A CP locomotive - Date/Photographer unknown - Canadian Pacific Railway.
22 April 2014
Don't Re-Regulate the Rails
Winnipeg Manitoba - In March of 2014, Ottawa pledged more than $14-billion over 10 years to infrastructure upgrades.
A half billion alone will be ploughed into fixes to Montreal's crumbling Champlain Bridge.
Over the next year, Canada's two biggest railways, CN and CP, will also get roughly $3-billion in infrastructure upgrades.
But in this case, taxpayers won't pay a cent for them.
That's because Canada's railways, unlike most transportation providers, build and maintain their own infrastructure, like track, bridges, and
tunnels.
Railways literally move Canada's economy, hauling one of the highest volumes of goods in the world at some of the lowest rates.
And they employ almost 35,000 people in the highest-paying union jobs in the industry.
Rail shipment is fully 16 times safer than trucking.
Canadians should be relieved, then, to know that explosive, flammable, and toxic cargo travels the iron road, not the Trans-Canada Highway.
And a single train emits roughly as much carbon as what 280 long-haul trucks do as they crisscross the country's roads and highways.
Unlike Canada's more coddled industries, like grain, subsidized since the last spike was drilled into the CP line in 1885, rail just wants to go about its
business.
And business, with demand for oil continuing to soar, is booming.
Although Canada's freight railways are the envy of the world, Ottawa doesn't seem to feel the same way.
In March, the Conservative government tabled a bill penalizing the railways because the delivery of grain had been slower than usual, the result of a perfect
storm: a record crop of grain and one of the coldest winters on record.
Even though the problem was way more complicated than Big Rail ignoring its producers and their agents, the government mandated CN and CP to deliver more,
faster, or face stiff penalties.
Then, on 26 Mar 2014, the government targeted the rail industry once more by introducing the Fair Rail for Grain Farmers Act.
The Act would force CN and CP to allow customers to transfer traffic between their rail lines at a greater distance, from 30 kilometres to an astonishing 160,
at a reduced, regulated rate.
This wide swath will mean extra moves, increased cost, crowded yards, and a sharp cut to railway revenue at a time when new purchases are needed.
It would open CN and CP to poaching by U.S. rail companies while back in Canada, traffic slows as bureaucrats filter through ledgers of railway costing to
determine rates.
Although Transport Minister Lisa Raitt acknowledged the need for a stronger supply chain in introducing the legislation, it fails to address a major problem
which is causing disturbances and slow-downs.
So-called rail car over-ordering is a practice whereby grain companies flood the supply chain with more requests for cars than it can handle.
To over-order cars when the system, that is the elevators or ports, are so jammed they can't handle more wheat, is a practice which needs to be
halted.
With close to a half-trillion dollars in goods moving by rail every year, the Canadian economy depends on the smooth flow of the entire supply
chain.
The new legislation is diverting 11,000 cars every week to move grain.
But, this won't cure the problem.
The Port of Prince Rupert can't take any more grain, Vancouver is close to capacity, and Thunder Bay needs ice-breakers to break four feet of ice before it can
even move grain from its storage facilities.
CN's CEO calls this "bad, bad, policy," and he's right.
With the new legislation the Conservative government has begun re-regulating Canada's rail system.
This will affect the country's economy, its tax base, and employment levels.
Walter Spracklin, a rail analyst with RBC Capital Markets expressed "bewilderment" at the origin of the legislation.
"Traffic," he says, "will disappear from the Canadian supply chain, weakening all stakeholders' positions, ports, trucking
etc."
It will also deter new investment and investors, making railway planning difficult.
The policy appears to have been made in haste and without consultation of other supply chain stakeholders, even major players like the railways.
The proposed Act would overturn a commercial system in favour of old style heavy-handed regulation.
Rail companies say their main request of government is to be left alone to continue hauling goods at the lowest prices in the world.
Former transport minister C.D. Howe once told the air industry, "You keep out of my pockets and I'll stay out of your hair."
This is what the railways want.
Mary-Jane Bennett
|