Transport Committee on Sept. 24th, 2018

[Matt Jeneroux]

Okay. With regard to policies, you mentioned there could be levels of federal government support. What specifically would those be?

[Bruce Graham]

I'm not the expert on that in our company.

[Claudine Couture-Trudel]

With respect to additional support, there are various things that we would love to see, outside of just infrastructure, such as research and development in the environmental sector. Right now, our companies are in need of different investments and new investments to address new concerns and new levels of protection for the environment. We would love to have additional federal support in finding better practices, and help with funding for infrastructure to reach these goals as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'll move on to Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

I will try to ask each of you a quick question, starting with Mr. Given.

I'm new to this field. I would like to know if there are mixed crews on a ship. What I mean is, are there Canadian seafarers who earn $26 an hour and foreign seafarers who earn $8, $10 or $12 an hour?

[James Given]

No, you wouldn't get a Canadian to go on board for two dollars an hour. I want to make sure that I set the record straight. With the new policy on temporary foreign workers—the new mandate and directive from ESDC—the foreign seafarers who do come to Canada and are working under a temporary foreign worker permit are now going to be issued new employment contracts that clearly show they are earning Canadian wage rates. It will help to level the playing field.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

My next question is for Mr. Burgess.

I don't know the Great Lakes region very well, but I know the St. Lawrence a little better, where a large part of the channel is dredged. Are we at the limit of possibilities in terms of ships, draughts and bridges under which to pass? For example, can we move from a Panamax to a super Panamax, or have we already reached the maximum of what we can do on the St. Lawrence Seaway?

[Capt Mike Burgess]

We are certainly at our limit for what exists right now. As mentioned, there is lots of room for more ships. The newer lake ships are at maximum size—length, width and depth—for the system that exists. An improvement and expansion in the system in the future is definitely worth looking into. It would provide much greater ability to move more cargo and keep it off the roads and do it more efficiently.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

Ms. Couture-Trudel and Mr. Graham, you said that investment was needed, particularly in wharves. Is it more a matter of upgrading aging wharves or adapting wharves to the size of new vessels?

[Bruce Graham]

I would say it's more on the modernizing side. If there were new vessels, and certainly if there was a depth change, then of course all ports would probably be affected on the Great Lakes in regard to what they could handle. You would have to find out what that modernization of the seaway was before you could answer the other question.

In regard to what exists today, you're looking for things to maintain what you have at a high level. Quite frankly, there's a possibility that maybe there are new ways and new technologies out there that could make it a more efficient operation as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I ask all of our witnesses and my colleagues if they would stay in place for a moment. Our clerk is going to take a picture and post it on our website so that taxpayers can see we are actually working. We're not out viewing the falls.

May I remind you that we do have a round table opportunity between six and seven this evening in this same room. You're all welcome to come back and talk with the committee members if you choose.

I will suspend, but please don't move for a minute.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order.

Thank you very much for joining us this morning.

We have the Algoma Central Corporation, Gregg Ruhl, chief operating officer. We have the Canadian National Railway Company, Andrew Fuller, assistant vice-president, domestic intermodal and automotive. We have the Chamber of Marine Commerce, Bruce Burrows, president. We also have Lake Carriers' Association, Jim Weakley, president.

Thank you all very much for being here. If you could, please keep your comments down to five minutes or so. The interpreters ask that you don't go too fast. They are trying to make sure that they get everything exactly. They don't want to miss a word.

We'd like to start with Mr. Weakley.

[Jim Weakley, President, Lake Carriers' Association]

Good morning, Madam Chair and members of the committee. Thank you for the opportunity to be here today.

My name is Jim Weakley, and I serve as president of the Lake Carriers' Association, based in Cleveland, Ohio. On behalf of my members, I would like to congratulate you on launching this important dialogue. A focused and thoughtful discussion on the Canadian transportation and logistics supply chain is well warranted. Given the highly integrated nature of the North American trade and logistics network, this dialogue must include a focus on cross-border issues, maritime trade, and opportunities shared between your great country and mine.

