19 October 2012

The Rail Freight Service Review Got it Right

The Coalition of Rail Shippers (CRS) notes a recent (5 Oct 2012) opinion piece in iPolitics, critical of the work of the independent Rail Freight Service Review and of the government promise to amend the Canada Transportation Act.
 
The shipper community is not asking for the government to manage relations between the railways and its customers as the article claims. Shippers continue to want commercial negotiations but need a fallback method to arrive at a Service Level Agreement (SLA) should direct negotiations fail.
 
In recent weeks, CN has been on a public relations offensive insisting that the CRS is asking for an onerous regulatory regime and government oversight that, as the CEO of CN, Claude Mongeau, keeps saying, would be "simply unprecedented in a market-based economy." This is not true.
 
What the CRS is actually asking for is the right to a SLA and a balanced dispute resolution process with consequences for non-performance by the railway. The railways should not fear these measures since they would only come into effect if normal commercial negotiations failed.
 
These recommendations reflect the findings released last year by the independent Rail Freight Service Review Panel. It had been set up by government after years of widespread and chronic complaints about inadequate railway service. The Panel report confirmed that the main problem is market dominance by the railways, an imbalance in market power, with shippers often captive to a single rail supplier to get their goods to market. The government has rightly pledged to follow-up on the panel recommendations to help level the playing field.
 
To characterize these proposals as unprecedented interference is also not consistent with the historical reality. Before the National Transportation Act of 1967, all aspects of railway pricing and operations were regulated. Rates could be neither raised nor lowered without regulatory approval. Wayside stations could not be closed without regulatory approval, passenger trains could not be discontinued without regulatory approval. Track could not be built or put in service without regulatory approval, and the list goes on. Looking at the current law with regard to "unprecedented interference", shippers have the right to binding arbitration to settle rate disputes.
 
The submissions of the CRS, the recommendations of the Rail Service Review Panel, and the government decision to accept and act on those recommendations are no more intrusive or unprecedented than the current binding arbitration on rates.
 
CN claims that customers are asking for an elite on-demand taxi service rather than hopping on a bus. Actually, what the customers want is for the bus to arrive in reasonably good shape and more or less on schedule. That would allow CRS members to be reliable suppliers and compete in the international marketplace while supporting more than three millions jobs.
 
Bob Ballantyne - President of the Canadian Industrial Transportation Association.