Evidence of meeting #110 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was capacity.
A recording is available from Parliament.
3:35 p.m.
Director, Logistics, Teck Resources Limited
That's fair enough. That's one component, but if you look at CP's profit earnings releases, you'll see it makes a pretty high margin on that. Distance is one factor, but you get efficiency when you're going over such a large distance.
3:40 p.m.
Director, Industry Relations, Pulse Canada
Just on the rate piece, it's not necessarily that.... I understand your point that we want better service and can also complain about cost, but just to Michael's point, these are monopolies and they have the ability to price accordingly.
I guess the question really is how much of a rate of return they need and if they are getting enough, really. There have been a lot of complaints that the maximum revenue entitlement is reducing their ability to invest, but they make a tremendous rate of return on grain. They have a privileged position as a company from being a monopoly, while others don't have that privileged position.
3:40 p.m.
Liberal
The Chair Liberal Judy Sgro
Mr. Aubin, one second. We were not receiving the English translation.
We will start over again.
3:40 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
Okay. I was saying that, with the absence of Ms. Kelly Block, I am probably the most senior member of this Committee, as I was on it under the previous government. In listening to you today, I have the impression that it is like Groundhog Day. It is as though nothing has really happened. This morning, we heard representatives from the main railway companies, who explained their investments. I admit that I forgot to ask them what percentage of their revenues they dedicate to those investments.
I have a brief question for each of you. Am I to understand that, in your daily activities, you do not see any change in the investments and services that you receive?
3:40 p.m.
Vice-President, International Trade and Transportation, Forest Products Association of Canada
I can go first.
In the case of CP, the service has been better than it was. CN is continuing to struggle. I'm sure they talked about all the numbers that we saw very nicely advertised in The Hill Times this morning when they were here.
As I said in my remarks, I acknowledge that. I respect those investments they've made, but will it be enough? Will it be enough to move everything we have to offer so we can fully take advantage of the products we're producing?
One of the things that we're trying to get into is incorporating more wood products into new forest products, such as engineered wood products, and getting wood products into the bioeconomy to make new products. If we can't get the products we already make to market, how are we going to get these new products to market?
We're still struggling. I like your Groundhog Day analogy. It's very apropos.
3:40 p.m.
Director, Industry Relations, Pulse Canada
So far in the grain year, service has been quite good from the railways, as you'd expect, because it's very good railroading weather. The crop has been a bit slow to come off. We've had some issues with weather and some stalls in harvest.
The railways are now meant to publish plans on how they plan to move the crop each year. It came out in Bill C-49. Their plans indicate that there is no increase in capacity. They haven't planned for an increase in capacity. When it's really going to matter for us is when we start to get into winter and start to see how they're able to respond and the kind of flexibility they have to be responsive to shippers' needs.
The investments may work, and we may have a great year—
3:40 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
We are often told that there are specific problems because of winter and exceptional returns some years. Are not the exceptional returns in agriculture five years ago normal returns now, in 2018?
3:40 p.m.
Director, Industry Relations, Pulse Canada
Yes, there's a steady trend upward, but for the harvest, if you take the three-year average, you're going to be able to predict with pretty good certainty the size of the crop you're supposed to move each year, and the railways do that. They plan operationally months and months ahead of time for the crop. They assume a crop size.
Yes, you should be able to plan, but the reality is that they don't necessarily plan based on the demand of the industry. They plan on how they want to utilize their assets. The capacity they plan isn't necessarily always going to meet the demand that's required, just by the very fact that they don't have to respond to all the demand when it comes at them.
3:45 p.m.
Director, Logistics, Teck Resources Limited
Thank you.
I guess at a high level, global demand continues to grow as people move to middle class. The population of the world is getting bigger, and there's increasing demand for Canadian resources in agriculture and forestry. We're blessed that way.
This is the challenge we see. We're not looking to grow our steelmaking, coal, copper, and zinc businesses, but we see increased exports of U.S. thermal coal coming up and placing strain on the existing capacity, and grains increasingly intermodally. I think it's an aggregate effect, the overall growth, and we're going to continue to see that.
Yes, it's like Groundhog Day, but we're persistent, and we'll continue to try to grow to meet new demand, as will rail and port, but it feels sometimes that we're lagging.
3:45 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
I will continue with you, Mr. Shaugnessy. In your cover letter, you stated the following:
“Therefore, we recommend that the government consider adopting a similar data transparency mechanism....”
