Low Reform Expectations Realized

I have written frequently about problems farmers have experienced with rail service.

Though my friends who work for the railways are quick to tell me I’m unfair to them (what else would they say?) I have always maintained the problem is not the railways.

The railways are only acting like railways when they provide lousy service, charge high rates and tell you that you should appreciate any service at all.

The problem, as I have said, is the legislation the railways work under.

The problem with the legislation stems from several sources.

One is that the railways have powerful lobbies and they have been able to convince the sycophants at Transport Canada that unless they make obscene profits, they will not be able to provide any service at all.

Another stems from the largest shippers in Canada. Grain, coal and fertilizer make up around 80 percent of rail traffic.

Until recently, grain shippers never cared much about freight rates, since they just pass them on to farmers.

The Canadian Wheat Board was a consistent advocate for change to benefit farmers, but the grain companies were so busy trying to undermine the CWB, they wouldn’t work with it on anything.

They still don’t care much about rates but are fairly steamed about poor service.

Coal and fertilizer shippers have a mixed record on lobbying the federal government.

Their level of concern waxes and wanes with commodity prices.

A friend of mine, who worked in transportation logistics with a major shipper, described the problem this way: “In the late 1970s and early 1980s coal, sulfur and potash prices were skyrocketing.

“The coal guys in particular didn’t care about freight rates when their prices soared from the teens to $80 or $90 a ton. It was only when they fell to $20 that they began to get interested.

“The same with sulfur that went up to around $160 at Vancouver. When sulfur prices fell to the point that they were negative with the freight rate, they kind of got concerned.”

He concluded by saying “shippers are so lame today that they deserve what they are getting. They generally have just caved to the railways and accept what they get.”

After several false starts, the Conservative government introduced amendments to the Canada Transportation Act in the House of Commons on May 30.

If you listen to shipper reactions, you would think they struck the motherlode. If you listen to the railways’ response, you would believe they were cut to the quick.

But how useful are the proposed changes?

There are a few that do stand the test.

One is the provision that allows shippers to act as a group to request a final offer arbitration.

It still carries the major weakness of all such arbitrations, which is that they only exist for one year and then the railway can put you through a very expensive legal process all over again.

Another provision extends the authority of the Canadian Transportation Agency to include not just freight rates, but all manner of ancillary charges the railways level on shippers to make extra dough.

This is generally seen as a significant gain, though there are some uncertainties in the provision.

Another important proposal would eliminate the section of the act requiring a shipper to prove “substantial commercial harm” before having access to the agency.

Shippers universally hated this measure because it complicated and delayed complaints.

Several measures singled out for praise by some shippers seem less useful.

One is the increase in the notice railways must give customers of rate increases. This would go from 20 to 30 days.

It doesn’t seem to add much, though it will allow shippers increased time to gnash their teeth.

On the ridiculous side, there is a proposal that compels railways to make a public listing of sidings available for producer car loading. They will also have to give 60 days notice before tearing up one of these sidings.

Oddly enough, this measure was praised by the CWB, but it is meaningless.

No producer car shipper, or any other shipper, can do anything to stop the railway from tearing out the siding.

This measure simply shows Transport Canada’s myopia to the real problem.

Note that the railways cannot tear out sidings in urban areas without offering them for sale.

There is one provision that seems to please all shippers. This is a commitment by the government to carry out a review of the level of service provisions in the act.

Poor service has been one of the biggest complaints by all shippers, and carries massive hidden costs to farmers.

While a review is seen as a big gain, there is no promise it will turn into action.

After all the transportation bills that have died on the order paper in recent years, it is hard to believe further changes will come up any time soon.

The review is to occur 30 days after the bill is passed. Unfortunately, the bill will not be voted on until the fall.

This gives the railways much time to browbeat politicians and senior bureaucrats. Canadian National Railway does not believe such a review is necessary. A CN spokesperson declared that level-of-service complaints are very rare, indicating shippers are generally happy with rail service.

CN, apparently, does not read the newspapers.