Define good service to avoid disputes, gov’t intervention

Government regulation is a blunt tool, so it is no surprise that the new rules re-quiring the two main Canadian railways to carry a million tonnes of grain a week are creating inequities.


The federal government’s order in council relates only to volume to be moved, not where the grain comes from or where it goes.


To move the most grain volume possible, the railways are focusing efforts on corridors with fast turn-around times. 


Grain is moving from Alberta to the West Coast and from Manitoba to Thunder Bay, says Wayne Sobkowich of the Western Grain Elevators Association. Movement from Sask-atchewan elevators is less of a priority because of distance from port and longer turn-around times.


So Saskatchewan farmers will likely have fewer delivery opportunities, more cash flow problems and larger unsold year-end stocks than their neighbours in Alberta and Manitoba.


As well, short-line railways in Saskatchewan are complaining of deteriorating services from the main railways since the federal order was imposed.


That is not fair, but in an emergency we might have to live for a short time with some unfairness so as to clear out as much grain as possible and restore relationships with grain importers.


However, fairness and equity, as well as efficiency must be priorities as the federal government reworks the long-term regulatory structure for Canada’s rail sector. Railways should not be allowed to dominate and dictate where grain goes, becoming the de facto manager of Canada’s grain trade priorities.


Bill C-30, the Fair Rail for Grain Farmers Act, takes the first steps toward levelling the dynamics in the grain transportation sector, which until now have been weighted in favour of the railways.


The act extends the order to move a million tonnes a week to the end of this crop year, and new reporting requirements will provide the industry with more detailed information to help it better plan and co-ordinate shipping capacity to meet sales obligations.


The legislation will likely also allow the Canadian Transportation Agency to assess financial damages caused by poor rail service and award compensation to shippers for unexpected costs.


It will also inject more competition into the system by expanding interswitching distances to 160 kilometres from 30 km.


These are good first steps, but further efforts are needed. First among them is to define what constitutes poor service and what service railways should provide.


Otherwise, anytime a complaint goes to arbitration, shippers must fight to define the appropriate level of service. Such undertakings are so costly they negate the value of service agreements.


A coalition of freight shippers representing grain, forest products and fertilizer has argued this point for years. 


The review of the flawed Fair Rail Freight Service Act, moved forward to this summer, presents another opportunity for the federal government to implement this recommendation to balance the relationship between railways and shippers.


That will make the rail transportation sector function more like a true competitive free market, which can work out problems fairly and expeditiously without the need for constant government intervention that is always too late and inadequate to address every need fairly. 


Never again should rail problems turn a bumper crop, the golden product of so much sweat, investment and planning, into a disaster for farmers.

Bruce Dyck, Terry Fries, Barb Glen and D’Arce McMillan collaborate in the writing of Western Producer editorials.