Ottawa Ontario - A coalition of business associations are urging Ottawa not to intervene in a months-long backlog of grain shipments, saying the move would only cause widespread delays for other commodity shippers on Canada's highly integrated rail system.
In a letter obtained by the Financial Post Tuesday, a coalition of seven business associations urged Transportation Minister Marc Garneau to instead focus on Bill C-49, the sweeping Transportation Modernization Act currently making its way through the Senate.
"A singular emphasis on grain has the unintended but inevitable consequence of exacerbating rail service issues for other commodity sectors, skewing the railways' allocation of scarce capacity resources towards the movement of grain," the coalition said in a 9 Mar 2018 letter to Garneau.
The letter is a rebuttal against a push by Canadian grain shippers and farmers, who have called on Ottawa in recent weeks to issue an order-in-council to ease a persistent bottleneck in rail deliveries.
Following a season of higher-than-expected grain production in the Prairies, farmers are now faced with the most severe backlog in years, with many deliveries for wheat, oats, barley, and other products lagging months behind schedule.
The coalition of business associations is urging Ottawa to refrain from issuing an order, however, which was last used in 2013-2014 by former prime minister Stephen Harper when grain shipments were similarly backlogged.
"It gets the farmers off their backs, but it's bad policy," said Pierre Gratton, the president and CEO of the Mining Association of Canada, which is part of the coalition.
Mining firms in Canada account for roughly 48 percent of total shipper volumes on Canada's rail system, the association said, while grain suppliers account for about 13 percent.
It said that many of its members have also been suffering backlogs in recent months, including coal miners in southern B.C., copper and nickel miners in Manitoba, and refiners in Ontario.
The letters come amid pressure on Ottawa to alleviate delays.
Opposition MPs have been calling on the Liberal government to step in immediately, but the federal government has been hesitant to compel rail companies to move mandatory volumes of grain.
Last week the Minister of Transport, along with Minister of Agriculture and Agri-Food Lawrence MacAulay, told CN and CP in a letter that they were "disappointed" in the ongoing grain delays, and gave the companies until 15 Mar 2018 to respond with plans to address the backlogs.
The coalition of business associations are now pushing for last-minute amendments to Bill C-49, which it argues will better address what it considers systemic shortcomings in Canada's rail system.
Canada's rail giants, Canadian National Railway Co. and Canadian Pacific Railway Ltd., currently have an advantage over shippers, the coalition said, and Ottawa's latest attempt to reform Canada's rail system doesn't go far enough in addressing those issues.
The letter to Garneau called for "a more pro-active and more predictable response to rail capacity issues," adding that "speedy passage (of Bill C-49) will do nothing to alleviate the immediate crisis for grain or any other commodity."
The coalition instead called for two amendments that would give the Canadian Transportation Agency more authority to intervene in disputes between shippers and carriers, and also give shippers the right to present cost analyses during final offer arbitration (FOA) hearings.
The group claims the amendments would give suppliers of lumber, natural resources, and other commodities a more equal playing field during disputes.
Alongside the mining association, the coalition includes the Western Canadian Shippers' Coalition (WCSC), Forest Products Association of Canada (FPAC), Pulse Canada, Fertilizer Canada, the Chemistry Industry Association of Canada (CIAC), and the Freight Management Association of Canada (FMA).
The letter comes just as the window to amend Bill C-49 is closing.
Senate committee hearings on the bill closed on 28 Feb 2018 after the second reading, leaving one final opening to amend the broad-based legislation.
Any changes in the senate have to be sent to the House for final approval.
"It's the eleventh hour," Gratton said.
Some business groups, particularly those representing grain farmers and shippers, have called for an expedited passage of C-49.
CP also urged the senate and government in a written statement last week to push forward with C-49 in order to "bring some further certainty to the supply chain moving forward."
The business associations have been generally supportive of the bill, saying it goes further than other attempts in recent years to alleviate systemic shortcomings in Canada's rail system.
But it said some changes, like new data sharing responsibilities for rail companies, don't go far enough to help "captive" shippers who depend on a single rail carrier to move their product.
Several associations said in House committee hearings in September that CN and CP should be forced to disclose information in so-called "waybills," which include data about the rate, origin, destination, and physical route of individual shipments.
The sharing of data would create more transparency and accountability, they argue.
Carriers, for their part, said in committee meetings last September that compelling rail companies to disclose waybill information would be unfair, unless shippers were required to supply similar data.
Mining companies, like other suppliers, say that shipping delays are part of a broader problem that has plagued Canadian firms.
In September, a representative with Vancouver-based Teck Resources Ltd. told the House transportation committee that "rail service failures" had cost the company anywhere between $50 million and $200 million over 18 month periods during the past decade.
The metals and mining giant is CP's biggest customer and one of the largest shippers by volume in Canada.
OKthePK Joint Bar Editor: I can't help but wonder if there are sufficient grain hopper cars available... the Trudeau (the elder) Hoppers aren't getting any younger.