Thank you very much, ladies and gentlemen. Good afternoon.
My name is Gord Peters. I am the president and co-founder of Cando. For the past five years, I've also had the pleasure of sitting on the RAC board, a position that has given me a great seat to view the great improvements the railway industry has made in the past 15 years.
The Canada Transportation Act in 1996 allowed Canadian National and Canadian Pacific to reorganize their operations by selling or leasing some of their low-density segments. The result was exceptional growth in the number of short lines, from a mere 12 in 1996 to around 50 in 2010. This was part of the partial deregulation of the rail sector in Canada, and it has created a truly entrepreneurial industry within Canada, one that we believe is vital to the smooth functioning of the rail network. Our industry is very close to the rail customers and to the communities, and we're very close to the class 1 railroads; we hear them all.
Part of our short-line industry is partially regulated federally, because they are federal railroads, and therefore will be impacted directly by Bill C-52.
In 2011, Canadian short lines, to give you an indication of their scope and size, had revenues of more than $735 million, employed close to 3,000 people, and operated more than 8,500 kilometres of track, which is close to 20% of the track in Canada. Short-line and regional railroads face tough challenges because of high costs and, in our opinion, an under-appreciation of their benefits to the communities they serve. For example, short-line railroads reduce traffic congestion on roads, reduce greenhouse gases and other emissions, and reduce the need for road maintenance and construction.
Despite the comparative capital cost advantage of rail infrastructure versus highway, one of the main challenges facing the short lines today is the ability to meet their long-term capital requirements for line and yard upgrades. Short lines typically operate low-density feeder lines that connect to class 1 railroad networks, but this is only part of the story.
Let me speak to you a bit about Cando, as an example within the short-line industry in Canada today. Cando was created in 1978. Today, we're a Canadian employee-owned company with 300 employees, operating in five provinces and several U.S. states. Cando operates three short-line railways in Canada: the Central Manitoba Railway in Manitoba, the Orangeville Brampton Railway, and the Barrie Collingwood Railway in southern Ontario. Our head office is in Brandon, Manitoba, and we have regional offices in St. Thomas, Ontario, in Winnipeg, Manitoba, and in St. Albert, Alberta.
And we have a good MP.
The Central Manitoba Railway is a Cando-owned full-service railway located in Manitoba that services a mix of on-line industrial and agriculture customers. We also have an off-line service provided by Cando through our 34-acre transportation centre in Winnipeg. In addition to interchange traffic with partners CN and CP, we offer a full suite of auxiliary railway support services, including rail car and locomotive repair, rail car storage, as well as trans-loading and logistics support for many small shippers in the Winnipeg market.
The Orangeville Brampton Railway and the Barrie Collingwood Railway are community-owned short lines in southern Ontario that partner with Cando as the railway operator. We provide local railway services to on-line customers in these communities and interchange with CP. Orangeville Brampton Railway also features the Credit Valley Explorer, a railway excursion tour that offers unique views through the Credit Valley escarpment in the heart of Ontario's Greenbelt.
Cando's short-line railway operations and industrial switching ops philosophy is very simple. We run a highly disciplined and sustainable service, with emphasis on safety, community relations, and customer service, utilizing the operations as a base on which to offer auxiliary railway support services that add value to the on-line and off-line customers. Examples include trans-loading, logistics, rail car storage, rail car and locomotive repair, tourism excursions, and contract industrial track construction maintenance. Our success has been based on a great entrepreneurial spirit and a great team.
That's the story of Cando. I could spend a lot more of the committee's time, but I will move on to what impact we believe Bill C-52 will have on the short-line industry in Canada.
Today, I'm here on behalf of the vast majority of the short-line railroads represented by the RAC. Of the 30 short lines that are members of the RAC, there are 17 companies that will be regulated under this new provision, and many of them, just like Cando, are small to medium-sized companies whose services are sold by class 1 railroads to shippers as part of a larger quotation for services.
This situation raises two issues. If a shipper requests an arbitrated service agreement and receives a new price or service, we will have to implement this service, and yet it is not clear that our role, the costs, or even the feasibility of what is requested is realistic. In other words, in terms of the unintended consequences we have talked about, short-line railways, like other network and supply chain partners, could be negatively affected.
These companies will be subject to this provision directly, but many of us might also have a much more difficult time meeting the deadlines imposed in the bill and absorbing capital cost implications or reduced revenues, if forced to offer added services with no input into what those services cost our companies over the short or long term.
Short-line railways were created in Canada as part of a deliberate public policy towards commercialization. While it is not easy to be in this business, we all love it and do what we have to do to make it profitable, including offering a range of services, having a flexible workforce, training our own people, and cutting costs relentlessly. We still have a long way to go in most provinces to create a better understanding among policy-makers about the benefits to communities and to taxpayers of supporting the short-line railway industry.
The legislation here is perceived as a check and balance on an uncompetitive dual monopoly of CN Rail and CP Rail. The reality is that the railway industry has developed into a complex system of various carriers of various sizes, suppliers, and partners all playing an interconnected and complementary role. Legislation targeting part of the system could have unintended and serious impacts on a far wider scale than was intended.
The short-line railways considered whether it made sense to ask to be excluded from this bill, but it is just not practical. What makes the most sense to us is that the committee exercise its right to recommend that this bill not proceed. With our motivated entrepreneurial teams, we feel confident that we can continue to improve the rail system.
Thank you for hearing our concerns. I look forward to the committee's questions later.
Thank you.