Wow, sorry to hear you're having a problem with shrinkage. I've used cedar but never that style fence - (mostly the "ventilated privacy" type w/vertical boards alternate front-to-back on horizontal stringers, or "picket fence" style.)
Western red cedar is supposed to be one of the more dimensionally stable outdoor woods. Was it kiln dried, green? You might ask the supplier what they can tell you about how it was dried and if you should expect it to become more stable after it has weathered to some point. . .sorry, I don't know more about it.
Stars