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.
President, Chamber of Shipping
Yes, certainly. To be quick, there's break-bulk cargo, which often supports the construction industry, for example, and that cannot be imported into B.C. ports right now because of the amount of congestion.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Give me an example. For construction, what is it? Is it drywall?
President, Chamber of Shipping
It's rebar.
I'll give you a simple example. With regard to rebar expecting to get into the port of Vancouver, the terminals are very busy, and those are commercial relationships, so there's no real lever that says this cargo is more important than another cargo. At the end of the day, the ship anchors for 20 days in local waters and that creates a secondary problem, and then that cargo needs to be diverted to Tacoma and trucked to Canada.
None of that makes much sense, nor is it helping people on the ground.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
No, for sure. It's adding costs at the other end, I would imagine, in terms of delays. Again, is that just inefficiency, or is the port just too damn busy?
President, Chamber of Shipping
Well, I guess we're a success of our own making as a gateway. There's not a lot of marine infrastructure. Those are commercial relationships that terminals have with the Vancouver Fraser Port Authority.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
What about a port like Prince Rupert? The trucking from Prince Rupert to Edmonton is no further than trucking from Vancouver to Edmonton. Is Prince Rupert underutilized?
President, Chamber of Shipping
Absolutely. The port of Prince Rupert has room to grow and, I think, a strategy to grow. Sometimes the commercial decisions don't reflect potentially what the policy decision should be. Again, that's why I think that, overall, there probably need to be some levers that we haven't identified yet and that would help the cargo flow properly—or better than it does today.
Liberal
The Chair Liberal Judy Sgro
We have our next panel here.
Thanks very much, all of you. Again, my apologies for starting a few minutes late and keeping you waiting.
We'll suspend for the next panel to come up, please.
Liberal
The Chair Liberal Judy Sgro
Welcome, gentlemen.
From the Forest Products Association of Canada, we have Joel Neuheimer, Vice-President of International Trade and Transportation. From Pulse Canada, we have Greg Northey, Director of Industry Relations. From Teck Resources Limited, we have Michael O'Shaughnessy, Director of Logistics.
Thank you all very much for being here to join us this afternoon.
Mr. O'Shaughnessy, should we start with you?
Michael O'Shaughnessy Director, Logistics, Teck Resources Limited
I'm new to this, so I guess I'll go first.
Director, Logistics, Teck Resources Limited
No problem. I'm looking forward to the discussion.
Liberal
September 26th, 2018 / 3:15 p.m.
Director, Logistics, Teck Resources Limited
I just won't look at you, then.
Madam Chair, members of the committee and fellow witnesses, good afternoon, and thank you for inviting Teck to participate.
My name is Mike O'Shaughnessy, and I'm the director of logistics for Teck Resources, headquartered in Vancouver. Teck is here to address concerns over Canadian competitiveness in reaching export markets.
Teck is a Canadian diversified resource company that exports steelmaking coal, copper, zinc and energy. We employ nearly 8,000 people across the country. We are Canada's single-largest rail user, spending over $600 million annually. We're Canadian Pacific Railway's biggest customer, and a leading exporter to key markets, particularly Asia.
Over the last five years, Teck has exported over $20 billion in products from our Canadian operations to China, Japan, South Korea, India and other Pacific markets. With improved transportation and logistics infrastructure, Teck's export potential also improves, and that supports jobs for Canadians and generates economic activity where we operate.
I would now like to highlight additional steps to improve Canada's rail freight competitiveness and ensure the competitiveness of Pacific coast ports.
Our primary rail recommendation relates to shipper remedies and the need for a sufficient rail data regime that would empower the Canadian Transportation Agency to effectively deliver costing determinations under final offer arbitration. With the recent changes to the Canada Transportation Act, we understand that the agency's mandate requires it to request information in order to conduct costing determinations.
We recommend that the agency clearly confirm that it does in fact receive non-aggregated costing information, and that it does so without being impaired by any public body within the Government of Canada, the railways, or any other person.
Also, we have ongoing transparency concerns that the amended Canada Transportation Act does not compel the agency to disclose details around its costing model or information regarding its processes or methodology for regulatory costing. Simply put, there is no transparency on how the agency determines costs. This contrasts sharply with the regulatory system in the United States.
The U.S. Surface Transportation Board publishes details online respecting the uniform rail costing system, its system for determining railroad costs. We recommend that the government consider adopting a similar data transparency mechanism so that the Canadian Transportation Agency is required to make its costing model processes and methodologies publicly available.
