Ottawa Ontario - Canada's freight rail transportation system is one of the strongest in the world, as measured by virtually any metric.
 
As other modes of transportation struggled with repeated disruptions in recent years, our industry continued to move trains safely, efficiently, and reliably, while overcoming challenges such as rail blockades, a pandemic (and the government's policy response to it), historic flooding, and wildfires.
 
Long-term investments by my company, CPKC, and others have resulted in safe and dependable service, including record grain volumes this crop year, while keeping shipping costs among the lowest in the world.
 
In fact, freight rail may be the best-functioning part of Canada's transportation system today.
 
Unfortunately, new regulation proposed in the Trudeau government's 2023 budget needlessly and recklessly jeopardizes that success.
 
The government is proposing legislation to bring back "extended interswitching", a policy that encourages the unnecessary transferring of rail cars between railways.
 
It is a regulation that forces railways to bring rail traffic moving on its own network, whether individual cars or an entire train, over to a competitor's network, with shippers paying a regulated, below-market rate that leaves railways unable to generate a return.
 
There is no sound justification for this policy, which will create avoidable inefficiency and unnecessary complexity in Canada's supply chains.
 
The most efficient way to move goods is with as few interchanges as possible.
 
Think of it this way, it is most efficient to fly direct, on one airline, without stops at multiple airports.
 
Railways are similar.
 
Encouraging additional, avoidable, interchanges is bad public policy.
 
By adding delays and congestion, extended interswitching will result in less rail capacity and higher greenhouse gas emissions.
 
It will increase, not lower, transportation costs for all shippers.
 
Ultimately, it will drive up prices for goods at a time when Canadians are already coping with high inflation.
 
Advocates for extended interswitching argue it is needed to give shippers access to other railways to support competition.
 
What advocates won't say is that shippers already have this access under Canadian transportation law.
 
But today shippers must pay a commercial rate to use another railway.
 
Under extended interswitching, shippers would pay the regulated rate.
 
This is shortsighted and damaging.
 
The returns generated by railways are invested into safety and capacity, benefiting all shippers and the Canadian economy.
 
Extended interswitching will chase investment dollars and jobs out of Canada.
 
This is the opposite of what Canada's transportation system needs.
 
CPKC competes fiercely against other railways and modes of transportation, and we always welcome more intense competition on a level playing-field.
 
Canadian Pacific's recent combination with Kansas City Southern forming CPKC is all about creating new competition and providing rail customers new choices.
 
But extended interswitching isn't about competition. it's about some shippers wanting to manipulate regulation to pay less.
 
But regulating rates down for some shippers unavoidably raises them for others.
 
As an industry, Canada's freight rail system already has among the lowest freight rates in the world.
 
On average, Canadian freight rates are 11 percent lower than those in the United States and significantly lower than in comparable countries in Western Europe and Japan.
 
Canadian grain and grain products move at rates that are approximately 30 percent lower than the Canadian average rate.
 
Canada saw the harmful consequences of extended interswitching when it was in place temporarily, from 2014 to 2017.
 
An independent review commissioned by Transport Canada in 2016 thoroughly studied extended interswitching, the same proposal now before Parliament, and concluded it should be ended.
 
All Parliamentarians should reject resurrecting this damaging policy and insist on a serious, fact-based approach to encourage more investment, capacity, and resiliency in the rail transportation system.
 
A particularly harmful feature of extended interswitching gives U.S. railways a competitive advantage over Canadian railways because there is no comparable regulatory requirement in the United States.
 
U.S. railways will be able to reach hundreds of kilometers into Canada to solicit Canadian business at a lower, regulated, cost-based rate.
 
Canadian railways will lose the business and be forced to hand it over to their competitors.
 
The reverse is not possible for Canadian railways in the United States as there is no law that forces a railway to hand over traffic to its competitor.
 
If Parliament approves this policy, it must at least insist on excluding U.S. railways to avoid leaving Canadian railways at a disadvantage.
 
Canadian railways welcome intense competition but the rules need to be the same for all.
 
Allowing only some railways the ability to solicit and secure business from their competitors at regulated rates is not a level playing-field.
 
Canada's goals of low-cost freight transportation and maximizing supply chain capacity and efficiency are fundamentally incompatible with this legislation.
 
CPKC urges Parliament to do what is right for Canada's supply chains and Canadian consumers by rejecting the government's proposed legislation to resurrect extended interswitching.
 
Keith Creel.