Canada Review Triggers Railroad Complaints

Canada Review Triggers Railroad Complaints

A Canadian government plan to legislate new freight rail rules triggered complaints by the country’s two major railroads, while shippers hailed the results of a federal review of rail service.

Transport Minister Rob Merrifield and Agriculture Minister Gerry Ritz said the government plans to offer legislation that would give shippers the right to a rail service agreement, and take other measures to address shipper concerns.

That includes a six-month effort for railroads, shippers and other freight-sector stakeholders to “negotiate a template service agreement and streamlined dispute resolution process.”

Claude Mongeau, president and CEO of Canadian National Railway, the nation’s largest carrier and operator of extensive lines as well in the U.S., said that company “disagrees with the focus and tenor” of the review panel’s views. Mongeau said CN officials are concerned the panel’s recommendations “are drifting backward toward more regulation instead of encouraging the current momentum for positive change.”

Canadian Pacific Railway’s president and CEO, Fred Green, warned that “isolating the rail sector will not produce the desired results.” He said he was concerned over how panel recommendations involving regulation would be applied. “The devil will be in the details,” said Green. “We will work with the government to ensure equitable accountability is achieved throughout the supply chain and fosters further gains in service reliability.”

However, at the Canadian Industrial Transportation Association, President Bob Ballantyne said government-proposed actions “will, if implemented carefully, provide a framework that will help re-balance the market power between the buyers and sellers in the rail freight market and lead to improved commercial relations.”

The review panel determined, the CITA said, that rail freight “is not a normally functioning competitive market and that, for many shipper segments, railways have market dominance.”

The review was launched in 2008 amid shipper complaints over rail service. Since then, both CN and CP have negotiated numerous supply chain service agreements with industry groups, ports and terminal operators that set out performance goals and responsibilities.

Mongeau complained that the review failed to acknowledge many of the gains made in the past two year to address service issues, and took issue with the panel’s finding that railroads’ market power is a cause of service problems. “In the end, supply chain partners need to embrace change,” he said, “to drive better service and efficiency gains. Burdensome regulation targeting railroads alone is not the solution.”

-- Contact John D. Boyd at jboyd@joc.com.