CTA review recommendations could give US railways competitive advantage, CPR’s Ritchie charges

Some proposals contained in the review of the Canada Transportation Act review released yesterday could, if implemented, hurt Canadian railways by increasing industry regulation and giving their US competitors a competitive advantage in the movement of North American freight, says Rob Ritchie, President and Chief Executive Officer of CPR.

“With Canadian industry huddled so close to the US border, policy proposals that would give US carriers an advantage, without reciprocal rights for Canadian carriers, present a potential economic risk to Canada,” Ritchie said.

Ritchie did, however, say he is pleased with the CTA review panel’s thoughts on the need for competition in the Canadian railway industry.

“CPR believes two strong national railways are in the public interest. And we believe the CTA’s report is walking in step with this fundamental principle,” he said. “The findings of the CTA Review panel provide the Transport Minister with some important insight into the competitive landscape and echoes some of the industry’s concerns about sustainability and the need for continued investment in national infrastructure.”

In particular, the report, which is consistent with the interim submission by the CTAR Panel, acknowledges:

 there is significant competition within the transportation industry
 investment in national infrastructure depends on adequate returns and railway infrastructure requires ongoing, large capital expenditure. Lack of investment will lead to railway industry and service decline, as well as the potential need for federal subsidies
 average railway freight rates have declined by about 26 per cent between 1988 and 1999
 the Canadian grain transportation system should more fully embrace the principles of a commercial marketplace, which could ultimately result in the elimination of the current revenue cap on grain shipments
 there is a significant taxation imbalance that puts Canadian railways at a disadvantage against other Canadian and U.S. carriers

“Some important principles have been set out by the CTAR Panel, but the challenge lies in the movement from principle to policy, sustaining the objective of a strong national railway industry and the move to deregulation,” Ritchie added.

CPR will assess the CTA review report in more detail during the coming weeks and will continue to provide input to the federal government as it considers the report and develops a new transportation blueprint.