Last, on rail issues, we remain concerned about whether railways are fulfilling their service obligations by taking into account the railway company and the shippers' operational requirements and restrictions. The language that became law under Bill C-49 does not reflect the reality that in connection with the service that a railway may offer, it is the railway that decides the resources it will provide. Those decisions include the purchasing of assets, the hiring of labour and the building of infrastructure. Any of those decisions could result in one or more restrictions. As those restrictions are determined unilaterally by the railway, it is not appropriate that they be used as a goalpost in an agency determination. As such, we recommend making the restrictions themselves subject to review.
The second area I will highlight relates to Canada's support for infrastructure competitiveness. Similar to rail monopolies in Canada, I have serious concerns about the non-competitive business environment of Canadian ports. On Canada's Pacific coast, there are only two publicly accessible major export points for steelmaking coal: Westshore Terminals, located here, and the federally owned Ridley Terminals, in Prince Rupert.
With the potential divestiture of Ridley Terminals, we are concerned about the possibility that both Pacific coast terminals would be owned or operated by a single entity. If both Pacific coast terminals were to fall into the same hands, our cost competitiveness, service levels and reputation would erode even further. We recommend a sale process that is fair, competitive and transparent, and that results in reasonable rates, service levels and open access.
I would like to thank the committee once again for the opportunity to appear before you today and for undertaking this important study. Given the limited time for my remarks, I invite you to read Teck's written brief, which outlines our position in much greater detail.
Thank you. I look forward to the questions.
Greg Northey Director, Industry Relations, Pulse Canada
Thank you very much, committee, for the opportunity to speak to you today.
Pulse Canada is the national industry association that represents over 35,000 growers and 132 processors and exporters of peas, lentils, beans and chickpeas. Canada is the world's largest producer and exporter of peas and lentils, accounting for over one third of global pulse trade. Approximately 80% of Canadian pulse production is exported to over 100 markets, and the value of the industry's exports exceeded $3.5 billion in 2017.
The Canadian pulse industry has set ambitious growth targets that focus on the incremental use of 25% of production, so about two million tonnes, in new markets or for new uses by 2025. Referred to as “25 by 2025”, this target will seek to capture the significant volume opportunities for pulses that exist in the food industries around the world, particularly North America, western Europe and China. Capturing these markets will be essential if we are to retain our standing as a world-leading producer. The significant economic, employment and processing innovation benefits that the industry brings also rely on capturing these markets.
Improving supply chain efficiency and performance is a key pillar of the sector's long-term strategy, as effective transportation is a significant determinant of export competitiveness in global markets. As noted in the 2015 CTA review report, “In a world of massive and complex webs of interconnectedness, the quality of transportation and logistics systems may be the single greatest contributor to a country’s economic performance.”
The pulse and special crops sector is particularly sensitive to this sentiment, as we are the most multimodal grain crop in western Canada, with product moving in box cars, hopper cars, intermodal vans and marine containers. In fact, 40% of our exports through Vancouver are containerized. When supply chains fail and logistics, reliability and predictability disappear, as we saw this past winter and in 2013-14, transportation costs increase, suboptimal economic decisions become the norm, and stable, long-term growth opportunities with international customers become difficult.
According to the World Bank, Canada ranks 20th on the 2018 global logistics performance index, a tool that was created to help countries identify the challenges and opportunities they face in the performance on trade logistics. Canada has dropped eight spots since 2014. On key indicators such as quality of infrastructure, timeliness of shipments, and the ability to track and trace consignments, Canada falls out of the top 20 countries. There is clearly room for improvement for Canada, which demonstrates that this committee's study on the Canadian transportation and logistics strategy is both timely and essential. Improving transportation and logistics is a tremendous opportunity to improve competitiveness for our sector and the Canadian economy as a whole. If effective, the strategy can set Canada down the path to become a world leader in logistics performance and infrastructure excellence, and our goal should be to become a top performer on the World Bank logistics performance index.
As you've heard from several witnesses today, a data-driven approach for any strategy will be essential. For our sector, the logistics system required to get pulse from the field to international markets, to customers and the store shelves, has a wide array of challenges, not the least of which is how to ensure complete visibility in the performance of these complex supply chains. Within months, the regulatory process required by Bill C-49 will begin to identify the service and performance metrics to be collected on the freight rail supply chain.
By establishing the right outcomes for this study, the committee can help guide Transport Canada and all stakeholders to ensure that these new regulations place Canada at the forefront of digital data management and real-time supply chain visibility that supports the competitiveness of Canadian exporters. We have to move beyond reviews of the Canada Transportation Act every eight to 10 years and legislative interventions when the system is in crisis. To do that, we need a data-driven supply chain that improves logistics and guides infrastructure spending continuously. This is by far the best way to do this, as it supports both commercial interaction between supply chain players and legislative efforts from government.
I'll leave it there. Thanks.
Liberal
Joel Neuheimer Vice-President, International Trade and Transportation, Forest Products Association of Canada
Good afternoon, Madam Chair and members of the committee. Thanks very much for having me here on behalf of the members of the Forest Products Association of Canada, or FPAC.
