Agriculture Committee on Nov. 21st, 2006

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I have to address one thing that you brought up. I would like to talk about some other things, but I have about four seconds here.

You talked about the fact that your accident rate has been reduced by 21% year over year. Can you tell me exactly how many accidents that is? Is this attributable to any particular change you've made in your safety policies, or is it just attributable to the fact that last year was a record high in accidents?

[Peter Marshall]

It wasn't a record high. The numbers I have here show that we had 221 this year versus 280 last year. That's where the 21% comes from.

I would say that this comes from a very comprehensive call to action on safety at CN, starting from our CEO on down. We have recognized that there is an ongoing need to make breakthroughs in safety, whether it be personal injuries or train accidents. We have gone out this year across the property and had very comprehensive assessments, action plans, and programs put in place to see that improvement. We expect that, and need that, to continue.

[Paul Miller]

It's technology investment as well as people and processing.

[The Chair, Conservative, Gerry Ritz]

Thank you, Brian.

Madame DeBellefeuille?

Monsieur Roy.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you.

My first question is for Mr. Marshall. I've heard you say at the beginning that the system is not very efficient and there are many problems. Of course, one can always use the weather as an excuse but not 365 days per year. Accidents may happen but they don't happen either on every line 365 days per year.

Is it a matter of bad equipment? Why are there so many delays? Why aren't you able to advise your clients in advance? Why can't you tell them in advance that there will be a delay and that they shouldn't bring their staff in because the train will only arrive in two or three days?

I don't understand. There seems to be a communications breakdown somewhere. For example, if one of your shippers knows that there will be a delay or if there has been an accident, the first thing to do would be to advise your client to let him know that the train will be two or three days late. If you did that, your client wouldn't have to keep his people on standby.

There's something I don't understand here. There's a lack of communications. That doesn't make sense.

[Peter Marshall]

Thank you for your questions.

Starting with your question on communications, I agree that there needs to be better communication at CN with the customer. There also needs to be better communication in the system. Sometimes we are not advised as a railway that there are issues. Sometimes the third party—

For example, let's say railcars are moving to Churchill and the weather is bad. Nobody knows when the weather is going to improve. Nobody knows when the ship is going to arrive. There are decisions outside of our control that we are just not advised of. Sometimes by the time the information gets to us it's too late.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

When you say that it sometimes happens that you are not informed, I have a problem with that. Can't the train conductor advise you?

[Peter Marshall]

We continue to work with the industry on the importance of communication. The sooner they let us know, the sooner we can make decisions and the sooner they can make decisions.

I guess what I'm saying is that sometimes they don't know themselves. And things happen. Sometimes when we're moving a train of empty cars or loaded cars the locomotive fails, the train stops, and we have to go and rescue the train with another set of locomotives. It may take several hours to do that.

Those are things that we know and we can communicate. But when it's with a third party--I'm not saying this happens all the time, Monsieur Roy, and again, I think we can improve our communications--sometimes we don't get the information on things that are occurring. Collectively, I think, the system needs to work better at communicating, but we ourselves certainly have an obligation to communicate better.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

I'm not convinced by your explanation. If you have a 100-car train moving on a rail line line, I can't conceive that you would be unable to be informed of its status. I'm sorry but, if anything happens, you should be informed immediately in order to be able to advise your client. I think that is essential. That's what good service means.

If a train breaks down, of course, the first thing to do is to start repairs. However, the very next thing should be to advise your client that there will be a delay because the locomotive broke down. I think that would be the first thing I would do if I were the carrier. I would try to communicate with my client to let him know that I would be late because of a breakdown. I would tell him not to keep his staff on standby since the train would be a day or two late and that I will call him as soon as I'm able to give him a firm arrival date. That would be logical, I believe.

[Peter Marshall]

I understand and I think a lot of communication goes on, but it's very complex and it's not the train that fails with its locomotives. That we all know, and we can communicate that. When we put a plan together with the industry, it's a week in advance. It's on Tuesday or Wednesday, so the following week we will be at your elevator.

If the cars are in Churchill that we expect to come back to spot at that elevator, and they don't come back to us, we will tell the train, there are weather issues in Churchill, the cars are not coming back; what do you want to do? In some cases the grain companies take that information and they change their location. Okay, don't spot them here; spot them over here. Go to a different elevator. That takes time to communicate through the system. Maybe those cars are coming from Thunder Bay.

So tremendous amounts of change go on every day in the process. Again, as an industry, we have done a much better job of communicating that. With fewer elevators, there are fewer chances for problems at the elevator. With programs like the GX 100, again there's a much higher probability of that working because we have a commercial contract that has penalties both ways. That drives some of our results.

