A coalition of rail shippers is pressuring Parliament to move quickly with changes that would compel railways to provide better service or face penalties.
It is urging MPs to ignore a key recommendation in the interim Rail Freight Service Review that the railways be given three more years to improve service.
In a letter to MPs, the coalition of agricultural, mining, forestry and automobile shippers said the panel’s interim report outlined service problems and an imbalance of market power in favour of the railways.
Read Also
Government, industry seek canola tariff resolution
Governments and industry continue to discuss how best to deal with Chinese tariffs on Canadian agricultural products, particularly canola.
But then it suggested no government action until a review of service improvements after three years.
“This review has established that the shippers have bona fide issues with rail freight service levels. Contrary to the claims of the railways, rail service has not improved overall in a significant way,” they said.
However, during a panel discussion at a joint Canada Grains Council- Grain Growers of Canada conference in Ottawa, Railway Association of Canada president Cliff Mackay insisted tougher regulations would be a bad idea and unnecessary.
Railways are improving service, do not have the monopolistic position and unfair market power portrayed by the freight service report and do not need the threat of sanctions to act.
“I think going that route is a disincentive to where you want to go, not an incentive,” he told shippers who went to microphones to denounce railway performance.
Shippers were not buying it.
Cargill Ltd. president Len Penner told the conference that while shippers would prefer to work out “market solutions” with the railways, they need some backup from government if that is not possible.
He said the Canada Transportation Act should be amended to give shippers the right to apply penalties when railways fail to meet agreed-upon performance standards set out in regulations.
In addition, a fast-track arbitration system should be established to deal with disputes and the Canadian Transportation Agency should be given enhanced investigative powers and the ability to launch a service complaint even in cases where an affected shipper has not launched a complaint.
Ian May, chair of the Western Canadian Shippers’ Coalition, told a news conference the issue is a power imbalance in the economy. Shippers are required to load when rail cars arrive or face penalties but there are no penalties for the railways when service is inadequate or inconsistent.
“Unless accountability is rebalanced, we are going to stifle economic recovery in Canada,” he said. “We are asking for immediate balance.”
Pulse Canada executive director Greg Cherewyk said his sector’s ability to expand exports is constrained by spotty rail service. Performance levels should be set, published and then policed by an independent watchdog.
However, there appeared little appetite among the shippers for a freight rate review and even some sympathy for the railway view that the revenue cap on grain movement reduces the railway incentive to provide better service.
“I don’t think the level of freight rates is the issue,” said Cargill’s Penner.
Some prairie farm groups, supported by the Canadian Wheat Board, have been calling for a freight rate review.
Mackay defended railway performance, insisting that service will be improved without tougher regulations.
He accused the panel, chaired by former Alberta agriculture minister Walter Paszkowski, of concluding that railways have excessive market power without any evidence.
