CN purchases B.C. Rail rights from province

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VANCOUVER, B.C. — Canadian National Railway has purchased the rights to B.C. Rail’s freight operation from the province for $1 billion.

The deal was announced Tuesday. It’s a 60-year deal which can be extended to 90 years afterwards. The province remains the owner of the rail bed and right-of-way.

"This partnership is a $1-billion investment in the future of B.C.," said Premier Gordon Campbell. "It will provide lower rates, faster service, new transportation infrastructure, new jobs and new resources for economic development in the North. Northern communities, shippers, and resource industries have made clear that BC Rail is failing them. This partnership directly addresses the needs that mayors and shippers told us must be met. By providing better service, an expanded Port of Prince Rupert and significant new community investments for Prince George and the North, the partnership will be a major new source of economic development for our entire province."

The union representing B.C. Rail employees fears this will result in more than 1,000 people being laid off. CN has announced it will cut 430 positions over three years primarily in North Vancouver and Squamish. The company hasn’t discounted the possibility of further layoffs.

“As we do everywhere on our railroad, we will look for new ways of doing things, find new initiatives for productivity,” CN’s chief financial officer Claude Mongeau told local media. “It’s possible over time with new ideas that it won’t be 950 (workers who find jobs with CN), it will be 900.”

CN plans to use B.C. Rail’s assets to step up its competition against Canadian Pacific for forest products business. The deal between the province and CN does not allow the railway to close any portion of B.C. Rail line for five years, despite union concerns that some sections of rail line will be shut down.

Part of the deal also included a $32.2 million commitment from the province and CN for the Port of Prince Rupert, where CN plans to expand its operations. The investment is aimed at turning Prince Rupert into a high-volume container port.

“Look at the Port of Vancouver. Last year containerized traffic grew by 27 per cent. It’s up another 16 per cent this year,” Port Authority president, Don Krusel told local media. “I don’t think too many people would challenge me when I say they’re reaching a critical point in sustaining that growth with the existing infrastructure. That’s not only Vancouver. That’s the Ports of L.A.-Long Beach, Oakland, Seattle-Tacoma. We’re off the launch pad now. It opens up the north to value added manufacturing. Once we have a container facility operating in Prince Rupert you can consider manufacturing facilities in Terrace or Smithers that build prefabricated modular homes for sale in China. We’re no longer going to be hewers of wood and drawers of water in the north.”

Other parts of the deal include an average seven per cent rate decrease for interline shippers, the addition of new 600 rail cars and the promise of a 30 per cent faster transit time between Prince George and Vancouver. There is also talk of a Chicago Express run for freight between Prince George and Chicago, which will get freight to the Windy City two days faster than before.

Also, CN plans to re-open the Dawson Creek to Hythe line to haul grain along that route. CN will assume B.C. Rail’s $500 million debt load, as part of the deal.

"CN set itself apart from the other proponents with its capacity to re-invest in the railway and to link shippers with markets across North America," said Transportation Minister Judith Reid. "Combining CN’s infrastructure with that of BC Rail will ensure a prosperous future for British Columbia’s rail industry and railway communities."

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