Agriculture Committee on Nov. 21st, 2006

[Tim Heney]

As the port has adapted to some of these modern operating methods, like 24-hour rail loading and things like that, the Grain Commission in Thunder Bay has been rather slow to adapt to those kinds of working conditions. On occasion, they've refused to put on midnight shifts. They've charged overtime for four o'clock to twelve o'clock shifts. Anything out of the ordinary seems to either cost people more money or prevent them from modifying their work practices. From that aspect, they have to change the way they man their operation or how flexible they are in terms of their working conditions, in order to adapt to the modern realities. I think they've been slow to do that.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

There was a suggestion made that some of it may be able to be privatized. Do you have a position on that? Do you have a concern? Do you think private companies could do the job? Or do you feel that the CGC needs to be available 24 hours a day?

[Tim Heney]

No. I think the elevators have used private companies and do use them on occasion. In many ways, it's probably an alternative.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Okay.

[Wade Sobkowich]

As you know, we appeared before the committee here in September and expressed our views on the COMPAS report in its entirety. We support the recommendations—not all of them, but most. We think they are necessary changes.

Without getting into too much detail, we support them. In particular we support the idea that Mr. Heney was talking about, which is the CGC's obligation to provide service at the ports. They've told us that sometimes they won't have the resources to staff the ports and load the boats when they need to be loaded. We've said that it's not up to the CGC to decide when the boats are going to be loaded. We need to deal with our operations. Basically we've asked for the recommendations to be implemented.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Okay.

I'd like to have you talk a bit about the container facility in Edmonton that you're establishing. It's a good news story, but I would also like to have a little clearer understanding on how it's going to positively impact the folks living in Saskatoon, Brandon, and those areas.

Over the past few years, there has been an issue on the Prairies regarding the inability to get containers quickly, efficiently, and effectively. I want to know how your proposal is going to improve the situation for producers.

[Paul Miller]

Sure. The basic logistical idea is pretty straightforward. Right now due to the strong importation of consumer goods from Asian economies into Canada, a number of steamship line containers go back empty, at least to the ports and often across the Pacific. The more containers that could be made available on the Prairies for loading, the better it works, because we avoid having an empty container moved to Vancouver, and an empty grain hopper car moved back from Vancouver.

Within a few hundred miles, the Edmonton facility is both a truck and a rail market. Producers could choose to truck their traffic to the Edmonton facility, where it would be transloaded into containers, then moved by rail to Vancouver. But it's also available for hopper car service.

So Humboldt, Melfort, and Saskatoon could choose to ship by rail to the Edmonton facility as opposed to shipping by rail all the way to Vancouver to a container stuffing facility and making the transload. This takes a significant chunk of two-way empty movement, or cross-hauled empty movement, out of the equation.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You're saying that you'll be able to take hopper cars and then stuff the containers in Edmonton? Are you using bulk product there? Does it have to be bagged? Are there any restrictions in terms of stuffing the containers?

[Paul Miller]

No. It tends to be speciality type crops, for which folks are looking for identity preservation. It can be bagged, or it can be just a big plastic liner that goes into the container, which is then loaded in bulk.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Anderson.

We'll move to Mr. Atamanenko for five minutes, please.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Perhaps Mr. Marshall and Mr. Miller can give me a quick answer on this. Canadian National Railway is no longer just the Canadian National Railway. You're a major player, the fifth largest railway company in North America, which is to your credit. Could this be a factor, in that some of the inefficiencies we're seeing with this 60% to 70% may be caused by decisions made outside of Canada that influence our grain transportation? This is kind of a philosophical question.

[Peter Marshall]

The answer to that is no, because most of what we're talking about today reflects western Canada. It's pretty much contained within the western Canadian borders. The decisions are made in the west.

I look after the west from Armstrong, Ontario, to the west coast, so the group we're talking about is pretty much in my backyard. We are responsible for providing the service and the resources to move the product, so it's invisible as far as I'm concerned. It's western Canada based.

[Paul Miller]

Perhaps I could add to this very quickly, from a network perspective. The techniques that we use to try to minimize congestion to the Canadian ports and congestion within the Canadian movement system and delay are identical to those we use in the U.S. In fact--and this is a very small anecdote, it's not the philosophy that you're discussing--we're actually moving resources from the U.S. to western Canada right now, because we're seeing some congestion. We can't use them effectively in the U.S., so we're bringing them out to the west.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Have you any comments on this, gentlemen?

[Tim Heney]

In defence of CN, I think their operating practices are being emulated in many ways by CP and many other railways, so it's not only a CN type of operation; it's a way to efficiently use their fleet. It's a new reality in North America, I think.

[Peter Marshall]

I'd like to mention that we seem to be spending a lot of time on this 60% or 70%. What we're saying is that during the week we're 90%, and in some weeks we've been 95%-plus. It's the day of week that we're a little bit out on. If we don't get there by midnight, one minute after, technically we're late. That's an area we have to improve on, I don't disagree with that. But again, I think we need some help in some respects as well.

