Hundreds of pages of submissions are flowing to the panel reviewing the Canada Transportation Act.
The CTA review is a precious opportunity to improve rail transportation for all commodities. Grain is arguably the most engaged of any sector.
The chair of the review panel is David Emerson, a former federal cabinet minister with wide-ranging business experience. He will report back to the transport minister with the panel’s recommendations by Dec. 24.
The go-to person on the panel for the grain industry is Murad Al-Katib, the head of AGT Food and Ingredients. Al-Katib is one of the largest pulse crop exporters in the world and has first-hand experience with and knowledge of grain logistics.
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Most farm organizations and grain shippers are sending similar messages to the panel. In many cases, groups are working together to craft joint submissions.
The overwhelming view is that the two main railways don’t operate in a commercially competitive environment and proper regulations are needed to ensure railway performance.
Grain is captive to rail because in most cases trucking isn’t a viable option. As well, the two railways don’t seriously compete with each other. Most grain delivery points are served by only one railway.
The railways want to move commodities in a least-cost manner to maximize shareholder returns. Surge capacity costs money. Finding way to keep trains running in cold weather is also expensive. They want to employ the fewest resources possible to sweat their equity.
The railways know the grain will still be there when they get to it. Missed sales, demurrage charges and shattered business relationships aren’t their concern, unless of course it leads to new regulatory requirements.
Balanced accountability is one of the solutions. Shippers are penalized if they don’t load rail cars within an allotted time, but no such accountability exists for the railways.
Loading 100 rail cars within 24 hours is commonplace for high-throughput terminals, which works out to more than four cars per hour. Miss that loading window and you lose your freight incentive. Cold weather, labour shortages and equipment failure are not valid excuses.
Shippers often don’t receive all the cars they’ve ordered, even in times of relatively good grain movement. There are no ramifications for the railway if allocated cars arrive several days late or if they’re still sitting on the siding several days after being loaded.
Similarly, there are no monetary penalties if the train is delayed somewhere on the way to its destination.
Railway lobbying is in high gear as they try to ward off potential rule changes such as reciprocal penalties. In fact, the railways will probably argue that the grain revenue entitlement (revenue cap) should be ended so they can earn more money from grain movement.
The cap is actually a volume and distance related formula with built-in cost increases. Grain moving to the United States and Mexico is not under the cap, but service is no better. As well, commodities other than grain complain about the same lack of railway service.
The review panel has been in place since the end of June. and its work will continue throughout 2015. There will have been a general election by the time its final report is submitted, and goodness knows what the new government will look like or what the burning issues will be.
The review is a long, arduous process with no guarantee of tangible results, but it’s the best hope for improved grain transportation.
