Evidence of meeting #62 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was customers.
A recording is available from Parliament.
General Manager, Service Delivery, Canadian National Railway Company
There's weather.
Director, Government Affairs, Law and Risk Management, Canadian Pacific Railway
The border would be very important. A lot of our traffic is interchange traffic with class 1 railways in the U.S., for example. There is the state of manufacturing plants, labour shortages.... There is a long list.
President and Chief Executive Officer, Railway Association of Canada
The other related issue that was brought up is the condition of cars. The rail company doesn't load the car; the customer does. Often there is damage done to the car, and then it goes to the next destination and the railway is responsible for it but it didn't do or know about the damage, because it happened in loading.
Conservative
Joe Daniel Conservative Don Valley East, ON
It's not beyond the wit of man to be able to check it somewhere along the way before it goes to the next customer, right?
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
But of course up here it would be a first nations blockade in Sarnia. We don't control that and our customers in Sarnia suffer from that. But it's a good example.
Conservative
The Chair Conservative Larry Miller
You are out of time.
I'd like to have just a couple of clarifications if I could.
There was Mr. Daniel's question and, Mr. Taylor, you also mentioned delays at borders. How are those measured? Can you give us any figures? Is it man-hours lost or how do you calculate it? Are there any figures you can give us so we have an idea of how big a problem that is?
Director, Government Affairs, Law and Risk Management, Canadian Pacific Railway
Knock on wood—and right now it's very pertinent with what's going on in the U.S.—but we do a pretty good job at the border. We have full electronic data interchange. We installed VACIS machines right across our networks at both CN and CP. So everything that goes into the U.S. is scanned by a gamma ray machine, which really helps our profile. We have invested a lot of money in providing advanced data to CBP, but we do have issues pop up from time to time. Wood packaging material, for example, has been a bit of an issue for us over the last year or so. U.S. CBP has brought FDA within their shop so there's more scrutiny around some of the wood pests, for example. So that has impacted some of our fluidity, but all in all we do pretty well.
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
Another good example is the fact that every rail car that travels over the border goes through this X-ray machine, which is a lot compared to what happens for trucks. But to give you an example, at CN, a big portion of our business is cross-border coming in and going out. We'll measure the delays by the hour. So any of our trains that is delayed by more than an hour at a border crossing will get flagged. What makes it important to us and successful is that we track it very, very closely and we develop relationships with both Canada and U.S. customs to make sure that when that train delay is over an hour at the border a phone call is made to ask what the issue is and what happened, and then we try to fix it.
So both CN and CP realize that the thickness of the border is crucial to our competitiveness in North America and if Canada wants to be the gateway to North America that border's got to be kept as seamless as possible. We've spent a lot of time working at it.
As we speak today, as Robert said, it's not a big issue, because we manage it and follow it so closely.
Conservative
The Chair Conservative Larry Miller
There is just one other issue I want to bring up and it's really not to do with the bill, but this came up quite a bit today. It's the closing down of lines. I don't have a rail line in my own riding anymore, but there was one that used to go to my hometown before my time, before I remember. I guess it came twice a day, and then it was once a day when I was growing up, and then it was reduced to once a week. But the bottom line is the reason it isn't there is that it wasn't financially viable. It's unfortunate, but things change. I see you all nodding in agreement, and I think that needed to be brought up.
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
They're not being used. That's the issue. If there is no traffic on it we still have to maintain it to a certain level just in case there is traffic, and we have to do snow removal. I think previous governments came to the point of view that ultimately if the asset is not being used we have to find a way to make sure there is some exit that is respectful of both parties' interests.
Conservative
The Chair Conservative Larry Miller
We have actually made our first round here, but a couple members have asked for one more question.
Mr. Sullivan and Mr. Tweed, you can have one question each, gentlemen, but try to make it brief. And Mr. Coderre will have one to be fair.
Mr. Sullivan, be brief.
NDP
Mike Sullivan NDP York South—Weston, ON
The minister told us that he hopes this bill would never be used. In other words, it's creating a fail-safe if the railways don't behave. But from what you've told us today, you're already behaving. So it shouldn't be a worry to you, this arbitration mechanism, because you're already able to do what you weren't able to do five years ago.
I know you'd rather it weren't there. I think it's going to be there. Is it something you should worry about anyway? I understand that there are some tweaks that you've proposed.
What do you say to that?
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
There are tweaks, but there are also unintended consequences. So we have a customer with whom we're negotiating in good faith, and we're going back and forth—and we had that today when it comes to rates for an FOA. I don't want to give any false impressions to anybody across the table, but if you have two kicks at the can, I'll negotiate with you as far as I can. What do I have to lose to go to arbitration? Maybe with an arbitrator there's a 50-50 chance he'll impose something that I think I'm entitled to ultimately, which might impact other shippers. Those are the unintended consequences. There's the risk of providing leverage that bypasses the commercial negotiations between the parties, where you'd sit down and negotiate and try to settle the problem, because if you can go to court or to the CTA or somewhere else and get somebody to impose an agreement on you, you have nothing to lose if you're a customer who wants to do that.
Conservative
Liberal
Denis Coderre Liberal Bourassa, QC
Mr. Chair, as we listen to the people from the railways, the problem is as if the Conservatives now had a socialist block making regulations and everything. Like the NDP or the Bloc Québecois. But I have no block in front of me.
I just want to understand. Basically, you do not believe the arbitrators. You feel that the arbitrators will take the shippers' side. If you cannot trust a judge, why can you not trust an arbitrator? If you come to an agreement, the legislation will only be enforced when it is needed. Is there no way to find that more acceptable? Would you prefer no legislation at all?
What do you think, Mr. Bourque?
President and Chief Executive Officer, Railway Association of Canada
I would rather just proceed [Technical Difficulty—Editor], if it's okay with you.
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
The answer is quite simple. We have a complex North-American network with a number of players involved. It is asking a lot for an arbitrator, in 30 or 45 days, to understand a service problem that may not be related to the system.
There might be an advantage to having someone from the CTA, but you know as well as I do that judges can be unpredictable. We are dealing with a complex industry with complex players. Asking an arbitrator to take a short amount of time to decide on a service problem with repercussions on a network stretching over 15,000 miles that serves a number of customers, that is quite a challenge.
Conservative
Conservative
Merv Tweed Conservative Brandon—Souris, MB
Thank you, Mr. Chair.
You mentioned that in a lot of your new contracts you have a dispute mechanism in place. If you have those in place, does the bill still have a role to play?
Director, Government Affairs, Law and Risk Management, Canadian Pacific Railway
Our CDR really overlays the existing robust regulatory regime, so you can CDR as opposed to going to the agency if you feel we're not meeting our level of service obligations and the like. We find that embedding a CDR into a piece of legislation is an oxymoron, really. A CDR is a commercial dispute resolution process. We have that, so instead of FOA you can use the CDR.
I don't know if that answers your question, but that's available to all of our customers right now, and our customers use it.
Conservative
The Chair Conservative Larry Miller
Thank you very much.
We've had some great presentations and questions today. Thank you to our witnesses for being here. Thanks again.
The meeting is adjourned.