To illustrate just how interconnected we are, when a laker transits the Detroit-St. Clair River system, it crosses the border 17 times. If it were a separate country, the natural trade corridor formed by the eight Great Lakes' states and two Canadian provinces would have the third-largest economy in the world. For these reasons, I have regular and ongoing interaction with many Government of Canada representatives through the course of my work.

LCA was founded in 1880 and is one of the oldest trade associations in the United States. We represent operators of the U.S. flag vessels operating on the Great Lakes. Our members employ more than 1,600 people, and our cargo generates over 116,000 jobs, $20 billion in economic activity, and $3.7 billion in taxes—all in U.S. dollars. The bi-national Great Lakes navigation system creates 237,000 jobs, $35 billion in economic activity, and $6.6 billion in taxes. It also saves the North American consumer more than $3.6 billion in transportation costs.

Our ongoing contributions to both Americans and Canadians are vast. We are proponents of more trade and commerce between Canada and the United States. We strongly recommend that both national governments take a holistic approach to the binational Great Lakes trade corridor when making investments, setting policy and making regulatory decisions. The words “harmonization” and “interoperability” are frequently used when discussing Canada-U.S. trade. The only way to fully enable the incredible economic potential of trade and commerce between our two nations, particularly here on the Great Lakes, is to ensure that decisions are made with these two key elements in mind.

A new transportation strategy must take into account the critical capability needs, such as enhanced and more reliable icebreaking services. We should also electronically integrate the U.S. Coast Guard and Canadian Coast Guard command centres on the Great Lakes, as they do on the west coast. In terms of regulation, taking a binational approach to air emissions, ballast water, and the protection of species at risk through the lens of cross-border integration and harmonization adds to our ability to generate economic development and good-paying jobs on both sides of the border.

I commend you on undertaking this important study. Transportation is the lubricant that keeps our economies moving. The binational Great Lakes trade corridor continues to contribute much to both our nations.

I look forward to your questions and to ongoing engagement with Canadian parliamentarians and other government officials.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Weakley.

Mr. Burrows.

[Bruce Burrows, President, Chamber of Marine Commerce]

Good morning, Chair and members. Thank you for inviting me to present before the transport, infrastructure and communities committee.

I am thrilled to be here in Niagara Falls, located so close to the Welland Canal, a key component of a bigger national transportation corridor, which in its entirety, right down to the bottom of the St. Lawrence, we would call the Great Lakes-St. Lawrence River waterway.

My name is Bruce Burrows. I am the president of the new Chamber of Marine Commerce, or CMC.

The new chamber is an organization that represents more than 130 members of the marine sector in Canada and the United States. Our members do work in the Great Lakes, the St. Lawrence Seaway, the coasts of Canada and the United States, and the Arctic. The CMC works to promote a strong and competitive marine industry in Canada.

I’d like to take a quick moment before delving further into my remarks to personally invite the members of the transport committee to participate in the CMC’s annual Marine Day on the Hill, taking place this year on Tuesday, October 16. CMC members will be in Ottawa to advocate for the importance of our sector to Canadian public interests, and we will cap off the day with an open reception. We will be reaching out to your offices with further details, and I hope to see all of you there.

Let me now highlight the importance of the marine mode in a few ways: its efficiency, its economic contributions and its environmental footprint.

Beginning with the environment, the marine mode has a great story to tell. Members of the CMC are dedicated to reducing emissions and are investing in alternative fuels, for example, to power their ships. We continue our global work at the International Maritime Organization in London to set a level playing field for emissions standards.

Like the airline sector, we are global and regulated at the international level. If you compare the modes, marine wins hands down on environmental efficiency. One litre of fuel can move one tonne of cargo 243 kilometres by ship versus 213 by rail, and only 35 kilometres by truck. In terms of emissions, our existing footprint is already very small. A typical ship will emit almost 12 grams of CO2 per metric ton kilometre, compared with 14 for rail and as much as almost 76 for trucks.

With our new goal of decreasing carbon emissions by 50% by 2050, we're on a path to almost complete decarbonization in the marine mode. Adding to this great environmental story is the efficiency of the marine mode. More than 90% of goods move internationally by the marine mode. It’s the most efficient way of moving bulk cargo. Combined with the right intermodal connections, we can maximize the efficiency of our other transport mode partners—one of them is here, CN—notably rail and also road. With the entire waterway system at 50% capacity, and with St. Lawrence cargo volumes up 9% last year and 4% up already this year, we have a great opportunity to build on this new momentum and increase the amount of goods moving by marine mode to relieve congestion on highways, keeping in mind that the typical ship represents about 1,000 trucks.

