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Business leaders unite to push Ottawa for legislated approach to solving rail service issues


OTTAWA, Ont. —: A group of CEOs and other senior executives from major resource sectors such as forestry, fertilizers, mining and agriculture converged in Ottawa this week to deliver the message that “now is the time to address inefficient and inadequate rail freight service.”

The business leaders, all members of the Coalition of Rail Shippers (CRS), brought their message directly to ministers, groups of MPs and key officials from Transport, Industry, Natural Resources, Agriculture, the Canadian Transportation Agency and the Prime Minister’s Office.

“For Resolute Forest Products, the inefficiencies of rail service have an impact on our bottom line and our ability to compete in fiercely competitive world markets”, said Richard Garneau, president and CEO. “For example, it’s unacceptable for our company to receive hundreds of unusable rail cars delivered to us each year, delaying delivery or resulting in direct damage of product. In today’s marketplace, you must be a reliable supplier. What we are asking of government is entirely reasonable.”

The CRS wants the government to implement legislation that would allow more balanced commercial relationships between railways and shippers. This would include the right to a service agreement between a rail company and a customer, backed up by a dispute settlement mechanism.

“The Canadian fertilizer industry urges the government to immediately pass legislation that will ensure the railways negotiate commercial agreements with all of our member companies to ensure that our products move to market efficiently and on time as this helps increase our trade and ensure Canadian economic growth and it helps farmers our customers provide a quality food supply for all Canadians,” says CFI member company executive and board chairman Norm Beug.

As reported previously on www.ctl.ca, the federal government is looking to draft legislation to give shippers the right to service agreements with the railways and a process to establish such agreements should commercial negotiations fail.

The Stakeholder Facilitation Committee did work with Rail Freight Service Review facilitator Jim Dinning in developing a template service agreement and a streamlined commercial dispute resolution process between railways and shippers. The committee had devoted five months towards a workable solution for both sides but ultimately was not able to agree on a commercial package.

 “Shippers expected the Facilitation process to impose solutions that would provide shippers with more leverage in shipper-carrier relationships,” Dinning said. “Shippers also linked the Facilitation process to the promised (federal government) legislation and their expectations extended beyond the scope or ability of the Facilitation process intended to establish commercial tools.”

Railways, meanwhile pointed to the positive improvements since the Rail Freight Service Review.

These include becoming more customer-centric to better serve customers, changing operational practices to improve service such as the scheduled grain plan through the establishment of collaboration agreements aimed at achieving continuous service improvements.

“Railways took the position that the process should result in a high-level template to guide bi-lateral negotiations. The railways’ perspective was that they were already required to meet common carrier obligations. They were not prepared to agree to a detailed template that would prescribe the outcome of bi-lateral negotiations. Nor would they agree to be bound by this template before the legislative processes commences,” Dinning wrote.

The railways strongly oppose regulatory intervention. They believe the improvements already put in place demonstrate that commercial, negotiated solutions to problems in the provision of service are possible.  

“We believe that the issue is ‘What is the problem?’ and ‘What is the pain?’ We will make improvements question by question, year by year,” Jean-Jacques Ruest, executive vice-president and chief marketing officer, CN, told us earlier this year. “The overall point about the Review is that for those who want to get on the page and be proactive and improve service, both CN and CP have the appetite to do this and both are interested in improving their reputations.”