Transport Committee on March 7th, 2013

[Greg Stewart]

I'm sorry, could you repeat the question?

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Would you agree with Mr. Edwards, or would you have that same feeling, that it won't have an impact on shippers—seeing as you are a shipper?

[Greg Stewart]

I'm sorry, I was having a side conversation. I apologize. I'm wondering if you could restate the question.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

I hesitate to repeat Mr. Edwards' answer, so I'll just skip on to another question.

Mr. Malec, I think this question impacts the east coast a lot more than the west coast. The Canadian government is currently negotiating a trade agreement with Europe, and there has been a lot of concern regarding the impact of arbitration. It is a very powerful tool, and often they come in conflict with international trade agreements.

Do you have any sense as to where the Canadian trade agreement might have an impact on this current legislation with regard to mediation and arbitration?

[George Malec]

Sir, that's an excellent question, but I really don't have a good feel for an answer on that one. I'm sorry. I would be speculating, and that's a disservice to your question, sir.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Fair enough.

I've noticed from certain media reports that you have been following the negotiations fairly closely. From the Halifax port perspective, I think the international trade agreement would have...especially opening markets regarding marine products, seafood in particular.

That's pretty likely to be the greatest impact for the port, yes?

[George Malec]

That's a fair assessment, sir, at this point, because a lot of that seafood requires special handling in the high-value refrigerated container units, which command a premium for the shippers and are very, very attractive cargo for both the railway and the shipper to handle as a consignment. Traditionally, that is one of the very important niche market mainstays of Halifax.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you.

The port at Sydney is also a shipper for that market, yes?

[George Malec]

The port facilities in Sydney do not currently accommodate the complexity of global connections that we have in terms of the deepwater container vessels on a regularly scheduled service. It's feasible to use the port of Sydney, but I couldn't really comment on their business model and where they stand on this.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Fair enough.

Regarding the rail companies' position regarding that particular trade, do you think the provisions that are presented here—we'll skip Sydney—in the proposed legislation are...? I noticed there was a serious hesitation when it came to the arbitration. I'm just trying to get a better understanding, especially from the port authorities that most of you represent, of where that line is.

When would you stop wanting to seek mediation versus arbitration? I don't have a clear understanding of how you see that. All of you seem to be saying at this point that arbitration is too heavy a tool, but at the same time you're saying if it weren't for that tool the rail companies wouldn't necessarily be as motivated to come up with agreements.

Do we need arbitration or not?

[George Malec]

That would be a very complicated answer, sir. I can only tell you from the port's perspective. When you're looking at the balance in that, if you look back to your original question about the refrigerated traffic supply chain, for example, that's extremely complicated and delicate to handle. A shipper in that supply chain also has all sorts of other agreements, in terms of equipment aspects, inventories, etc.

One agreement they may have with the railroad is going to be heavily impacted with several others—the terminal operator, for the way the containers are handled, the shipping line carrier to have those refrigerated boxes available at a specific time and place. Then, there has to be an agreement with the railway about how those are going to be plugged in on mobile generator sets. That's why we're a little hesitant to say very quickly that there's an easy template and that arbitration is the end logical step. We tend to agree that, because of the complexity of it, it has to be treated as a tool of last resort.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

I've run out of time, so I thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I'll let whoever takes the question first have the answer. The question is this. Do you favour more prescriptive regulations or performance-based regulations?

Don't speak all at once, please.

[The Chair, Conservative, Larry Miller]

Go ahead, Mr. Mayer.

[Andrew Mayer]

Because of the different requirements for various commodity types, I think it would be difficult to establish a prescriptive set of performance requirements for the individual areas. It would vary with the shipper. It would vary with the location. It would vary with the commodity type. The most likely scenario, and perhaps the best scenario, is really just a higher-level set of performance standards or criteria.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Right.

My time goes now to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

I'd like to thank our guests as well.

It's rather interesting. When we had the minister appear before us, he talked about the issue of arbitration. He said the best arbitration tool is the one that is never used, and he felt very strongly about that.

As we all know in business relations—and I come from 30 years in business—unless you've got some form of what I might call a hammer, some ability to be able to enforce, the potential for things just to not get resolved becomes a concern.

It's unfortunate that our friend from Port Metro Vancouver has left, because he made a statement, or actually it came from his predecessor—I'm not sure—the president and CEO, Robin Silvester, on July 31, 2012. This letter, by the way, was sent to Transport Canada. In the part where it talked about progress since 2010, the letter said:

Despite this progress, shippers groups representing a broad spectrum of port users and customers continue to maintain the position that service issues have not been fully addressed—

—but then it goes on to say—

—or that they are concerned that the service issues will resurface without effective remedy.

Then I'm going to go back to February 28, when we heard François Tougas, from the Mining Association, say:

...now we have a situation where I think many shippers feel that their relations with the railways are much improved over what they were during the service failure period that lasted so long, which Monsieur Mongeau talked about. We don't want to go back to those days.

What I'm trying to understand—I asked this of them and I would like to get your sense of this, gentlemen—is your sense, as it relates between not just your work but also with shippers and the railways. Is the issue that it's now in good shape, and the bigger concern is that they just don't want to go back to the bad old days, as it were?

Mr. Mayer, do you have a thought on that?

[Andrew Mayer]

Yes. I think the rail freight service review process, the level-of-service agreements, and the structure that's been established as a result of that process have improved the situation. Certainly we would like to see railways continue to enter into those agreements with our other terminal operators that don't have them and with new developments as they come into existence. I think that would be beneficial.

[Ed Holder, Conservative, London West, ON]

Would any of the others have any other opinion, different from Mr. Mayer's? Mr. Edwards, Mr. Stewart, Mr. Malec, do you have a different view from what was just expressed?

[The Chair, Conservative, Larry Miller]

Go ahead, Mr. Edwards.

[Stephen Edwards]

I think there is a much clearer understanding that for us to be competitive as gateway ports, whether it's the port, the terminal operator, or the railroad, we have to hit a competitive standard.

I was asked earlier about the impact of U.S. cargoes moving through Canadian gateways and I said it was neutral. You could also argue it's been to the benefit of all because it puts Canadian ports into a much more competitive environment of competing against those south of the border. As cargo is cargo, we can only move it at one speed, per se. You can't accelerate one versus the other without impacting your cost structure.

As the railroads have begun to compete for U.S. freight, it's probably been to the benefit of Canadian shippers as well in the intermodal phases.

[The Chair, Conservative, Larry Miller]

You're out of time, Mr. Holder.

Did Mr. Malec or anybody else want to comment on that point?

If not, we're going to thank our witnesses for showing up here today. We lost one of you three times, but you're persistent; you kept coming back.

Thank you very much for that.

Mr. Mayer, thank you to you as well.

[George Malec]

Thank you, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Okay.

I wish all the committee members a good break week. I know it's never really a break week, but have a good one.

There is some housekeeping.

I'd like to propose that our official start time for these meetings be 3:45. I would appreciate that support. I know today I was a few minutes past the 3:30 time, with question period and what have you. If we have enough people in the room to start before that, we will. This is so nobody is caught—if that's good with everybody.

We had a couple of requests to have some cookies and fruit here. It goes against my fiscal conservative attitude, but we will have that starting at the next meeting.

Have a good break week.

The meeting is adjourned.