There are, I must caution, some challenges to growth, for which we have solutions. I'm thinking in particular about the need to modernize and reform pilotage services, which have become very costly to users, and as Jim was mentioning, the need to replace an aged fleet of icebreaking assets.

Beyond efficiency and the need to harness recent gains, when we look at the economic contributions to the industry in Canada, it is truly amazing. In a recently released study of the impacts of the marine mode in the entire waterway region, it was revealed that in 2017 in Canada—Jim spoke to the U.S. side; it's the same study that we collaborated on—the marine mode creates over 180,000 jobs, and we handle about 185,000 metric tons of cargo every year. That contributes about $26 billion on the Canadian side in economic activity, and it's almost $6 billion in tax revenues in this big region that Jim referred to as the third-largest economy. That's a $6-trillion economy that we're right in the middle of here. It is very substantial.

As you can see by the numbers, Canada’s inland waters are a large contributor to our country’s trade success. These results underline the importance of the waterway as a strategic transportation and trade corridor, not just for Canada domestically but also with our trading partners in the U.S. and throughout the world. This corridor will help Canada build exports and diversify its international markets. We hope to see this vital corridor recognized through increased infrastructure investment in the region as well as through increased utilization rates.

Once again, thank you for taking the time to invite me to present today. I look forward to answering any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Burrows.

Mr. Ruhl, please go ahead.

[Gregg Ruhl, Chief Operating Officer, Algoma Central Corporation]

Good morning. I'm representing Algoma Central Corporation. We've been in business for over 100 years, incorporated in Canada. We are the largest carrier on the Great Lakes and St. Lawrence Seaway, with almost 30 ships plying these waters exclusively, ships that were purpose-built for the lakes and the seaway and optimized for the infrastructure that exists.

We have spent almost a half a billion dollars in the last few years renewing our fleet, or a portion of our fleet. We obviously have replaced older ships with more modern and more efficient ships, with the size, fuel efficiency and emissions all upgraded.

Our headquarters are in St. Catharines, just a few minutes from here. We have over 1,000 employees, at least half of them employed in the Niagara region and the rest throughout Canada.

In addition to our domestic activities, Algoma recently has expanded internationally with our expertise in what we call “short sea shipping”, which has been done around the Great Lakes for many years before the term was even popular. We're doing short sea shipping now and taking that expertise around the world. We have over 50 ships that we either own or operate in Central America, and throughout Europe and Asia. Algoma is growing and taking the expertise of the Canadian workforce and expanding it really throughout the world.

In terms of what we do in the Great Lakes and St. Lawrence Seaway, we move a lot of iron ore, both Canadian ore mined in eastern Canada into the Hamilton area for production of steel in blast furnaces and ore mined in Minnesota moved cross-border into Hamilton to make steel for the Canadian industries. Some of that steel, of course, ends up going back into the U.S. or into automotive production for export into the U.S.

I mention that because, as I go through some of the commodities we move, you will see a theme. Over half of the cargoes that Algoma touches move cross-border. They either originate in Canada and end up in the U.S. or originate in the U.S. and end up in Canada.

The second biggest commodity we move is grain. We have over 50 cargoes of grain to move here in the next Oct., Nov., Dec., as they say. Most of that will be out of Thunder Bay, elevated in the St. Lawrence Seaway for export, but much of it also goes to millers in Canada for flour and food production domestically.

We carry a lot of road salt. We are the largest carrier of road salt. We move salt mined in Cleveland to the Toronto area. We move salt mined in Goderich and Windsor, Ontario, to places such as Milwaukee, Chicago, and Green Bay, as well as, of course, all throughout Canada as far up as Montreal.

We move a lot of aggregate stone for construction, as well as for use in blast furnaces to take impurities out of the steel as the iron ore is broken down. We move slag for the production of cement. We move cement from Canada into the U.S. for construction. We move clinker from Canada into the U.S., where it's further processed into cement in Detroit.

