CN’s Paul M. Tellier urges level playing field, better customs procedures to ease congestion at border

Railroads can play a bigger role in easing highway congestion at Canada-United States border crossings, but they need more government cooperation to do the job, said CN President and Chief Executive Officer Paul M. Tellier, speaking at a New York-Ontario Economic Summit.

CN moved the equivalent of 240,000 long-haul truckloads of freight between New York and Ontario last year, but Tellier said its ability to move ahead in reducing transborder highway congestion is being hampered by discriminatory tax policies in Canada and cumbersome United States customs procedures.

In a single year alone, says Tellier, drivers will wait the equivalent of 425 years to clear customs between Canada and the United States. But just when rairoads are ready to offer greater road relief, he says, a new U.S. customs policy is sometimes substantially delaying CN’s transborder freight trains.

“We could do more if the playing field between trucks and trains was level,” Tellier said. Taxes on rail inputs – fuel, material, equipment purchases and railroad rights-of-ways – are 50 per cent higher in Canada than in the U.S. In addition, he says, Canadian railroads pay heavier taxes than Canadian and U.S. truckers.

Tellier says another problem is U.S. Customs’ move to adopt a system of enforced customs compliance, in place of informed compliance. This recent practice is interrupting the flow of CN’s Canada-U.S. traffic. U.S. Customs officers stop CN’s high-speed intermodal trains so inspectors can examine specific containers. The result is service and scheduling disruptions that can affect as many as 40 trains per day in busy crossborder rail corridors.

Tellier has set out four proposals to improve procedures for customs clearance: harmonization of Canada and U.S. customs computer systems so that there is a single reporting requirement that would allow information to be shared by officials on both sides of the border; customs preclearance for all freight carriers having a proven record of customs compliance – a return to voluntary compliance; customs inspections of shipments at destination, rather than at border points, when this practice is more efficient; and the adoption of a “North American” customs perimeter for all offshore shipments reaching the continent, no matter what their origin or destination, with a single customs agency doing inspections, and allowing for a more seamless movement of goods across the Canada-U.S. border.