Ottawa Ontario - Last week's passage of the 2023 federal budget starts a 90 day countdown toward an 18 month test of expanded interswitching on railways in the three Prairie provinces.
 
Bill C-47, the government's budget implementation bill, which was first read 20 Apr 2023 in the House of Commons and got third reading in the Senate and royal assent on 22 Jun 2023 includes amendments to section 127 of the Canada Transportation Act, extending rail interswitching radius within the Prairies to 160 kilometres, up from 30 currently.
 
Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul, that is, if the point of origin or destination of a "continuous movement of traffic" within the Prairie provinces is also within the given radius of an interchange between two companies' rail lines.
 
In other words, as the Western Grain Elevator Association, which declared its support for the provision in a release Tuesday said, it "gives shippers in all sectors who are physically located on a single rail line, the ability to automatically seek competing service and rates from an alternate carrier."
 
The 18 month pilot expansion "is expected to bring about an increased level of competition among railway service providers, and represents an incremental gain for supply chains and the Canadian economy more broadly," the WGEA said.
 
The budget bill calls for the interswitching pilot to come into effect on the 90th day after the bill received royal assent, that is, 20 Sep 2023.
 
The previous Conservative government had set up a temporary extension of the interswitching radius to 160 kilometres in 2014, but that extension was sunsetted in 2016.
 
The Railway Association of Canada, which represents almost 60 railways including Canadian National Railway and CPKC, in March ripped the current Liberal government's plan as a resurrection of a "failed policy" that was "misguided and harmful to Canada's supply chains."
 
A number of farmer groups disagreed, launching a campaign this spring called "Flip The Switch," calling for the budget provision to be boosted even further to a five-year pilot and a 500 kilometre interswitching distance.
 
For its part, the WGEA said Tuesday that when the 18 month pilot is done, it plans to ask the federal government to make the expansion permanent, "regardless of how often physical interchanges occur."
 
The association said it would also ask for an increase to the radius, so as "to give all shippers at least one other competitive shipping option."
 
The interswitching provision "recognizes that competitive tension is one of the basic tenets of a well-functioning marketplace," WGEA executive director Wade Sobkowich said.
 
"Shippers prefer to use the rail carrier that services their facility first and foremost, however, the provision offers an alternative when service or freight rates are less than adequate."
 
Dave Bedard.