I will keep going for a few minutes. You are probably catching the theme of my remarks here.

We move aggregate stone that's mined in Ontario into places such as Green Bay for feed for chickens and things such as that. We move a lot of stone mined in the U.S. also into Canada, where it's used for its chemical properties and also in the steelmaking process.

I don't have prepared remarks. If you could wave to me when I'm done, I will be respectful.

I hope I can take some questions later about some of the bottlenecks that we have a vision for helping with. I heard that mentioned earlier. Also, Canadian seafarers are very important, obviously, our lifeblood. More important than our equipment is that we have the people to run that equipment. It would be silly to spend a half a billion dollars and not have trained and qualified Canadian seafarers to operate those ships for the next 30 to 35 years.

In terms of pilotage, we are the self-piloting folks who were mentioned by Mike earlier. We do self-pilotage certification for our employees. As companies, we are also 99.99% safe when we self-pilot our own fleets. We're working together, in co-operation with the pilotage authorities on that end.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Let's move on to Mr. Fuller.

[Andrew Fuller, Assistant Vice-President, Domestic, Intermodal and Automotive, Canadian National Railway Company]

Good morning, everyone. I'm Andrew Fuller and I'm the assistant vice-president for sales and marketing for domestic intermodal at CN. We appreciate this opportunity to appear before your committee today on the important topic of trade corridors.

Today marks the beginning of Rail Safety Week across Canada. Our team of railroaders will be on the ground all week in many of our neighbouring communities, sharing a message of awareness and tips about our shared responsibility for safety around rails. CN is a proud partner of Operation Lifesaver, whose 2018 rail safety campaign #STOPTrackTragedies will reach millions of Canadians all over the country. There are actually signs and boards in many communities where you can pledge support for rail safety awareness in all communities across Canada.

CN employs about 24,000 Canadians across the country, and it transports more than 250 billion dollars' worth of goods across a North American rail network that covers roughly 20,000 route miles. As a reminder, our network stretches from Vancouver and Prince Rupert on the west coast to Halifax on the Atlantic coast and to New Orleans and Baton Rouge in the American south. We serve ports on all three coasts. In Canada, we serve all the major ports, including Vancouver and Prince Rupert on the west coast and Montreal and Halifax on the east coast. We also serve Thunder Bay, carrying grain and other products that move on the seaway system.

CN has a significant footprint across Ontario, serving thousands of businesses and supporting a large number of local jobs. We have the largest terminals of their kind in the CN system. Our classification yard in Vaughan and our intermodal yard in Brampton move over one million containers annually.

CN's business is very diversified, both in terms of the traffic we move and where we move it. Thirty-four per cent of our traffic moves across the Canada–U.S. border, 17% moves domestically in Canada, 25% is exported from the west coast ports, and 6% is exported from the east coast ports. You may not be aware that CN also operates a fleet of ships that move iron ore and other products on the Great Lakes system.

CN crosses the Canada-U.S. border in eight locations, but our primary points of entry are the CN rail tunnel between Sarnia, Ontario, and Port Huron, Michigan, and our crossing between Fort Frances, Ontario, and Ranier, Minnesota, which together handle about 85% our our cross-border traffic. We move a significant amount of container traffic, known as intermodal traffic, which comes from Asia through the ports of Prince Rupert and Vancouver, then on through Fort Frances to the U.S. market in Chicago, Detroit, and south to Memphis and beyond.

CN is investing heavily to grow our capacity and strengthen our network in Ontario. Our 2018 capital investment plan includes the investment of approximately $315 million to expand and strengthen Ontario's rail infrastructure. The Ontario investments are part of CN's record $3.5 billion capital program for 2018, which represents roughly 25% of our revenue base in 2018 alone.

Key investments include a new passing siding on our transcontinental corridor through northern Ontario, linking Toronto and Winnipeg, and intermodal rail yard expansions that will improve the efficient movement of containers into and out of the greater Toronto and Hamilton areas. Other capital program elements will focus on the replacement, upgrade and maintenance of key track infrastructure to improve overall safety, capacity and efficiency.

