Rail improvements taking too long: FPAC

The head of the Forest Products Association of Canada (FPAC) says if Canadian railroads were serious about improving service they would have acted on all the criticisms that have been raised to the Rail Freight Service Review Panel.

FPAC president Avrim Lazar told the panel looking into the rail industry yesterday that the federal government should take action to Canadian Pacific and Canadian National railroads to improve service, particularly to resource industry shippers in rural and remote areas.

"If the railways were serious about improving service, they would have done so by now," Lazar said. "Service is poor because there’s no effective competition … and more delay will hit resource communities in rural Canada that depend on rail shipping… the railways should not have three more years to underserve and overcharge."

The panel, set up two years ago, rightly identified the problems, he said, but "it is terribly wrong to defer action for another three years."

Most pulp and paper and lumber mills are in remote areas and are captive to the rail monopoly, Lazar said. When the review began, they were told the government would act quickly.

"Regulatory action is needed now to ensure that a strong commodities sector can compete in international markets, create wealth, benefit all taxpayers and preserve jobs and communities."

The review panel’s interim report, released Friday, calls for "commercial measures" to resolve the problems, and suggests a 2013 deadline to do so before bringing in more regulations.

"[The panel has] recommended a regulatory fallback position," said Catherine Cobden, vice-president of regulatory affairs at FPAC. "We’re saying rather than do them as a fallback position, do them now."

The recommendations call on railways and shippers to cooperate on voluntarily implementing a minimum notification period for changes of rail service, to negotiate good-faith service agreements, to establish a dispute-resolution process and to make reporting of service performance more transparent.

The railways, however, disagree that they are being monopolistic and argue that they are improving service, so no additional regulations are necessary.

Industry stakeholders have until Nov. 8 to comment on the interim report; the review panel is due to submit its final report to Transport Minister Chuck Strahl by the end of the year.

CP Rail, in its response to the interim report, said it has negotiated service agreements with key customers and has embarked on initiatives to improve its reliability.

"CP supports the government’s goal of improving overall performance of Canada’s supply chain," which CP agrees should be based on commercial principles coupled with "a stable regulatory regime."

However, the railway does "not agree with the panel’s recommendation that additional regulation may be required."

CN Rail, in its response, took issue with the report’s implications that railways behave monopolistically.CNargued that it has consistently improved its performance with measures such as a scheduled service for grain shipments and the introduction of "scorecards" to improve accountability to customers.

"All stakeholders in the supply chain — shippers and receivers, terminal operators, port authorities, truckers and steamship lines — are accountable for system performance, not just railways," the CN statement said.

In its interim report, the review panel acknowledged the railways have begun initiatives that are improving service but that "further improvement in rail service is required, and these changes need to be lasting."