Western Canada’s $5 billion grain transportation mess is now five months old. On March 7, the federal government finally did something about it.
Transport minister Lisa Raitt announced that an order in council will require Canadian National Railway and Canadian Pacific Railway to start moving a million tonnes of grain per week and provide 5,500 rail cars per company.
If those requirements are not met, the government will impose $100,000 per day fines. The railways must also report to Raitt on weekly shipments.
However, the government is giving the railways four weeks to ramp up to those numbers.
It’s about time the government acted, and at the very least, the order shows the railways that it means business. That being said, there is no indication yet whether it is even possible to crank out that many rail cars, or whether farmers will ever see any compensation for lost sales.
For anyone who is keeping track of this winter’s transportation disaster, the price tag of a failed agricultural economy includes lost and deferred sales, hungry livestock in British Columbia, demurrage costs at port and, on top of it all, lower grain prices.
CP president Hunter Harrison has said his company has moved massive amounts of grain this year despite the cold weather, but the Western Grain Elevators Association’s numbers show that the railways delivered 51,000 fewer-than-ordered rail cars as of mid-February.
Farm leaders, Saskatchewan premier Brad Wall, Liberal MP Ralph Goodale, NDP ag critic Malcolm Allen and Alberta agriculture minister Verlyn Olson have called on the government for weeks to use its powers under the Canada Transportation Act to bring the railways to heel.
Section 47 of the act states that the government may step in to “stabilize the national transportation system, including the imposition of capacity and pricing restraints” when “an extraordinary disruption to the effective continued operation of the national transportation system exists or is imminent.”
Agriculture minister Gerry Ritz had been attempting the conversational approach, but apparently has finally thrown in the towel on negotiations.
He does seem to realize that the emergency measures are only a start to solving the issues that have long plagued western Canadian grain transportation and have come to a dramatic head this year.
He announced that the government is preparing draft legislation to solve the long-term issues plaguing western Canadian grain transportation. While he is at it, he should closely look at amendments to the new Fair Rail Freight Service Act proposed by the Coalition of Rail Shippers.
The coalition includes almost every shipper in Canada, including coal, potash and other mineral producers. Every shipper in this country is in agreement on this, and the government must consider these amendments carefully.
There are three important changes.
One is that the act must define what constitutes service. Incredibly, this has never been done. The language regarding service in the act remains “suitable and adequate accommodation,” which is so vague as to mean nothing. The amendment clearly outlines service in five points, from timeliness to the quantity of rolling stock.
Another change recommends a way to measure whether these obligations have been fulfilled.
The other one deals with the consequences of not fulfilling them. Railways would have to directly compensate shippers for not fulfilling their contractual obligations, and an arbitrator would assist in determining the amounts.
Hopefully, the government’s action is not too little, too late.
Canada’s agricultural reputation is at stake. It doesn’t matter how wonderful our quality is if we cannot deliver.