Rail Freight Service Review
On November 8, 2010, APAS submitted our comments to the Rail Service Review Panel’s Interim Report.
"In its interim report, released in October, the Service Review Panel provides a clear, consistent, and convincing analysis of the lack of competition in the rail transportation industry and the preponderance of power possessed by the railways in the marketplace. Non-railway stakeholders have long-identified it as the problem and the Panel’s application of the Competition Bureau’s methodology clearly confirmed it.
Indeed, the Panel rightly acknowledges that the lack of competition in the industry is the problem: “In the Panel’s view, the major cause of rail service problems is railway market power, which leads to an imbalance in the commercial relationships between the railways and other stakeholders. This, in turn, reduces the railways’ accountability for performance. As a result, railways do not always face the consequences that come from offering poor service that occur in other sectors in which competition is more prevalent.” (p. 37)
The Panel goes on to conclude that “If more stakeholders had access to effective competition and/or effective regulatory tools … it is unlikely that the government would have felt the need to undertake the current service review.” (p. 38)
The interim report goes on to make four things very clear:
- That there is no competition in the industry; the railways have all the market power.
- The Panel believes that competition cannot be introduced into the industry.
- The majority of non-railway stakeholders, especially shippers, are calling for regulatory protection and the railways are the only parties saying that no regulatory change is needed.
- And finally that the Panel has chosen not to recommend any of the viable commercial solutions it received.
It is deeply puzzling that the Panel chose to recommend neither immediate regulatory intervention, clearly called for by the market environment and stakeholder submissions; nor any of the commercial solutions that are identified and available. The implication is that the Panel role was and is to provide a rationale for a pre-determined outcome rather than follow the evidence to more logical outcomes.
It is especially unfortunate that one would draw this conclusion about a democratic process in which grain producers have high hopes for a process that would improve service to their farms." Read More HERE
APAS was invited by the Service Review Panel to submit a written brief by the end of April 2010. In planning for the review we saw two levels where we can represent the interests of producers, based on who is the “shipper” of the grain:
- Farmers are really only shippers of grain when they load producer cars.
- Otherwise, the grain shipper is the commercial interest that has accepted delivery of producers’ grain – the CWB for Board grains and grain handling companies for non-Board grain.
Your Experience with Rail Service – Tell Us About It
APAS conducted a survey of producers to gather information at both of these levels. Why?
- We want to give farmers an opportunity to be heard.
- We want direct feedback from farmers based on actual service experience.
- We want to ensure that APAS is able to represent farmers to the Service Review Panel.
The survey was distributed to APAS reps who will be asking farmers to complete the short questionnaire (basically four questions). The results of the survey were included in the submission to the Panel.
Shippers’ Experience with Rail Service
We have communicated with the Western Grain Elevator Association (WGEA) and elevator companies they represent. Based on analysis of information we have to date, here are some of areas where we anticipate they will be representing the interests of their farmer customers when they represent their own interests in submissions to the service review:
- The rights and responsibilities of shippers and railways need to be balanced.
- Currently the railways determine the level of service required of shippers and the penalties for non-compliance.
- But, there is no mechanism for shippers to set the level of service required of the railways and no meaningful penalties for poor service.
- Car supply volumes are not adequate both on an overall, weekly basis and seasonally to meet peak demand when farmers’ shipping needs are at their greatest.
- There are deficiencies that need to be addressed in terms of timely service both in spotting cars and in delivery to destination.
The Canadian Wheat Board intends to make a submission to the service review. The CWB has published an industry working paper about grain transportation costing and service that can be found at: ttp://www.cwb.ca/public/en/library/publications/popups/farmers_Linking_Farmers.jsp
Background
The level of service provided by the railways for grain transportation is an ongoing issue that has been around for a long time.
- After a seven year battle by grain shippers to deal with the impact of the railway monopoly on service, the Canada Transportation Act was changed in February 2008, making it easier for shippers to raise service complaints (see W-P, Feb. 21/08).
- In April 2008 the Rail Freight Service Review was announced to conduct a country wide review of service to all shippers. Non-grain shippers (Western Canadian Shippers’ Coalition) are fully supportive of the needs of grain shippers to have their service concerns addressed (see W-P, April 3/08).
- Shippers in general have expressed their concerns that the terms of reference of the service review are prejudiced in favour of the railways (see W-P, April 17/08).
Review Process
The final terms of reference for the Rail Freight Service Review can be found at: www.tc.gc.ca/policy/acg/rfs-review-examen-sfm.
There are two phases to the review:
Phase 1: Data Gathering
- Four projects have been awarded to consultants
- Assess Operational Issues
- Conduct surveys of shippers to identify issues and best practices
- Reports will be posted on line when completed
- Transport Canada will assess how service issues are addressed in other transportation sectors and in regulated industries in Canada and the U.S.
Phase 2: Recommendation Development
- Panel of Three Eminent Persons Named September 23
Walter Paszkowski (chair), former Minister in Alberta government David Edison, former VP of CN Bill LeGrow, formerly with CN and West Fraser Mills
- Panel will accept submissions from shippers and those affected by rail service
- Panel will develop recommendations
- Stakeholders to be consulted on draft recommendations
- Interim report available for final comment by stakeholders
- Final report will be forwarded to the Minister of Transport
APAS submission to the Rail Service Review Panel
April 29, 2010
Mr. Walter Paszkowski, ChairRail Freight Service Review Panel
808 – 180 Elgin Street
Ottawa ON
K1A 0N5
Dear Mr. Paszkowski,
The Agricultural Producers Association of Saskatchewan (APAS) is pleased to have an opportunity to contribute analysis and recommendations to the Panel in regard to grain transportation. Please accept the attached submission.
We look forward to further opportunities to participate in the Service Review process. If you have any questions about our submission, please feel free to contact me.
Yours truly,
Greg Marshall, APAS President
As indicated in the Panel's call letter for submissions, all submissions will be posted on the Rail Freight Service Review website at http://www.tc.gc.ca/policy/acg/rfs-review-examen-sfm/sbmsns-eng.htm.
APAS Rail Freight Service Review Panel Submission
APAS Commentary on the Rail Freight Service Review Panel Interim Report
Western Producer Article - April 17, 2008