Rail Report Riles Shippers

 

Long-standing grievances unresolved
railways get three more years to mend ways
 
By Alex Binkley
True North Perspective

Business news stories rarely get much notice but the rocky relationship between the two main freight railways and their largest customers has set the stage for a tough balancing act for the Harper government.

Much of the shipper community has waited patiently for the last few years hopeful longstanding grievances about rail transportation might finally be acted on.

The Rail Service Review Panel, established by the Conservatives to buy time in solving the acrimonious dispute, issued an interim report in October and gave both sides a month to comment on its recommendations before it prepares a final report for the government.

For all the report’s authors did to try to strike a balance, their ears are probably burning at the response. It goes way too far, the railways squawked. Too slow and ineffectual, the shippers charged, frustrated at what they see as further delay in resolving the issue.

The report says CN and CP have a powerful market dominance over their customers and aren’t accountable for their performance. The Panel recommends the carriers be given at least two years to clean up their act or face regulations imposing more control over their operations.

“The railways and shippers often have differences of opinion because they come at issues from different perspectives. However, the panel was struck by how significant the gap is and how it is straining relationships, likely to the detriment of overall system performance. The panel sees this as a very important issue and recognizes that it will take time to build the trust and confidence that are essential to maintaining effective relationships.

“Many shippers suggest that more needs to be done to enhance their ability to deal with railway service concerns. The Panel concurs on this point.”

Bob Ballantyne, president of the Canadian Industrial Transportation Association, says shippers need stronger government protection to balance the bargaining power between the buyers and sellers. “The recommendations tell the railways to play nice or we'll force you to play nice some time in the future.”

Avrim Lazar, President and CEO of the Forest Products Association of Canada, wants immediate government action. “If the railways were serious about improving service they would have done so by now. Service is poor because there is no effective competition. A delay is simply unacceptable and a deep blow to resource communities in rural Canadathat depend on rail shipping. Why would the government want to give the railways another three years of virtual monopoly status, three more years to underserve and overcharge, and three more years o failing to adequately serve rural communities. The government needs to do its job now.”

Ron Bonnett, President of the Canadian Federation of Agriculture, Canada’s largest farm organization, said, “The railways have historically fought off competitive measures such as open running rights and opposed regulations to maintain this monopoly.”

He renewed the call of many farm groups for tougher controls and a full review of the freight rates the railways can charge.

Richard Phillips, Executive Director of Grain Growers of Canada, said the panel simply lacked the courage to make meaningful recommendations. “We need legislative tools to ensure we have recourse to dealing with the railways including financial penalties for when they fail to perform.”

CN and CP both said there was no need for increased government regulation because they have developed service agreements with key customers in recent months and working on others. “These agreements focus on specific performance targets, clear service measures, and balanced accountability among supply chain participants within a commercial framework,” CN insisted.

CP said it has worked at improving the reliability of its service to customers. “As part of our efforts to continually improve supply chain performance and foster industry leading customer service, we have negotiated a number of service agreements with our key supply chain partners – including customers, ports and terminals.”