Poor rail co-ordination targeted in Vancouver

Canadian Transportation Agency holds hearing to look for answers after congestion issues emerge in city’s rail network

Vancouver — The Canadian Transportation Agency concluded two days of hearings in Vancouver last week, aimed at learning more about the causes of a railway snafu that delayed rail car deliveries, prompted a series of freight embargoes and resulted in undetermined financial losses for some shippers.

The hearings are part of an ongoing federal investigation into Vancouver-area rail service launched earlier this year and endorsed by federal Transportation Minister Marc Garneau.

Congestion issues began to emerge in some parts of the Vancouver-area rail network in late October 2018 and persisted until January 2019.

A CTA panel led by agency chair Scott Streiner heard oral presentations Jan. 29 – 30 from railway companies, port officials, commodity groups, legal experts and shippers, including agricultural groups whose export traffic was affected by the congestion and freight embargoes that followed.

Among other things, the CTA investigation hopes to determine if rail freight embargoes put in place by Canada’s two largest railway companies — Canadian National Railway and Canadian Pacific Railway — constituted discriminatory action against certain shippers or commodities, a scenario that could imply a breach of railways’ common carrier obligations under the Canada Transportation Act.

Officials from CP and CN have denied any wrongdoing and have defended the use of freight embargoes as an effective means of managing rail traffic and restoring fluidity to already congested areas of the Vancouver area railway network.

“This notion that we discriminate against certain commodities is incorrect,” CN’s vice-president of government affairs, Fiona Murray, told the CTA.

The implementation of freight embargoes and special shipping permits “did not cause the problem,” she added.

“It was a tool used to correct the problem.”

A total of 15 freight embargoes were imposed by Canada’s two largest railway companies in late 2018, including 12 by CN and three by CP.

Freight embargoes are used by railway companies to limit railway traffic in areas where congestion has occurred.

Some embargoes halt rail traffic completely. Others restrict traffic flows by requiring shippers to obtain special permits.

Senior managers from CN suggested that inconsistent rail car unloading operations at some Vancouver area terminals — particularly those handling forestry products — contributed to congestion in parts of the Vancouver rail network, resulting in service delays for other shippers.

Company representatives told the CTA that some shippers and terminals “have not and will not take steps to make sure inbound (rail car) flows match (terminal) unload capacity,” a scenario that turns CN operating yards into “parking lots” for loaded rail cars.

“CN would prefer that shippers and terminals … manage their own traffic flows, but our experience is that this does not happen,” said Shauntelle Paul, CN’s vice-president of network operations.

“Therefore, the only mechanism available to manage these types of flows is an industry process … an embargo with permits.”

Paul said poor co-ordination between some shippers and their receiving terminals is forcing CN to serve as “pipeline managers” rather than freight haulers.

She likened the situation to a commercial airline that sends a flight from Toronto to Vancouver but does not have clearance to land until the following week.

“You can circle the airport for a week or you can decide not to allow the plane to take off from Toronto,” she said.

“It was critical and necessary to take the action that we did,” added Doug Ryhorchuk, CN’s vice-president for the western region.

CP officials offered similar comments suggesting embargoes are “a tool of last resort” but are an effective way to control inbound traffic to areas that are operationally impaired.

“We are unaware of any evidence … to suggest that CP is failing to meet its level of service obligations,” company representatives told the inquiry.

CP acknowledged that some shippers experienced delays but insisted that embargoes were a “necessary, measured and reasonable” response.

At no time were any specific commodities or shippers discriminated against, CP added.

CP rail traffic that was supposed to be interchanged to CN’s rail system in New Westminster began to back up in late 2018.

Subsequent embargoes imposed by CP between Dec. 10 and Dec. 21 restricted pulp movements, CP grain shipments to North Shore export terminals, and transload traffic destined for South Shore container terminals, including pulse crops.

Embargoes imposed by CN affected pulp shipments and interchange traffic that were scheduled to be transferred to the CP and BNSF rail networks, including canola meal shipments destined for the California dairy market.

Both CN and CP said regular flow has been restored to the system, thanks largely to the use of embargoes.

Forrest Hume, a transportation lawyer representing the Freight Management Association of Canada (FMAC), urged the CTA to scrutinize the use of embargoes and determine whether they comply with the Canadian Transportation Act.

Under the act, railways cannot use “capacity issues” as justification for failing to provide adequate rail service, he added.

“The blunt instrument of an embargo … puts the railways in the position of being a regulator of national transportation policy,” Hume said.

The railway industry “is not the judge of whether an embargo complies with the law ….”

CN legal representative Doug Hodson suggested FMAC’s claims of wrongdoing were both prejudicial and unsubstantiated.

Hodson also questioned the “procedural fairness” of the CTA hearings, suggesting that some shipper groups had failed to provide empirical evidence to back their claims.

In addition, some written submissions delivered to the CTA by shipper groups were not shared with CN prior to the hearings.

Under those circumstances, “it’s neither fair nor possible to expect CN to deal with these types of allegations,” Hodson said.

The CTA will continue to gather information over the next few weeks.

The investigation, which was launched Jan. 14, must be concluded within 90 days.

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