OTTAWA – CP Rail is not financially viable unless it can get more money from its customers, the railway president told MPs last week.
And that can only happen if Parliament amends its proposed new transportation act to give railways more market freedom, R.J. Ritchie told the Commons transport committee.
“We are not earning what it takes to sustain the business,” he told MPs. “By that most fundamental of measures, we are not viable even though there may be a modest profit.”
With shipper protection clauses still present in the proposed new Canada Transportation Act, the rules still are too biased against commodity carriers, he complained.
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“Taking the hand of regulation out of commercial negotiations is one way policy can give a positive signal about railway prospects,” said Ritchie. “It is a signal that investors can respond to.”
He asked MPs to cut service obligations in the proposed bill, to reduce the ability of shippers to seek relief from high rates from the Canadian Transportation Agency and to end the cap on grain freight rates in the year 2000.
Ritchie urged MPs to resist pleas from a string of shipper witnesses that have appeared before the committee asking that shipper protection be strengthened.
He said shippers served by just one railway have competitive choices with trucks and other transportation modes.
He said Canadian efforts to use regulations to create the appearance of competition have failed.
Because of it, railways have not been able to earn enough to invest in needed rail and rolling stock, said the CP president.
Ritchie said CP has “gone out on a limb” this year by increasing capital spending from a five-year average $150 million to $500 million.
He said the spending was increased because it is needed and because the company assumed it will be able to earn more in the new deregulated environment.
Shipper-friendly regulations proposed by the government throw that assumption into doubt, he said.