[Wade Sobkowich]

Yes, relative to the last comments, we're interested in improving that number.

Another measure of performance is cycle times. We know that cycle times are around 18 days. Recently, I think, they've gone down to 17.7 or something like that, so that's an indication of efficiency. Another indication of efficiency is deviation from the cycle time--reliability, in other words. Recently we've seen cycle times get a little bit better. We've seen deviation from the average get a little bit worse.

I'm pretty sure that doesn't answer your question, but it's a point I wanted to make.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I have one last question. This may be a stupid question, but as a former teacher I guess there are no stupid questions, so hopefully you'll forgive me.

You don't seem to be meeting your targets during the week to be where you have to be, except at times, and it's frustrating for the other people. Logically, one would think that there has to be--and I asked this question before--more equipment to facilitate this process, yet you're saying this is not a factor, and that if there were more, then the farmer would bear the cost. I don't understand that. A private company has to meet its commitments, increase the cars or personnel or locomotives, and I don't understand why then the farmer bears the cost. This is your company that's making that investment to make more money to serve the people.

I would like that cleared up, please.

[Paul Miller]

Sir, one of the things that we continually focus on is to have the right number of assets and the right amount of capacity to meet the market requirement. We mentioned earlier in this presentation, I believe, that the amount of grain we expect to lift in western Canada is well known and it's communicated in advance. It's 4,450 cars per week, and we have put our car fleet plan in particular, but also our service plan, locomotives and so on, in place to meet that.

What we have found over the long history of railroading is that if you start to fall off and you try to address that by flooding in more assets, you wind up slowing down the whole system. You can have a very unintended consequence, and we've seen that ourselves in the past, much to our chagrin, when we've had many more cars, sometimes twice as many cars as a port can unload. The reason for that would not be because of the port or our customers or the terminal elevators, but situations have developed where we have twice as many cars loaded as they could unload in an entire week. That simply slows the whole system down and you wind up worse off than you would otherwise have been.

So we're very much focused on having the right amount and then addressing and fixing and working with others to address and fix what's broken, what has caused the delay, in order to get back to the country with the empties. That's our operating philosophy in all of our lines of business, not only grain but throughout.

[The Chair, Conservative, Gerry Ritz]

Thank you, Alex.

A final point on that, Mr. Meijer.

[Robert Meijer]

Let me just...I don't know whether “clarify” is the best word, or just “get some more discussion” here. Let's keep in mind that the 4,450 that was just thrown out is a number that's provided to us. It's not the demand that we have signalled as shippers in this equation. The number 4,450 in this context is what the carriers have come to us and said is realistically what they feel they can give us.

As I said, we reluctantly accept that; then, based on the allotment among all the shippers in this industry we're participating in, we're finding ourselves in that 60% to 70% on a daily basis. They're using a weekly number. As we said, if we expect a car to be there on Monday or Tuesday, that's when we hope it's going to be there.

So there is a spread between the demand and what we get. I would not like to think it would be the shipper who tells us what the demand is; we know what the demand is. We're telling our carrier, this is what we need, and they're saying, okay, but this is all you're getting. So that's a part of it.

Just to bring it back a little bit, if I could, Mr. Chairman, I've sat and listened to all of the discussion, and there have been excellent questions. I think the dialogue has been fantastic here today. But one thing that gets me—I've heard it here a couple of times, and we continue to read it—

Years ago we were all at this table, and I suspect next year we'll be at this table, and I certainly think years from now we'll be at this table to address Mr. Easter's point. Where we're coming from is that we need legislative reform to get the base right, to get the playing field right, to get both shippers and carriers on equal footing, where both are held accountable in a very transparent way to the obligations of the industry, and most importantly—and I've heard it here many times from many of the members of the committee—so that producers are protected, in particular on the cost side.

We as companies make investments, as do the carriers as well, and we have to bear some of that cost—we accept that—and shouldn't be allowed to simply pass it on in the system, and that's a part of legislative reform.

I think it's great that we come here and have a dialogue about all the operational things and the business elements of our day-to-day transactions, but we'll continue to do that. I'm certainly not coming here to Ottawa today to ask the committee to sit and hold our hands and help us through it. I want the ability, through legislative reform, as does the WGEA, that when we get into problems we can go to an arbitrator and say we have a business issue here and don't want to have to run to government—to go to a committee—to complain about it.

[Wade Sobkowich]

May I answer Mr. Atamanenko's question?

[The Chair, Conservative, Gerry Ritz]

Very quickly.

[Wade Sobkowich]

I agree with you that farmers shouldn't have to pay for those costs when there are service deficiencies in the country. We think that's what demurrage is for. Demurrage should be taken and used to make sure the railways can fulfil their commitments in the country.

[The Chair, Conservative, Gerry Ritz]

Mr. Miller, you wanted to make a point on this issue?