FPAC is the voice of Canadian wood, pulp and paper producers nationally and internationally. The forest products industry generates $69 billion annually and contributes $21 billion to Canada's GDP. The industry is one of Canada's largest employers, operating in over 600 forest-dependent communities from coast to coast, and directly employing 230,000 Canadians across the country.
In 2017, our industry exported over $35 billion worth of goods to 180 countries. We heavily rely on Canada's supply chain to get our goods to market. We are the second-largest user of the rail system, transporting over 31 million tonnes by rail in 2017. We transport over 74.2 million tonnes by truck each year, which makes us one of the largest users of this system. Through ports, we ship approximately 31.2 million tonnes overseas.
The forest products industry is facing several challenges right now. Most importantly, the lack of reliable infrastructure to support our transportation system is estimated to cost our industry over $500 million a year.
Minister Garneau's 2030 transportation strategic plan is a step in the right direction, to help ensure that Canada has a long-term vision of what our transportation and infrastructure systems must look like. However, 2030 is fast approaching, and while some of the investments may well help in the future, forest products are still feeling the effects of the 2017-18 freight rail crisis, and we fear the same will happen this year. Months after the crisis, fulfillment levels are still low in our sector. With winter fast approaching, our members are concerned that they will have to shut down mills.
I would like to acknowledge the work that the Canadian railways have done in recent months to add more capacity to the system. Unfortunately, there is still great concern across Canada in our business that it will not be enough.
We need to revitalize the Pacific gateway initiative, and FPAC looks forward to seeing the benefits of the investments made through the trade corridors fund. FPAC also looks forward to the quick implementation of the comprehensive and progressive trans-Pacific partnership.
Canada needs to avoid taking sector-specific approaches to transportation usage. We know that Minister Garneau recently met with representatives of the grain and agriculture sector, and FPAC believes these types of meetings should be held with all sectors together.
With the implementation of Bill C-49, Canada has an opportunity to strengthen its legislation and regulations to make rail rates and service more competitive for railway customers.
FPAC hopes that with the new own-motion power granted to the Canadian Transportation Agency, or CTA, through Bill C-49, more investigations into rail issues will be done, with the support of Minister Garneau.
Rail, however, is not the only mode that currently has negative effects on the Canadian transportation system. For the past couple of years, Canada has faced and continues to face a severe truck driver shortage, which has caused the cost of this mode to rise dramatically. With the rail issue already prominent, the need for trucks is higher than ever, yet most times our members cannot get the service they need.
Federal and provincial governments need to do more to ease the truck driver shortage, for example via immigration and training. To help ease the truck driver shortage crisis in Canada and the U.S., FPAC recommends harmonizing weights and dimensions across Canada and eliminating cabotage rules.
In the final point of the supply chain, current congestion and bottlenecks at ports are increasing delivery times and costs for the forest products industry, specifically at places such as the port of Vancouver. Our second-largest market is China; therefore, the industry heavily relies on this port to get our product to Asia. Enhanced performance metrics, expanding B.C. ports and other opportunities along the B.C. coast, including the implementation of short-sea shipping where needed, will help with these challenges.
On dangerous goods, we need to maintain a risk-based approach.
FPAC also believes it is important for the federal government to provide a mandate for safety-sensitive workplaces, such as the transportation sector and ours, to be able to test employees in relation to the legalization of cannabis.
Finally, labour stoppages are an issue over which our members have to be extremely vigilant in order to prepare for delays and added costs. FPAC asks the government to include railways and ports as an essential service, ensuring that service will continue even during a strike.
In conclusion, we need to do more and have a better-defined vision of the infrastructure we need going forward, now and for the future.
Recently, the Minister of Innovation, Science and Economic Development Innovation, Navdeep Bains, announced a report called “Resources of the Future”. Within this report, it is recommended that Canada have a 50-year Canadian strategic infrastructure plan.
Liberal
The Chair Liberal Judy Sgro
Mr. Neuheimer, I'm sorry, but I have to cut you off. Can you get the very end of your presentation in while you're answering some of the members' questions?
Vice-President, International Trade and Transportation, Forest Products Association of Canada
Yes, with pleasure.
Liberal
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Thanks, guys, for being here.
Matt and I represent Alberta ridings, and one way to stay elected in Alberta is to beat up on the railways, so we took our opportunity earlier today to beat up on the railways. In all fairness, I had a discussion with them afterwards.
It sounds to me as though in your presentation, Michael, you're talking about cost and transparency with the railways versus what we continually hear on the prairies, which I would say is efficiency in getting cars and that sort of thing. Is it that there's no transparency around cost, or is it that the service from the railways doesn't meet the needs of the growers, as all three of you have outlined?