We're thankful to the government for making rail service a top priority on its legislative agenda. The entire shipping community has been through a multitude of processes leading up to Bill C-52, which started in 2006 and which, we hope, will finally result in the necessary backstop for balanced accountability.
In order to ensure that it does not render the legislation ineffectual for or detrimental to shippers, Bill C-52 requires six sets of amendments. We cannot overstate the importance of all six. I should add that they complete the modernization required to ensure that the service pie grows in size rather than it only being divided differently. Without all of them it's possible that rather than facilitating the predicted growth in our economy, the bill might have the unintended effect of potentially constraining that growth.
Others will speak to items 1, 2, 4, 5, and 6, although l'd be pleased to respond to any questions. l'm choosing to focus my comments on item number 3 from the CRS package that I believe everybody has. It's about the need for an expedient mechanism for a shipper to be awarded liquidated damages for service failures.
This particular amendment speaks to a void in the draft version of Bill C-52 that affects smaller shippers. My perspective is that of a grain shipper. I'm a member of the CRS, but I'm with the Western Grain Elevator Association. In this regard, we speak about all grain elevators as smaller shippers since each elevator location essentially acts as a small location shipper. The best way to illustrate the problem we're trying to rectify with amendment number 3 is with an example. So here it goes in two minutes.
Typically, the time allotted for loading a unit train of grain is 24 hours. If we fail to perform, the consequences are set out in a railway tariff. We don't object to this discipline. For example, if a grain shipper is anticipating the arrival of a unit train at an elevator location on a Tuesday, normally the elevator will shut off receiving from farmers when they are loading so they can dedicate staff to loading the train. Twenty-four hours means that with about a hundred cars, it takes about 14 minutes per car to load, so the company has to be very efficient.
When the train doesn't arrive on the day the railway says it's supposed to, we're faced with added costs of labour and overtime costs on a weekend. And if the train doesn't show up on a weekend, now we've paid time and a half. Inbound loads from farmers have to be rescheduled, which causes significant problems at the farm level, and there's a danger of congesting deliveries. If the train doesn't show up for three days, now we've shut that elevator down for three days. In some cases the elevator is full and can't accept any more deliveries. When cars don't show up, those farmers have to be turned away, and that disrupts the system.
When the train moves to a terminal elevator later than expected, it is very likely that it will arrive on top of other shipments. Rail car bunching occurs, which leads to longer unloading times, exposing companies to railcar demurrage. If terminals are waiting for those cars, they are exposed to vessel demurrage, which is extremely expensive. Or perhaps the vessel has sailed, and now the terminal has to sit on this inventory. It would not be unreasonable to assume that the added costs to the shipper in this example could be $50,000. Under Bill C-52 the railways are not required to compensate shippers for any portion of these losses, and this gap is what we're trying to address to the best of our abilities to make sure that this legislation fulfills its intentions.
We propose a modification to 169.31(1)(b) to allow the shipper, at its option, to submit to the agency for arbitration terms governing whether or not a service failure has occurred and the manner in which damages are to be assessed and paid to the shipper for losses resulting from such a failure.The practical use of a service level agreement is severely limited if obtaining a remedy resulting from a breach requires the shipper to commence proceedings before the agency and/or court, or to rely on the proposed AMPs system. It's not practical for shippers to always undertake costly and lengthy agency and/or court proceedings.
Allowing dispute resolution mechanisms to be included in an arbitrated SLA will enhance railway responsiveness to service problems that arise once an SLA is established. The concept of balanced accountability between shippers and rail carriers can be achieved if mechanisms for compensation to shippers for railway failures can be determined in a simple and expedient fashion.