Transport Committee on Nov. 27th, 2007

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

The reason I made that request is that I have had an opportunity to hear a lot of complaints—primarily about the ancillary charges, to be honest.

I would like to find out a couple of things. Let's say we have a farmer in western Canada—and this is the major complaint I've heard—who arranges for maybe six cars to come to load their product. On a Monday they have a group of individuals there ready to load the cars. Indeed, maybe they have 10 people or so, and they're all ready to go and are at the railroad waiting, and the cars don't show up. Nobody calls them; nobody tells them anything. In fact, the cars don't show up on Monday, Tuesday, and maybe even on the Thursday or Friday, or even the next week. Yet those shippers are expected to have these people on call, ready to go to load the product into the cars.

Finally, when the cars come, the shipment is late for the boats that have been waiting for the shipment, or, in essence, some other transportation mode that has been waiting. Indeed, the farmer or shipper has to go to tremendous cost; sometimes the cost, I've been told, is actually over and above any profit they would make. Indeed, it's sometimes even over and above the cost of the product itself; it would be cheaper for them to just dump it. While I know this is second-hand information, I've heard it from a lot of people in different parts of the country.

So my question to you is this. Does the railroad pay the shipper for their staff in those four or five days they're waiting and they receive no call? Does the railroad pay the shipper for any lost revenue as a result of the wait or delay and the extra charges? Does the railroad pay for the ship waiting for the product to be delivered? Does the railroad pay for any late shipments at all? Is there any performance guarantee as to when that load is supposed to come in, or are any promises made?

The reason I ask is that I used to order furniture from Montreal. I had a choice, as I could order it by truckload or railroad load. If I didn't need the shipment in a month, I would send it by railroad; if I needed the shipment in a month, I would have to bring it from Montreal to Fort McMurray and pay the much more expensive rate for trucks. The reality was that I could not get any guarantee or certainty from the railroad, even though the railroad was less expensive.

[Cliff Mackay]

I'll ask my colleagues to speak to that, because you're really asking about the terms of contracts, very specifically.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I'm asking in relation to demurrage. If there is a delay caused by the railroad, do you make it up to the farmer?

[Marc Shannon]

Let me just say, first of all, if there is a contract and the contract contains specific terms and conditions about when traffic is to be delivered, then there may in fact be a variety of different guarantee payments. Typically, however, the way the railways operate is they don't provide service to meet a specific timeline; doing that generally would increase costs significantly.

It's true, you order a car and the car is spotted. With grain shippers, if they select one of the products under the CP MaxTrax system that includes shipping commitments and the railway does not supply the car within the specific time provided under the program, then there will be payments to shippers, yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

So, indeed, if you're a large corporation such as Wal-Mart or somebody like that with a balance of power equal to the railroad's, then you could negotiate those commitments in the contract. But I'm talking more about the little guy without the contract, who is really left with no option but to use the railroad.

[Marc Shannon]

I'm sorry if I wasn't clear. My last example related to grain shipments, whereas you asked about grain shippers.

Typically, very few farmers ship grain directly, so we deal with the grain shipping companies: Viterra—which used to be the Saskatchewan Wheat Pool—and Agricore United. If those companies select one of our products that does in fact contain commitments on car supply or car delivery, then, yes, there will be payments if the railway fails on those commitments.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Now, are those—

[Marc Shannon]

That's in a tariff.

[The Chair, Conservative, Merv Tweed]

Your time is up.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Five minutes goes fast.

[The Chair, Conservative, Merv Tweed]

We've completed our round, so I am going to open the floor for brief questions.

I have Mr. Volpe, Mr. Laframboise, Mr. Masse, and Mr. Jean. As I recognize you, I'll add you to the list.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I just want to finish what we had started, gentlemen.

Just as an aside, Mr. Mackay, or “Mackaye”, reminds me that in Chinese Mandarin or Cantonese, you see the same symbols and they are two different languages. I don't know, I'm just a poor immigrant kid. I don't understand this.

[Jeff Watson, Conservative, Essex, ON]

It's the little guy from Shawinigan.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I want to go back to your observations on section 3, because the Government of Alberta submission really does say this issue about commercial harm is a non-issue. I think they even use the terms. It's some art and some science, but the agency is still obliged to consider all commercial factors and therefore the harm factor.

Is this an accurate assumption on their part, or, as Mr. Watson referred to earlier on, is this an exaggeration by the Competition Bureau that says maybe there is no need for this? You took some pains to say you don't think you should be tested twice, that one test is sufficient when you're providing relief. I'm really not clear on your position, since everybody else says the agency will determine the relief, if any, that's going to be determined, and it gives a list of factors it must consider, including the commercial impact. What's the problem?

