The battle over railway running rights boiled over last week when the president of CN Rail delivered a flurry of cutting remarks about short-line operator Omnitrax.
In an April 10 speech to the Canada Grains Council, Paul Tellier singled out the company during a speech urging teamwork among the discordant players in the Canadian grain industry.
Tellier said all players stand to gain if they work toward “just-in-time” delivery for grain from prairie to port.
But he flatly rejected regional railway proposals from Omnitrax and Ferroequus Rail Company. CN is interested only in commercial partnerships with short lines, not those forced by government intervention, he said.
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Tellier pointed out the Omnitrax and Ferroequus proposals overlap in North Battleford, Sask., providing a case study of the pitfalls of open access running rights. There are small volumes in the area, said Tellier, and the two short lines and CN would be splitting what volumes there are. Tellier also noted that, by law, CN is not allowed to refuse traffic, yet Omnitrax would have that ability.
“(Omnitrax wants) to pick and choose the high-throughput business and basically they are riding on the wave of discontent that arises as a result of the farm income crisis.”
Later, Tellier told reporters Omnitrax has been “very, very skillful in terms of their political relationships.”
He compared the short line’s Canada Transportation Agency application to a farmer asking the government to grant the right to farm on a neighbor’s land for a bargain rent.
Tellier boasted to the luncheon audience that CN is a Canadian business success story, and questioned why the government and industry would allow Omnitrax, “a suitcase operator in this country … (to) run on our tracks.”
He also noted CN was instrumental in bringing Omnitrax to Canada when it sold the Churchhill line to the Denver-based company.
“What I object to is we at CN to a large extent have given birth to the short-line industry in this country,” Tellier told reporters.
He said CN might be willing to sell or rent lines to Omnitrax, “but I’m not going to have a bunch of bureaucrats negotiating the rent.”
Omnitrax first started discussing its farmer-friendly concept for a regional railroad last May.
Waiting for proposal
Although the idea has been publicly aired for a year, Tellier said he has yet to see a description of the proposal from the company, and criticized Omnitrax for failing to approach CN about its ideas directly.
A spokesperson for Omnitrax said officials from both companies have met to discuss the short line’s proposal on several occasions, most recently in January.
Genevieve Young, who works at an Ottawa public relations firm, said Omnitrax has little to say about Tellier’s harsh remarks.
“Generally, I’m pretty disappointed about the public name-calling, and I’m not going to get into a debate about that,” she said.
Tellier also took shots at Omnitrax’s recent sale of 1,450 kilometres of track in Kansas to a competing short-line railway called Watco Companies Inc.
Michael Babcock, a transportation economist at Kansas State University, said Omnitrax leaves behind mixed feelings in the state.
Omnitrax was first hailed for buying the line and trying to preserve rail service in 1992 when it was sold off by a Class 1 railroad. However, traffic on the line has stalled and declined over time, and not all shippers were happy with the short line.
“Put it this way: Everybody’s happy that Watco is going to be operating these lines,” said Babcock, noting Watco is known for being an innovative short line.
