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.
President and Chief Executive Officer, Railway Association of Canada
Well, if you accept our amendment, there would be no tax, but I'll let Mike—
General Manager, Service Delivery, Canadian National Railway Company
I'd like to comment about demurrage, because we don't really view that as a penalty. That, to us, is an extended asset use charge. It's like when you go to a budget car rental agency and you don't return your car on time: you're charged extra for showing up late.
The reason is that these fleets are shared amongst many shippers. If we're in a position where somebody is holding onto cars, it's a very valuable asset that has to get to somebody else. That's why those provisions are in place.
NDP
Mike Sullivan NDP York South—Weston, ON
I'm not suggesting they're wrong. I'm just suggesting that the shippers don't have a countervailing anti-demurrage. If you fail to show up with the car on time, if Budget rental car has no car and as a result you can't get from point A to B and you miss something, there's no.... You've still been charged for the car, but you didn't have a car, and there's no recourse.
That's I think what the shippers were saying to us. I'm not saying that I agree. I'm just asking what you think of that.
President and Chief Executive Officer, Railway Association of Canada
I'll point out one thing. In that freight rail service review, in the survey, they asked shippers how many of them knew about existing recourse, and 8% of them knew about the provisions that were already in existence for recourse, for example, going to the CTA. There was a great deal of misunderstanding and a lack of understanding from the get-go.
Maybe Robert or Mike want to add to that.
Vice-President, Government Affairs, Law and Risk Management, Canadian Pacific Railway
The only thing I would briefly make a quick comment on in terms of the kinds of charges you're talking about—and I think Shauntelle did a good job of explaining our view with respect to demurrage—is our understanding that we are operating a network business. It's complex and the assets aren't just dedicated to one customer in a particular instance like that, because the assets have value throughout the network.
But I would say that we also have situations where a customer is willing to make a commitment, and Mr. Dinning looked at this pretty extensively. Whether it's a commitment at a level that includes some kind of a forecast to us, or taking it to the next level, and bringing it up to an actual commitment for traffic, then we can talk about how we would deal with that in a situation where we don't meet our commitment once the customer has put his commitment into the agreement with us. So that's not an uncommon situation for us at all.
Conservative
Liberal
Denis Coderre Liberal Bourassa, QC
Thank you very much, Mr. Chair.
It is quite curious to see shippers on one side who are completely in favour of this bill and railway people on the other side who are completely opposed. There has to be a reality that will balance the two.
Basically, what you are saying is what the minister said.
I quote:
We are not dealing with the normal free market. The reality is that many shippers have limited choices when it comes to shipping their products. It is therefore necessary to use the law to give shippers more leverage to negotiate service agreements with the railways.
So that's the issue.
Do you believe that the minister is out of touch, that he doesn't understand the business, and therefore that he's misleading us?
President and Chief Executive Officer, Railway Association of Canada
No, what I would say is that in fact the government did the right thing. The president of CN was here last week—
President and Chief Executive Officer, Railway Association of Canada
—except the bill, exactly.
The president of CN acknowledged that the service changes they had made in introducing precision railroading were done perhaps too fast, without enough customer communication, and that there were a lot of unhappy customers. Then they launched into the next phase of their evolution, which was really to be more customer-focused.
Both CN and CP are investing considerable dollars and effort and time into improving service. The government should really take credit for that because they had the rail freight service review, they had the Dinning process. Coming out of the Dinning report, what we would have expected, because Mr. Dinning acknowledged that service had improved, was that the government would keep monitoring and perhaps using the threat of legislation or the normal pressure that government can bring to bear, without actually introducing legislation and regulating.
Liberal
Denis Coderre Liberal Bourassa, QC
My problem is that…
I'm a radical centrist. I'm looking for a balance. Do you believe in insurance policies, Mr. Murphy? Yes or no?
Vice-President, Government Affairs, Law and Risk Management, Canadian Pacific Railway
Certainly.
Liberal
Denis Coderre Liberal Bourassa, QC
Don't you think that Bill C-52 is an insurance policy? What is the problem with having a kind of a process where at the same time you can say to the shipper, “Well, we're providing you with some more leverage, but on the other side with the railways, you have l'arbitrage, so at the end of the day, it can be on your side too.”
What's wrong with that?
Vice-President, Government Affairs, Law and Risk Management, Canadian Pacific Railway
Let me make a comment. Insurance is another example of something that would be negotiated. If it's personal or whatever type of insurance you're getting, you'd be negotiating that individually with maybe one or more carriers and deciding what you're going to do.
So for us everything comes back to a commercial negotiation between our company and a customer. Everything comes back to that. To the extent that you have a bill that takes away that commercial relationship or provides some opportunity for some third party, either the regulator or an appointed arbitrator to do that—and that's why we proposed some of the amendments we have—it is obviously a concern to us. Anything that takes away from that commercial relationship is a concern to us. To the extent that we have the opportunity to continue to negotiate.... As I mentioned in my remarks, we receive about 70% of our revenue through commercial arrangements with our customers.
So it's something we're comfortable with.
Liberal
Denis Coderre Liberal Bourassa, QC
What actually bothers you is someone meddling in your affairs. You would rather…
Sean Finn Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
I would not say that. The concern, I feel, is that…
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
We want to negotiate contracts with customers in good faith. We feel that, if the parties sit down and negotiate these contracts, they will come to an agreement that will result in better service and a better understanding of each other’s needs. Show me an industry in Canada or North America where a third-party arbitrator determines the level of service to be provided after the parties have negotiated a price.
Liberal
Denis Coderre Liberal Bourassa, QC
As my NDP colleague has said, railways are not like companies in other sectors. In this sector, customers do not have a lot of choice but to do business with you.
Executive Vice-President, Corporate Services and Chief Legal Officer, Canadian National
I feel that we have explained to you that customers have a lot of choice. There is another railway company and there are other means of transportation.
Liberal
Denis Coderre Liberal Bourassa, QC
We are “on division” about that; someone will explain to you what it means.
Mr. Murphy, given that I am from Montreal and that I only have seven minutes, let me take advantage of your presence to get you explain something to me. If you are in favour of deregulation, why is the City of Montreal forced to go to court to require you to install pedestrian crossings at CN lines? It can be organized and the city is ready to pay for it. What is the basic problem if everyone is in agreement?
Vice-President, Government Affairs, Law and Risk Management, Canadian Pacific Railway
Mr. Chair, I'll just take a minute to respond. It's not a question related to the legislation, but something going on in the city of Montreal today with respect to our right of way in Montreal on our main line. Our concern between the port and serving the port—and I mentioned the importance of ports and the port of Montreal is right up there in terms of importance to us—we worry not only about the efficiency and the fluidity of the movements coming out of there, but also about safety.
There's a proposal here to build half a dozen pedestrian crossways at grade across our right-of-way in Montreal. We've already got under-the-rail passageways today that pedestrians are choosing not to use. So I think that's a concern right off the bat. The idea that we would just sit there and say it's reasonable to go ahead and build these at-grade pedestrian crossings is, in our view, itself neither reasonable from the perspective of safety or our ability to move product on our main line like that.
Liberal
Denis Coderre Liberal Bourassa, QC
But it can be proved to you that it is safe, given that it happens in other cities. It can be done every 500 m and every 250 m. There are engineers who have worked on these things. They can show you that it is indeed safe. It must be said that the tunnels are not. We know that a lot of things can happen at night.
Do people really have to go to court over this? Is there no way to come to an agreement?