[Cliff Mackay]

As I said earlier—and obviously I think we're going to end up agreeing to disagree here—from our point of view, it seems to us that if commercial harm is going to be a part of the process in the determination of the recourse, then why the heck wouldn't we just leave the clause alone? It's just that simple. We just don't follow the logic. With all due respect to the Alberta government, they look at it from the point of view that the glass is half empty as opposed to half full. I think it's just that simple. That's where we're coming from. We don't see any benefit to taking it out. That is the simple way to put this.

[The Chair, Conservative, Merv Tweed]

Monsieur Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you.

I want to come back to clause 3.

Mr. Shannon, in an earlier answer, you told me that things were going well and when Transport Canada says that there many complaints, that was close to wrong.

Mr. Patenaude, your answer to one of my colleagues was that disputes with shippers were being settled and that everything was going well. If we have this bill before us, it is surely because something is not working.

You have difficulty with clause 3 because it is vague, but surely something is not right because we are expecting complaints about freight rates. You seem to agree with that. We are adding "and associated terms and conditions". You charge for things other than transportation and that causes problems. Do not come here and tell us that everything is going wonderfully in the best of all worlds. If that were the case, we would not have the bill before us.

I am really trying to help you. You tell us that clause 3 does not meet your needs because it is too vague. But it is vague because you are sending bills for charges that have nothing to do with transportation. You are adding incidental services or other terms and conditions. Of course these things bother the shippers. I would like you to tell us what kind of situations bothering the shippers you can fix.

There has to be something else. I really want to help you and get the bill clarified, but if someone has gone to the trouble of adding the words "and associated terms and conditions" to freight costs, it must be because there are things happening in real life that you are not telling us about.

Could you enlighten us about that?

[Jean Patenaude]

Of course, not all disputes are resolved by mediation. I wish that were the case, but clearly some remain. Many disputes are resolved by mediation or outside the recourse provided by law. These provisions are there, of course, because others are not resolved.

At the moment, there is recourse for transportation charges, and that is binding final arbitration. This is for transportation charges only, getting freight from point A to point B.

Clause 3 seeks to introduce a new recourse to the Agency for other costs: storage fees, interchange fees, demurrage, merge fees. These incidental service fees have nothing to do with transportation. In many cases, shippers do not even have to incur them. Some do, some do not. It is a bit like a menu. Shippers have said that railways often raise these fees without consulting them. The fees are not for transportation. They have said that they have not had an appropriate recourse to challenge the increases or the conditions that railways may require. The recourse is to the Agency, and deals with the ancillary costs not the transportation.

We think that the clause is drafted ambiguously. We could propose wording that would clarify it. Even the shippers will agree that the wording would not be a problem because the intention is to take ancillary charges to the Agency while fees for transportation go to arbitration.

[The Chair, Conservative, Merv Tweed]

We'll go to Mr. Masse.

[Marc Shannon]

May I make one additional comment in response to that?

[The Chair, Conservative, Merv Tweed]

You may, very briefly, sure.

[Marc Shannon]

When one looks at the legislative summary that accompanies Bill C-8, clause 3 deals with incidental or ancillary charges not directly related to the movement of traffic, such as demurrage. So really, I think all we're saying is that the intent expressed in that summary should be reflected in the clear wording of the legislation.

[The Chair, Conservative, Merv Tweed]

Go ahead, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Now I want to move to a little bit of a different subject, which is transborder trade, and get your analysis of current procedures, especially the role they should take in terms of the study.

Actually, there's a fair amount of scrutiny that goes on in your operation that doesn't go on in other types of transport and trade.

I want to get from you firsthand what your experience is with the United States. What efficiencies can we create to move goods and services across the border?

[Cliff Mackay]

Sure. Let me start with that. Thank you very much for the question.

First, as I said earlier, the border works reasonably well for rail. That being said, there are a number of issues that we very much want to continue to pursue with our U.S. colleagues.

There are a number of specific issues on the harmonization of procedures and processes, some of them having to do with operating rules, so we can move trains more efficiently. For example, there are different rules in the U.S. than there are in Canada with respect to where you should position cars that have dangerous goods in them relative to the power unit on the train. There are these sorts of things.

We'd like to get a standardized approach to that sort of thing. It would be much more efficient at the border if we could do that. There are things like where we switch crews. We'd like to get a wider zone at the border. So there are a number of technical things in that area that would make a significant difference in terms of efficiency at the border.

Another one that, frankly, is very egregious and that we're very annoyed with, if I can put it bluntly, is that the Americans are now charging us $7.75 for an agricultural inspection fee for every car that goes across the border. Well, I'm here to tell you that we don't move a lot of tomatoes. But every car that goes across the border gets charged this fee. And we frankly feel that it's quite egregious, and we'd like to see the U.S. government address that question and change that.

Yes, there are a bunch of issues that we want to continue to address in the longer term. There are questions on the broader infrastructure, such as, in your area, the CP tunnel, and on further infrastructure improvements on the U.S. side of the border, particularly in the Detroit area. Some of those issues are also with us.