THE Canadian Transportation Agency’s ruling regarding a level of service complaint has struck a blow in favour of competition and efficiency throughout the grain industry.
The relentless drive toward grain handler consolidation was fueled by grain companies and railways wanting to improve efficiency, drive down costs and improve their own profitability.
It is a natural process in the free enterprise system and it generally works for all, so long as the market is open to new players.
The idea is that if consolidation reduces service to customers, new players arrive to meet that need and provide new competition to the existing consolidators.
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But the grain handling sector faces an important limitation: companies can do business only if they have access to rail transportation, the lone economic option to move grain long distances.
There are only two national railways and each dominates a region: CP to the south and CN to the north.
If a railway imposes policies that limit access to its rails, that restricts competition in the grain handling business.
CN’s incentive program for companies that could load 100 cars at a time for a minimum of 30 weeks clearly discriminated against small and medium shippers. Indeed, only about 20 percent of primary grain elevators in Western Canada have sufficient car spot capacity to qualify.
It put CN, where it controlled rail service, in a position to pick winners and losers in the grain business and the CTA was right to rule against it.
The agency was also right to go beyond the specific service complaint to comment on wider dissatisfaction with CN’s performance.
It encouraged CN to “open new dialogue” with shippers to settle disputes and avoid a “proliferation of level of service complaints before the agency.” This implies that the CTA would not be happy if CN does not change its ways.
CN has reintroduced a program that allows shippers to book 50 car lots. That is good, but wider issues remain, related to reoccurring service complaints from the largest elevator company to the smallest special crop processor. Complaints are likely to increase as pressures increase on railways to accommodate growing traffic generated by lucrative Asian trade.
That is why it is vital that government and opposition parties give priority to federal bill C-55, which amends the Canada Transportation Act, when the House of Commons resumes sitting in the fall. The proposed changes are designed to protect shippers from potential railway abuses and provide the full level of service review of rail performance that shippers have long requested.
MPs are active in their ridings this summer as the election threat hangs over this minority Parliament. It is a good opportunity for farmers to emphasize to their elected representatives why they should favour this legislation.