We are working with all levels of government to align our inland capacity to support port expansion and population growth in the population centres of southern Ontario. To address increased demand, we plan to invest $250 million in a satellite intermodal facility in Milton, which will enhance volumes and relieve the strain of overcapacity being felt in our facility in Brampton. The Milton logistics hub has been strategically located to support the logistics and warehousing industry in the west GTHA. It will support up to 1,000 jobs while also relieving highway pressure on the 401 and QEW highways, which I took this morning.

This project is good for movement of both goods and people. This project will facilitate the modal shift of goods from long-haul trucks to trains, reducing emissions and alleviating congestion. The project is undergoing an environmental assessment by a three-member independent review panel under the Canadian Environmental Assessment Agency and the Canadian Transportation Agency.

CN will continue to make investment decisions that benefit the supply chain and its users and ensure that product gets moved to market in a timely manner.

We look forward to continuing to work with the Government of Canada to strengthen trade corridors and ultimately the transportation network across the country.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Fuller.

Mr. Jeneroux, you have five minutes.

[Matt Jeneroux]

Perfect. Thank you, Madam Chair.

Thank you, everybody, for being here.

It's a shame, Mr. Burrows, that we're always in Ottawa, but you're here today, so it's good to see you travelling along with the committee.

We'll start with you, Mr. Burrows. This is a stat that I've now heard twice today, that 90% of goods are moved by marine. We had a presentation from the transport department prior to our heading out on this trip, which said we're seeing an increase in the number of trucks on the road. I'm hoping you're able to comment on that increase because from what you're saying, that there's ability for added capacity on your end, it would make sense to continue to increase on the marine side as opposed to trucks.

[Bruce Burrows]

I have two points, if I may. First of all, let me just say we've left a copy with each of you of the March study that I was referencing—that's the blue document. That really demonstrates clearly, I think, that the entire marine corridor is a key driver of activity in Ontario and Quebec, in particular.

Within that, you're making reference to the increase in trucks, and we too are growing. I mentioned the 9% improvement last year, and already it's 4% this year to date. That was with a rather difficult opening to the season with a lot of ice, as my partners at the table here fully understand. We expect a pretty robust fall, and we're on track for further significant growth this year. I think all the modes at the moment are growing.

I'm not sure what CN's growth is, Andrew, but I know you're growing as well this year from last year.

Then it's a question of modal shift in particular with the trucks and what we can do to facilitate more modal shifting. That's really the nub of your question.

I think there are a number of things, particularly at the provincial level, that we can do from a policy perspective. We can perhaps look at some incentives and maybe even disincentives. The Quebec government, if you're not aware, has a very progressive maritime strategy in place. They recognize these environmental benefits and economic benefits that I spoke of. They're very keen to facilitate that modal shift, and to the extent that the federal government can be engaged in that process, there may be some taxing mechanisms that could be deployed here as well. There is an opportunity, I think, even at the federal level to facilitate some of that shifting.

[Matt Jeneroux]

I guess some of that could cross the provincial borders, as you've indicated. Being from western Canada, I'm not aware of an Alberta provincial marine strategy, but I would be curious, when it comes to the increase in trucks and what you just spoke of, if there's a possibility to have all provincial partners at the table to address certain areas. Is that happening now?

[Bruce Burrows]

It's not but it should. I'd certainly be very keen to participate in some more of those discussions. Just look at western Canadian exports, which neither turn left and go out over the very difficult and expensive Rocky Mountains route—and we're hearing all about the problems with congestion in the west coast and so on—nor turn right and go east through the Thunder Bay gateway to a whole corridor that is underutilized.

Again, there may be some infrastructure investment opportunities here that would ultimately help, in particular, with the ports in the system—if we can then have an even more efficient ports system—to perhaps take some of that truck volume off the roads. I think the issues that we raised here in terms of getting some of the costs out of the system—pilotage, getting more icebreaking assistance in place, addressing some of those cross-border harmonization and regulatory improvement issues that Jim Weakley spoke about—will ultimately help us be more efficient and better able to attract business off the roads.

[Matt Jeneroux]

If we're looking at getting trucks off the roads, we've just seen an investment of an increase, I believe, to 12 lanes at the Ambassador Bridge in the Windsor corridor, which is coming from that perhaps.