In fact, you want the same policy put in place as in the United States. In the transportation industry, we often hear about harmonization of Canadian and American legislation. What is blocking that?
3:45 p.m.
Director, Logistics, Teck Resources Limited
At a high level, we hope for increased transparency so that we understand what an appropriate level of return is for a rail company based as an infrastructure company. Commodity producers take on a lot of risk, so we're always trying to determine what's fair so that we divide the pie appropriately.
Yes, we think the U.S. does this better than we do right now. It provides a lot more transparency on cost and margins.
3:45 p.m.
NDP
3:45 p.m.
Liberal
3:45 p.m.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
Thank you, Madam Chair.
Mr. Neuheimer, my question is more for you.
Canada is the world's second largest exporter of forestry products. What are the transport challenges for the forestry industry? What aspect should the Government of Canada address first?
3:45 p.m.
Vice-President, International Trade and Transportation, Forest Products Association of Canada
This really comes back to the vision point that I was trying to make in my remarks earlier. Probably the biggest pain point that we have right now is right here at the port of Vancouver. Once you get near Vancouver, it becomes a bottleneck and it slows down. Why are we not investing more to eliminate those bottlenecks once and for all? If we're not moving trucks efficiently in and out of and around the port of Vancouver, why are we doing more short sea shipping?
I think we have to spend more time trying to answer those questions. Then we have to come up with some better answers to moving the products through more rapidly and trying to take advantage of opportunities we have.
I talked about the trans-Pacific partnership that hopefully will be rapidly adopted. We want to ship more to Asia. We want to be less dependent on the United States, especially with the uncertainty that we're facing there right now in the marketplace. Unless we're able to solve those problems by using Prince Rupert or other options more, we're not going to fully realize our potential. It's going to work as a disincentive for investment in Canada.
3:45 p.m.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
In your remarks before you were asked to stop, you mentioned something about to be eased by immigration and training. Can you develop a bit on that?
September 26th, 2018 / 3:45 p.m.
Vice-President, International Trade and Transportation, Forest Products Association of Canada
We're desperate to find people to drive trucks. Conceivably, we should have an easier time with the new folks who are coming to Canada. Some of them, conceivably, would want to drive a truck and start to pay for their living that way. Why can't we make it easier for some of those newer arrivals to get into that business? It's very expensive to get into that game, and it's very expensive to do some of the training. Why can't we make it easier for people to do that if they're interested in doing it, especially when they're new Canadians?
3:45 p.m.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
Thank you.
Do I still have some more time? Yes. I'll be giving it to my colleague, Vance.
3:45 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Madam Chair and Mr. Iacono.
Again, I want to dig a bit deeper. The fact of the matter is, that's why we're here. It's to come up with a “how” to the “what”. We talk about the obvious with transportation, infrastructure, the operating side, the capital side. We have had a lot of discussion about that in the past few days, here as well as in Niagara.
I want to dig a bit deeper into the “other”. The other is what affects the transportation. The key here is transport and the methods by which we transport to strengthen our international economic footprint. Fluidity is critical. Fluidity in terms of trucks, boats, planes, cars, and railcars is an obvious one. Let's take it a step further in terms of those choke areas, those areas that are congested, and why we don't have that fluidity.
You talked about diversification into new markets. The government has made great strides, in the past few months especially, with respect to responding to our friend to the south. I guess that would be a subjective comment, but that said, we do have to respond. In responding, we have to be less reliant on the obvious market—albeit robust—and get into new markets, such as Malaysia, the EU, Asia, India, and areas like that.
My first question to you is this: how do we enhance what we've already announced with respect to diversifying into new markets?
Number two, I want to speak about the elephant in the room. No one seems to want to talk about this publicly, but I'll say it anyway. It's the fact of productivity and the lack thereof. In competing against international markets, I guess one of the albatrosses around our neck is the lack of efficient and fluid productivity at our ports.
With that, I'm going to ask you the question. We know what the problem is. We see that. We've heard it loud and clear, but with your background and your expertise, what are some of the solutions that we, as a partner, a federal level of government, can facilitate in discussion with all levels of government as well as with partners across the country? What do you think the solutions are?
3:50 p.m.
Liberal
The Chair Liberal Judy Sgro
Before you start, just to make it clear, this is now the completion of Mr. Iacono's time. Please answer. Now we're into Mr. Badawey's time.