placement f cars if we accept yur change request. Cars placed must be shipped t the destinatin crridr cnsistent with the cnfirmed car rder, and with reference cdes in shipment instructins t track prgram cmpliance. Mislading t a different crridr withut CN cnsent will result in charges under CN 9000, lss f car utilizatin fee payments, and suspensin f car alltments. When participants d nt have sufficient demand t place car rders fr the cars alltted during a Perid, a fee f C$100 per car will apply. Participants withut management cntrl ver an elevatr r lading facility at an eligible rigin (third parties) must reach agreement, independent f CN, with the party that has management cntrl (the lader) t place car rders, and t lad, ship and bill cars placed in cmpliance with the prgram. Car Utilizatin Fee payments Within frty-five (45) days f the end f each perid during the Fleet Integratin Prgram, CN will verify whether participant has rdered and whether CN has filled all rders placed up t the maximum car alltments that custmer is entitled t receive. If it is determined that yu placed yur rders in a timely rder and have fulfilled yur cmmitment fr the maximum car alltments, we will prcess payment in the amunt equal t the number f cars that yu have in the Fleet Integratin Prgram multiplied by yur per car bid (Car Utilizatin Fee). Example: 100 cars in Fleet Integratin Prgram at US$250 per car. If all cnditins have been met, we will prcess payment in the amunt f US$25,000. Strage If there is a dwnturn in business and cars must be stred, and if yu lack demand and reduce car rders belw the number f cars alltted during a Perid, yu may be required t prvide strage facilities fr the number f yur private cars that are nt being used in the mvement f their respective alltments. Cars stred will be frm the integrated fleet and may be a mix f bth private and railway marked cars. 4
Western Canada- Fleet Integratin Prgram Strage charges under CN 9000 will apply if yu cannt prvide private strage facilities. Western Canada Fleet Integratin Prgram - Frequently Asked Questins Wh is eligible t participate in this prgram? Participants must: (1) have an apprved line f credit in gd standing with CN; (2) be registered in CN s ebusiness electrnic cmmerce prgram t receive and make payments under this prgram via electrnic funds transfer; and (3) have management cntrl f an elevatr r grain lading facility at an eligible rigin, r (if a third party) reach agreement (independent f CN) and crdinate with the party that has management cntrl (lader), t place car rders thrugh CN s Grain Car Order ebusiness tl and t ensure cars supplied and placed are laded, shipped and billed in cmpliance with the terms f the fleet integratin agreement. What lading facilities are eligible in this prgram? An elevatr r grain lading facility directly served by CN r by a CN partner shrt line in Western Canada. Eligible lading facility must be set up fr cars t be rdered thrugh CN Grain Car Order ebusiness tl, and have sufficient car spt capacity t receive all cars rdered in ne week, in multiples f 25-car lts, fr placement at ne time n arrival in a single switching peratin. Prgram is nt available fr rigins served by an interswitching carrier, r fr CN-served sidings made available fr lading f cars that are rdered thrugh and allcated by the Canadian Grain Cmmissin under sectin 87(2) f the Canada Grain Act. What may be shipped under the prgram? Wheat, Barley, Oats, Canla, Flaxseed, Special Crps, Crn r Sybeans. Prgram is intended fr cnsistent, year-rund shipping t balance demand fr railway assets and resurces within CN s manifest train service design. Cars are t be rdered and shipped in 25-car lts, destinatin-blcked in multiples f 25-cars. Nt intended fr unit train shipping. T which markets will the prgram apply? Cmmercial crridrs frm Western Canada t destinatins in the US, r Easterm Canada, r Western Canada. In Grain Car Order tl, eligible crridrs are EC Eastern Canada, UE US via Eastern 5
Western Canada- Fleet Integratin Prgram Gateways, UW US via Western Gateways (in BC), and WC Western Canada. Excludes Western grain mvements t prts. Excludes shipments t Mexic. Will CN pay fr excess mileage in private cars? Yes. In the event that the average actual mileage fr all cars accepted int the prgram frm a custmer incurs excess mileage, CN will pay the excess mileage charges. Yu ll need t supply CN with certified dcumentatin fr bth mileage and cst per mile fr the excess mileage. Will CN pay car hire n cars with railrad markings? N. Any railrad-marked cars accepted int the prgram frm a custmer will be zer-rated fr car hire time and mileage and private-marked cars will be exempt frm mileage charges while n CN lines. Yu will need t prvide CN the car wner s authrizatin t zer-rate in writing. Wh is respnsible fr maintenance and repairs f private equipment in the prgram? Respnsibility fr taxes, maintenance and repairs f private equipment (including gates and hatches) in the prgram will remain the respnsibility f the car wner r, fr a leased car, the party that wuld therwise bear such csts under the lease. What if there are mechanical r cntaminatin issues with the cars prvided by CN? Custmers are respnsible t cmpletely unlad the car and clse the gates. If cars are fund with cntaminatin, cars shuld be rejected. CN will investigate and take crrective actins. If the cause f cntaminatin is a specific prduct, that prduct will be remved as an eligible prduct under the prgram. What abut quality f equipment in the prgram? Cars put int the prgram must cnfrm t the requirements f the respnsible regulatry rganizatins in the US and Canada, including, but nt limited t, the American Assciatin f Railrads, the Federal Railway Administratin, Transprt Canada and the Transprtatin Safety Bard. Cars must be fully suitable fr use and yu are required t certify that the cars have nt been used fr the transprtatin f mammalian prducts (such as bne meal, bld meal, feather meal, etc.). Equipment that is fund t be defective will be switched ut and repaired. Rejectin rates are mnitred n a regular basis and if rejects are fund t be high, actins will be taken t imprve fleet quality. CN reserves the right t reject frm the prgram any car that is deemed t be unsuitable fr service fr reasns f mechanical cnditin, including high rejectin rates, r regulatry nn-cmpliance. 6
Western Canada- Fleet Integratin Prgram What are my ptins if there is a dwnturn in business? CN may be able t use the integrated car fleet capacity. A penalty wuld nly apply if cars cannt be used. Yu must als prvide strage facilities fr the number f cars yu have placed in the prgram. If yu are unable t prvide strage facilities, yu will als be subject t car strage charges. Can I exit the prgram early? Custmers will cmmit their fleet under the 2014 prgram fr the minimum term until July 31, 2015. While the expectatin is that custmers will cmplete the full term f their agreement if this extends beynd July 31, 2015, CN recgnizes there may be factrs that can cause yu t seek t exit the prgram early. In this situatin, yu must prvide 90 days advance ntificatin t CN f the redelivery date, which can be n earlier than the later f July 31, 2015 r the date when 75% f the term f the agreement has been cmpleted. We will plan t switch ut the private equipment t return t yur designated dispsitin lcatin befre the date yu intend t have the cars remved frm the integrated fleet. Yu will be respnsible fr a C$400 per car switch fee, and an amunt equal t the number f cars t be remved, times the number f remaining Perids in the agreement, times the Car Utilizatin Fee. Beynd the redelivery date, CN will pay a daily fee until such car is returned t yu. Will OT-5 Authrity be required? Yes. Custmers that participate in the prgram and add private cars int the CN Western fleet must apply fr OT-5 authrity and btain prir apprval frm CN. The OT-5 applicatin requires custmer t designate rigins and strage lcatins fr the cars being integrated. Fr further infrmatin, cntact yur CN Accunt Manager. 7