Industry Issues: Prepare for Another Volley From the Railway Lobbyists
February 1, 2004
The trucking industry in Ontario has come under unfair attack again from the Railway Association of Canada for use of the province's highway system.The industry in all parts of the country should be p...
The trucking industry in Ontario has come under unfair attack again from the Railway Association of Canada for use of the province’s highway system.
The industry in all parts of the country should be prepared as the arguments on both sides will be very similar.
The contention is, if more freight moved by rail, congestion on GTA highways would be reduced.
In addition to being based on a distorted view of the facts, this notion ignores the real reason why most Ontario businesses prefer trucking to rail.
Rail is cheaper than truck.
But it cannot provide the level of service demanded by today’s just-in-time inventory systems, synchronous manufacturing processes and express retail delivery.
The trucking industry’s commitment to service and its ability to meet shipper demands is what has made it Number One.
Does it make sense then to hamstring the mode of freight transport that best meets the needs of the economy to try and prop up another mode, whose service applies to a specific market segment (long haul, less time-sensitive shipment of bulk commodities) but cannot provide the service needed by high value-added goods-producing industries?
The arguments employed by the advocates of modal shift rely on some popular myths espoused by the railway industry: (1) Toronto’s congestion problems are the result of truck traffic; (2) Highways are provided by government for free; (3) All road users, but especially trucks, do not pay their fair share of highway costs and should be more heavily taxed.
Trucks are not a chief cause of congestion and gridlock in the GTA.
There are a lot more cars than trucks on the road, especially at peak traffic volumes.
Weather and accidents also play a significant role.
A recent report conducted for Transport Canada found that even at full capacity in terms of the amount of intermodal freight the railways could handle, less than 0.5 per cent of the traffic volume in passenger car equivalents on Highway 401 in the GTA would be removed.
Investment in additional highway capacity is seen as a bad thing. Road users are called “free riders” and it is argued that the costs of highways is “often free” to motorists and truckers alike. (Are other government services funded by the taxpayer such as health care and education also free)? User pay is the way to go – unless you are talking about transit riders.
But, Ontario motorists are paying significantly more in road-related fees than is being invested in highways. Combined, the provincial and federal governments bring in about $6 billion a year in revenues from fuel taxes and vehicle registration fees.
The Provincial Highway Management Program budget is about $1 billion. The federal government has no highway fund. The revenues from Ontario fuel taxes and registration fees generated from truckers alone pays for almost all (at least 85 per cent) of the provincial highway program costs.
We think that is more than a fair share.
Road users are not only paying for the highways, they are also making a major contribution to all other government provided services.
Trucks pay about three times the rate of tax on their diesel fuel compared to rail diesel.
If modal shift occurs, will the railways make up the shortfall in government revenues?
Groups like the railway association claim to be champions for more investment in commuter rail and public transit.
But are they prepared to review the significant rental and maintenance fees the railways charge services like GO Transit for use of their rail lines?
No, they want the road user to pay the shot.
They want motorists to pay more tolls and more for parking, gasoline and automobiles.
Other arguments – e.g., trucks do most of the damage to highways; the Europeans have found a way to shift freight from truck to rail; and more rail means less air pollution, are also inconsistent with the evidence.
Our freeze/thaw cycles are the chief cause of pavement damage. Environmental laws in both Canada and the United States mandate that by the fall of 2006, the smog-causing emissions from heavy truck diesel fuel and new heavy truck engines will be virtually eliminated.
(Railways are exempt from such laws in Canada).
Despite taxes, weight restrictions and other punitive measures imposed on trucks by some European countries, the growth of trucking is still outpacing rail.
The reason, as cited by the OECD for example, is the same as it is here – superior performance on just-in-time delivery.
– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.