CN "Disturbed" By New Rail Bill

The head of one of Canada's two main railways called Wednesday "a sad day for Canada" with the introduction of the federal government's new rail bill.

The "Fair Rail for Grain Farmers Act" was introduced in the House of Commons with the intent of helping Western Canadan grain move more efficient to market.

"CN is disturbed that the government has decided to punish railways with re-regulation for an outsized crop and winter conditions totally beyond their control," says Claude Mongeau, the president and CEO of Canadian National Railway, in a news release issued Wednesday. "The legislation does not address the root cause of the current grain situation and will do little to move more grain, now or in the future. We also have deep concerns about the potential consequences of the government’s proposed new interswitching rules."

Interswitching is an operation where one railway picks up cars on its line and delivers them a short distance to another railway, who is responsible for the "long haul." The proposed legislation would increase the distance that railways are required to provide this service from 30 to 160 kilometers.

"The government is opening the door to extended interswitching limits for specific regions or goods without any due process to assess the potential consequences for railways and the Canadian economy," says Mongeau. "This action could hit Canada’s railways by opening their business to unfair poaching by U.S. railways without any reciprocity. Beyond causing financial harm to CN, it could drain traffic away from Canadian ports and cause the loss of jobs, reduce investment and undermine tax revenues across Canada."

The bill would also give the Canadian Transportation Agency the authority to regulate "prescribed elements" in arbitrated service agreements between shippers and railways, which Mongeau says could add costly inefficiencies to the grain handling system.

"CN firmly believes that commercial incentives and effective supply chain collaboration are the best ways to promote rail investment in infrastructure and resources to transport increased volumes of grain and other freight," he explains.

In the end, Mongeau says the bill favours one industry over another.

"It’s a sad day for Canada when the government decides to hit one sector of the economy in order to placate a vocal constituency, instead of fostering sound commercial solutions to strengthen Canada’s transportation infrastructure."

Source: SteinbachOnline