Omnitrax intends to become Canada’s third major railway by adding up to 6,000 kilometres of branch lines to its existing 1,900 km of Canadian track.
The company says it has no desire to become a main-line carrier like CN Rail and CP Rail. It sees itself as the WestJet of the rail industry – a regional operator providing service on underused branch lines.
Omnitrax is creating a new entity called CanRail West Inc. to develop and manage this regional railway. But before Canada’s largest short-line rail company can transform, it needs to remove a legislative boulder blocking the track.
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Omnitrax chief financial officer Gary Rennick said he needs some help from the federal government to create this regional railway, which would help restore service to many rural communities in Saskatchewan and Manitoba – the two provinces on which CanRail West will initially focus.
“Not unlike the regulatory changes granted to WestJet Inc. facilitating access to western Canadian air passenger markets, we at CanRail West will be seeking what we call managed access provisions,” he told reporters at a Sept. 15 news conference.
He said CanRail West must have guaranteed access to operate its trains over portions of CN Rail and CP Rail track. Legislation must be changed so the onus is on the two major railways to prove that allowing access would not be in the public interest.
Rennick said the new railway will “rebuild and rejuvenate” Western Canada and bring improved rates and services to shippers in rural communities. It will also decrease the wear and tear on roads in Saskatchewan and Manitoba, which he said need $300 million in repairs.
It’s no coincidence the announcement comes in the middle of a comprehensive federal review of competitive access in the rail industry. A five-member review panel appointed by transport minister David Collenette has until Dec. 31 to complete an interim report on the issue of open access in the rail industry.
In addition to provisions allowing for managed access, Rennick wants that report to give regional railways:
- A smoother process for acquiring branch lines abandoned by the two major railways.
- The right to access all shippers and receivers of rail traffic on designated lines and enter into commercial arrangements with those parties.
- The ability to set single and joint line rates on designated lines.
- Open and secure access to the national grain hopper car fleet.
- The ability to negotiate fair access fees.
- Effective, inexpensive and quick mechanisms to resolve disputes.
Omnitrax, which is based in Denver, Colorado, also wants the revised Canada Transportation Act extended to apply to provincial railways.
Rennick said about 6,000 km of branch lines in Saskatchewan and Manitoba are not being serviced the way they should be. It would cost Omnitrax $100 million to buy the track if it were put up on the block.
CanRail West will attempt to buy up as much track as it can, adding it to the 1,300 km it owns in Manitoba and the 450 km it operates in Saskatchewan. The company also owns 150 km of track in British Columbia. Where it couldn’t acquire track, the company would rely on its proposed managed access concept to use stretches of rail owned by the main-line carriers.
Happy news
Short-line rail advocates say they are thrilled with the prospect of a new regional railway.
“This is a breath of fresh air for western Canadian farmers,” said Ron Gleim, Saskatchewan chair of the Western Rail Coalition.
“This will create the competition that the CTA review is looking for and we hope that the panel looks at this in a favorable light.”
He estimates it will put between $100 million and $500 million in farmer’s pockets, saving them $12 per tonne on handling and cleaning charges alone.
Rob Lobdell, spokesperson for West Central Road and Rail, a group that failed in its attempt to buy a short-line railway in southern Saskatchewan, is equally delighted.
“I’m hoping, and I know that many others are hoping, that CanRail West can do for the railway industry what WestJet has managed to do for the airline industry.”
Canadian Wheat Board chair Ken Ritter also welcomed the announcement.
“We have worked closely with Omnitrax now for three or four years. Our business has doubled with them. They’re good business partners and we look forward to continue to do business with them in the future.”
Saskatchewan Association of Rural Municipalities president Sinclair Harrison said it looks as though there may be one strong regional network of branch lines on the Prairies rather than a series of independently owned lines.
If all goes as planned, the railway will create up to 800 new jobs in Western Canada, said Rennick.
CanRail West will be guided by an advisory board of western business leaders and a working group of producer, industry and community leaders who will be appointed in upcoming weeks.