But I don't disagree. We need to communicate better. I think CN is a part of that solution and I think the rest of the industry is also part of the solution. We need to help each other.

[Le président, Conservative, Gerry Ritz]

That's all.

Mr. Boshcoff, five minutes, please.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Heney, regarding the St. Lawrence Seaway system, we talk about the fact that the port gets 400 vessels a year, which is down considerably from the heyday. What is the critical mass or what is the prime determinant that makes for a functioning seaway system? We know it's working in combination with all those other transportation systems. But where are we, and if some of these train changes that have been suggested by the WGEA don't happen, is there an impact that could affect the seaway?

[Tim Heney]

To my way of thinking, there are two parts to the seaway. One is the lower lakes and one is the full route all the way to Thunder Bay. And grain is the only option in Thunder Bay at this point. We have coal and we have potash to smaller degrees, but in its history, grain has been the mainstay. So without the critical mass, as you say, in grain, you could eventually lose the capability of the seaway being a link to western Canada. In other words, a route that travels 2,300 miles inland is sustained basically by grain.

We still have nine elevators. That's far more than is theoretically required and that's sustained by the diverse ownership of those elevators. But certainly we're at the lowest. The last five years have been the lowest five years in the history of the port and grain. How much lower can it go? It's always a question. We don't know. You will start to see elevators lost during consolidations of companies. Beyond that, it seems to be sustained by that distinct ownership.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you.

This is for CN. There has been some nervousness about the movement of personnel and intelligence operations to Chicago from Montreal. Whether it's a real or perceived issue, the movement of the system from being transcontinental east and west and now with the tremendous impacts north and south in the United States, should Canadians be concerned, even as we talk, about some of these policy decisions, about a gravitational pull or movement from Montreal to Chicago as headquarters and operational centres?

[Peter Marshall]

I'm not aware of any plans at this point. I think we have a North American view. Structurally, we're in three regions—eastern Canada, western Canada, and the United States—and right now that model is working very well. I don't have anything further to comment at this point.

[Paul Miller]

We could just add, sir, that while some may argue whether it was the movement of intelligence or not, the movement of our network operational group, of which I am a part, was from Montreal to Edmonton. Edmonton is our network operations headquarters for our entire system, east, west, and south. In fact, it has been publicly announced that we're investing in facilities and real estate to rehouse that network operations function.

So as Peter says, neither of us is aware of any plans, and certainly the plans that we are aware of are to maintain the importance of the Edmonton operation.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

For the WGEA, when you talk about this lack of balance in accountability, I think that concerns us all. I know the proposal, the consensus, was supposed to find a solution for that.

Were the railways involved in terms of the understanding about penalization if they don't provide service? The corollary is that if the minister said he would act on your solutions, why would he promise that in the first place if there wasn't an intent to follow through?

I'll just leave those two. I don't think we'll have much more time beyond that.

[Wade Sobkowich]

The railways weren't involved in the discussions with the shipper group, nor were they involved in the discussions with Transport Canada. The thinking at that time was that the situation had regressed to such a point that there was no way we were going to be able to sit down and reach a consensus with the railways. Our objective was to come to Transport with some solutions that they said they would accept, and those were our expectations.

As for where the minister's head is at and how it got there, I can't comment because I don't know.

[Peter Marshall]

Minister Cannon asked both us and CP to come up with some solutions, because we were not part of the industry associations at that time. We embraced that opportunity, we did bring forward some proposals, and there were some very comprehensive discussions. At the end of the day, the proposals that we had put forward and on which we were making some good progress actually didn't conclude, because there were some other items that were brought into the discussions relative to shipments to the U.S. The industry was therefore not able to support the proposals. They weren't able to kind of get a consensus among themselves. That's where things stand right now.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Boshcoff.

Mr. Anderson, for five minutes.

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

We've been studying another issue at the committee here as well, and that's the Canadian Grain Commission and the COMPAS report on that. I would like some response from all three groups about what role you feel the Grain Commission should play. What kinds of changes should we, the committee as a group, be looking at making in our recommendations to the government? I'm particularly interested in your perspectives on inspection and those kinds of things.

Actually, Thunder Bay interests me in particular, but everybody can answer the questions.

[Peter Marshall]

We can only speak for the railroads on this. We don't have a position on it. I'm not really familiar with the proposed changes, and this is not a part of the business that we get involved in at all.

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

So when you're saying terminals aren't able to handle your loads and that the CGC's ability or inability to provide services there doesn't have a direct impact on—

[Peter Marshall]

I think that's a very valid point and a good point. It's something we would probably interface on with the terminals themselves or the grain companies themselves, rather than going directly to CGC.

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

Maybe Mr. Heney can deal with that.