Move to give shippers right to service agreements with rail to be announced Tuesday?

WINNIPEG, Man. — Tuesday morning we may find out whether Ottawa will make good on stated plans to introduce legislation that will give shippers the right to service agreements with the railways and a process to establish such agreements should commercial negotiations fail.

Minister of Transport, Infrastructure and Communities, along with the Gerry Ritz, Minister of Agriculture and Agri-Food, are scheduled to make “ an important announcement and host a question and answer session regarding rail freight services and amendments to the Canada Transportation Act” in Winnipeg.

Members of the Coalition of Rail Shippers (CRS), which includes representation from major resource sectors such as forestry, fertilizers, mining and agriculture have been lobbying hard for just such legislation.

“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.”

As reported previously on www.ctl.ca, 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 railways, however, take a much different view of a legislated approach.

CN president and CEO Claude Mongeau has said the “intrusive” regulatory-based approach to service demanded by shippers would be “unprecedented in a market-based economy.”

“Such an approach would send mixed signals to customers and suppliers around the world about the government’s approach to commercial markets for rail transportation in Canada,” he believes, warning that legislation would deter railways’ willingness to innovate and to work collaboratively with customers to develop more ambitious service standards.

“It would chill the current service improvement momentum and would damage the supply chains that CN serves in the Canadian economy,” Mongeau says.

Canadian rail shippers began to push for such a framework back in 2006.  The Conservative government agreed in principle to a formal rail service review process in 2008 and appointed a panel to do the work in 2009.  The panel reported in 2010.  Just before the 2011 federal election, the government accepted its findings and promised legislation.

Six months later, in the fall of 2011, the Conservatives asked former Alberta Treasurer Jim Dinning to facilitate another process to find common ground between railways and shippers.  His work ended in April with no new solutions.  His report was released by the Conservatives just after the House of Commons had adjourned for the summer.

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

Railways, meanwhile point to 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.

Minister Lebel had said during the summer that his government would be looking to introduce legislation and that he wanted this final piece of the legislative process to be on the fast track.