The biggest single user of Western Canada’s railway system says proposed amendments to the Canada Transportation Act don’t give prairie grain farmers and shippers what they need.
What they need is a system that will discipline freight rates and ensure that productivity savings realized by the railways are passed back to shippers, says Canadian Wheat Board director Ian McCreary.
The best way to accomplish that is to introduce a system of reverse onus running rights, he added, and that’s conspicuously absent from the package of amendments unveiled by the minister of transport March 24.
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“Getting productivity savings back to farmers is the number one issue,” said McCreary, who tracks transportation issues for the CWB’s board of directors. “Reverse onus running rights is our tool to get that.”
Under reverse onus running rights, it would be up to a railway to prove that a request by a competing carrier to operate on its tracks would be contrary to the public interest. Under existing rules, it’s up to an applicant to prove that its request would serve the public interest.
“That would give us some commercial lever to deal with the railways,” McCreary said. “If they’re not passing the productivity gains back, then you bring in somebody who will.”
Failing that, he said, the only other alternative to deal with the productivity sharing issue is to conduct a full railway cost review.
“There is no tool in this act to do either one.”
McCreary said he’s disappointed, but not surprised, that the proposed amendments don’t include a reference to running rights, given the strong opposition by the two national rail companies to such a proposal.
A Transport Canada official has said Canadian Pacific Railway was the strongest objector to running rights.
A senior CPR official told a recent grain industry conference in Winnipeg that the company wouldn’t expand its system as long as running rights remain on the table.
In an interview last week, CPR spokesperson Ed Greenberg declined to comment on the government’s CTA amendments.
“We feel it’s just too early to respond in specifics since the proposed changes have to go through parliamentary review and debate and possible revision,” he said.
He acknowledged that the company has made its views known to the government in recent weeks.
“We gave our company’s position on behalf of our customers on a matter we take very seriously.”
James Nolan, an agricultural economist and transportation expert at the University of Saskatchewan, said he thought the government might introduce running rights as a limited experiment, adding that the railways could actually do well under such a system.
They could pick and choose the services they provide, keeping what’s profitable and selling off other services to anyone who’s willing to do it at a lower cost.
“If it’s done correctly, the railways could actually make money through rent they collect in a running rights system, but for some reason they’ve dug their heels in.”
He said adding a fee structure could be negotiated or set by regulation.
“They seem to be so concerned with protecting their markets, they don’t seem to want to look for ways to do things more efficiently.”
McCreary said there are good things in the package of amendments, including final offer arbitration, maximum inter-switching rates and dropping the requirement that the Canadian Transportation Agency be satisfied that a shipper could suffer substantial commercial harm before intervening in a rate dispute.
Another amendment that would require the railways to publish a list of sidings available for producer car loading and provide 60 days notice before abandoning them needs more study.
“I don’t think we’ve got enough protection there,” he said, noting that a formal process is needed to assist interested parties in buying sidings.
