In backrooms and on social media, battle rages over law to expand railway competition
MONTREAL –
A brand new rail delivery rule is poised to drive up inefficiency and client prices.
Or it’s going to drive them straight down. It relies upon who you ask.
Set to return into impact with Ottawa’s federal price range invoice, an obscure legislation has Canada’s two foremost railways combating again over issues about bills and congestion, with the drama taking part in out in social media posts and a backroom lobbying push.
At the centre of the tempest in a practice yard is laws that goals to increase what’s referred to as prolonged interswitching, a seldom-heard time period that describes a essential follow within the rail business.
Interswitching refers back to the switch of cargo between two rail corporations at a degree the place their tracks meet. Extended interswitching is when Company A should transport that cargo alongside its personal tracks to a degree the place it meets Company B’s rails, and it is at present required on request for distances of as much as 30 kilometres.
The follow seeks to spur competitors, as somebody delivery from a grain elevator on Canadian National Railway Co. tracks, for instance, might select to have the freight transported by Canadian Pacific Kansas City Ltd. as a substitute if the worth is healthier.
The price range invoice, which handed within the House of Commons on Thursday and now awaits Senate approval, proposes a pilot that might prolong the interswitching zone to 160 kilometres from 30 kilometres within the three Prairie provinces for an 18-month interval.
The transfer goals to tamp down costs, nevertheless it has awoken Canada’s two railway giants, prompting them to go on the offensive to warn of the deep hurt they are saying it’s going to inflict.
“The cargo handoffs will snarl traffic; they will soak up time and personnel,” states a CN Rail advert that aired on a Canadian political affairs podcast. “They will result in delays. They will drive up the railways’ costs. And who do you think will pay for it? The same person who always pays: the consumer.”
Shipping occasions will develop by as much as 25 per cent, the advert warns, evaluating the cargo hand-offs to “forcing airlines to deliver passengers to their competitors back and forth on several flights instead of a direct non-stop.”
Echoing CN’s issues, CPKC stated the “drastic” and “extraordinary remedy” seeks to resolve a nonexistent drawback in a transfer that may additional enhance inflation.
Railways haven’t held again on makes an attempt to affect politicians, both.
Lobbyists with Canadian Pacific had 96 conferences with public workplace holders within the first 4 months of 2023, the identical quantity it posted by means of all of 2022, in keeping with the federal lobbyist registry. More than 30 concerned civil servants — primarily Transport Canada’s — or ministerial places of work. Another 10 had been sit-downs with House of Commons or Senate transport committee members. The Railway Association of Canada filed 17 lobbying studies for the reason that begin of the yr, versus seven for the whole thing of 2022.
On the opposite aspect of the problem are farmers, who disagree on just about each level. Industry teams say the change will result in decrease prices, increased effectivity, higher entry to markets and elevated competitors.
The debate is a heated one. John Corey, president of the Freight Management Association of Canada, stated the railways have “gone above and beyond apoplectic” of their objections, calling their claims of congestion, job cuts and American encroachment “B.S.”
“They can control their networks and control their customers … without having to adjust to competitive forces or adjust to what their customers may want,” stated Greg Cherewyk, who heads Pulse Canada, which represents 25,000 farmers of peas, lentils and beans. “There’s a reluctance to lose that power.”
Over the previous month, teams starting from the Alberta Wheat Commission to the Canadian Canola Growers Association have promoted the trouble on social media. Kevin Waugh, chair of the Conservatives’ Saskatchewan caucus, has touted the Liberal measure on Twitter as providing “greater flexibility in transportation choices” and “more efficient and cost-effective supply chains.”
Meanwhile, stances opposing the legislation have shaped the throughline of the Railway Association of Canada’s public statements for the reason that price range was tabled on March 28.
In an emailed assertion, affiliation CEO Marc Brazeau stated U.S. railroad operators can be ready “to reach hundreds of kilometres into Canada” to snap up shipments handed over involuntarily by home railways.
The Teamsters Canada Rail Conference, representing 16,000 employees, additionally warned of potential job cuts if U.S. operators decide up extra business.
Moreover, Ottawa slid the develop into the 2023 price range “without consulting railways,” Brazeau claimed.
The authorities primarily based its determination on a advice from a provide chain activity drive report final fall, stated Nadine Ramadan, a spokeswoman for Transport Minister Omar Alghabra.
“The railways were actively consulted throughout the task force process, and both Transport Canada and our office continue to communicate with the railways regularly,” she stated in an e mail.
The pilot is particular to the Prairies to keep away from clogging key arteries such because the B.C. Lower Mainland or the Quebec-Windsor hall, she stated.
“There are very minimal operational changes,” stated Wade Sobkowich, who heads the Western Grain Elevator Association, which handles 90 per cent of the grain grown in a given yr — largely for export. When the same prolonged interchange rule got here into impact for 3 years beginning in 2014, lower than one per cent of the grain was interchanged inside 160 kilometres of the delivery level, he stated.
Railways that hope to avoid prolonged interswitching might merely decrease their costs to retain their clients, he argued.
“What it does is it gives the shippers some bargaining power,” he stated.
This report by The Canadian Press was first printed June 11, 2023.
