Transport Committee on Oct. 4th, 2018

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I am calling to order the meeting of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to Standing Order 108(2), we are doing a study of the Canadian transportation and logistics strategy.

With us as witnesses today we have the Saskatchewan Association of Rural Municipalities, with Ray Orb, president; and the Shipping Federation of Canada, with Michael Broad, president, and Karen Kancens, vice-president.

Welcome, and thank you very much for being here so early this morning.

We will open it up with five minutes exactly. When I raise my hand, we're going to cut you off. The members always have lots of questions, and we want to give them sufficient time.

Mr. Orb, would you like to start?

[Ray Orb, President, Saskatchewan Association of Rural Municipalities]

Yes, I will. Thank you.

First of all, I'd like to thank the committee for allowing me to appear this morning. My name is Ray Orb, and I am the president of the Saskatchewan Association of Rural Municipalities, which is known as SARM. We were incorporated in 1905 and have been the voice of agriculture and rural Saskatchewan for over 100 years. We work on behalf of our members to identify solutions and challenges in rural Saskatchewan.

As an association, we are mandated to work in agriculture, which is an important sector in our province. Saskatchewan is a key producer of Canada's wheat, oats, flaxseed and barley, and we are proud to be home to many farms, cattle ranches and dairy operations.

Our agriculture industry relies on the ability to move product efficiently and cost-effectively. An adequate and efficient transportation system is imperative for producers to move their product across the province and across the country.

Saskatchewan, Canada and North America rely on the rural municipal primary weight infrastructure in Saskatchewan to connect to the provincial network to move goods and services in a reliable, timely and safe manner. Our province boasts the largest provincial road network in Canada. Provincial highways contribute 26,000 kilometres, while rural municipal roadways contribute 162,000 kilometres.

The Saskatchewan Ministry of Highways provides funding to SARM to manage a primary weight network grant-funding program for rural municipalities to maintain rural roads at a primary weight. These primary weight corridors enable the seamless transportation of goods and services throughout the province and the country, while protecting the aging provincial system. The program has proven to be very successful, as there are currently 6,500 kilometres of “clearing the path” primary weight corridors in the province.

We also rely on the rail system to ship grain and agricultural products, and SARM has been really vocal about the rail level of service since 2009.

More recently, we provided comments on Bill C-49. We supported the bill, as it provides legislation for increased data reporting. More data means that producers in the supply chain can make better decisions that are based on good information. We also believe that the federal railways should be required to produce plans that detail how they'll deal with demands resulting from the upcoming crop year.

We're pleased to see reciprocal penalties and the provision for informal dispute resolution services included in Bill C-49. It's important that disputes be resolved quickly so that producers aren't faced with additional penalties or delays.

It is also important that the Transportation Modernization Act and related regulations ensure that the Canadian Transportation Agency and Transport Canada have adequate mechanisms to keep railways accountable. SARM believes that the federal government needs the ability to act if it deems a railway's grain plan to be insufficient. Without adequate enforcement options, Bill C-49 would not bring about meaningful change.

Although rail transportation has primarily been an issue for grain producers in western Canada, the increase of oil by rail causes additional concerns. Thousands of barrels of oil on the track not only cause capacity issues for grain but also pose a threat to the environment.

Pipelines are an environmentally favourable alternative to road and rail transportation and should be used where possible to reduce the risks associated with moving dangerous goods by rail. Pipeline development will also take oil cars off the rail tracks and free up cars for the movement of grain.

My last comment is related to the important role that ports play in our rural economies. Since the port of Churchill stopped operations in 2016, SARM has been closely monitoring the situation and advocating for a solution. The port provided an important export point for producers, and its restoration would help move the grain backlog in the Prairies.

Last year, SARM had the opportunity to meet with officials from the port of Vancouver. We have seen first-hand some of the logistical issues and how the port authority hopes to bring about further efficiencies.

The rural landscape has changed over the course of the last century. Demands on infrastructure have increased and will continue to increase. The report “How to Feed the World in 2050” indicates that by that time the world's population will reach 9.1 billion. Food production must increase by 70%. Annual cereal production will need to reach three billion tonnes, and annual meat production will need to increase by over 200 million tonnes. It is imperative that we have a transportation system that enables producers in rural Saskatchewan to do their part in feeding the world.

On behalf of Saskatchewan's rural municipalities, I would like to thank the committee for the opportunity to lend our voice to this important conversation.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Broad, go ahead.

[Michael Broad, President, Shipping Federation of Canada]

Thank you, Madam Chair and committee members, for seeing us today.

Karen and I are here on behalf of the Shipping Federation of Canada, which was established by an act of Parliament in 1903. We are the trade association representing the owners, operators and agents of the ocean ships that carry Canada's imports and exports to and from world markets, including some of Ray's grain.

The ships represented by our members load and discharge cargo at ports across the country and are literally the carriers of Canada's world trade. We were following the meetings the committee held last week in St. Catharines and Vancouver, and we're very interested in hearing the views of our trade chain partners on how to modernize Canada's trade corridors from a regional point of view.

For our part, we'd like to address this issue from a national perspective and focus on a handful of key actions and priorities that we believe will increase the efficiency of vessel operations in Canadian waters for the ultimate benefit of the transportation system as a whole.

One of our priorities for optimizing vessel operations is to invest in modernizing Canada's marine communications and traffic services, or MCTS, which is the Coast Guard-led system that monitors vessel traffic movements in Canadian waters.

We believe that a real opportunity exists to transform this system from what is currently a conduit of information that acts much like a telephone operator into a truly dynamic tool that is able to gather, analyze and broadcast real-time navigational information, not only to the bridge management team on the ship, but also to the shoreside infrastructure, such as ports and terminals. Modernizing the MCTS system would lead to a more holistic approach to managing marine transportation in Canadian waters, with the benefits extending to all our trade corridors on a national basis.

Another element of the marine transportation system that is critical to several of Canada's key corridors is the availability of icebreaking capacity to support safe and efficient transportation during our long and challenging winters, particularly on the northeast coast of Newfoundland, in the St. Lawrence River and the Great Lakes, and, of course, the Canadian Arctic.

Despite its importance, the icebreaking fleet has shrunk significantly over the years and is currently made up of over-age vessels, which are very thinly spread over a vast expanse of water. Although the government has announced some measures to address this situation, including the acquisition of three used icebreakers, we need a concrete plan for renewing the fleet in the long term, which is essential if Canada is to have sufficient icebreaking capacity to meet future demand for safe and efficient marine transportation.

No discussion on optimizing the efficiency of vessel operations in Canadian waters would be complete without talking about pilotage and the ongoing review of Canada's pilotage system. Although there is no question that the Pilotage Act has served as an excellent tool for ensuring safe navigation in Canadian waters, it is our view that the pilotage system is unable to control costs or consistently provide users with the level of service they require in a highly competitive marine transportation environment.

We believe that the recommendations arising from the pilotage review provide a much-needed opportunity to amend and modernize the act, and we urge the members of this committee to communicate the need for such renewal to their fellow parliamentarians.

Finally, we'd like to draw the committee's attention to the marine single window initiative, in which all the information required by Canadian authorities, and CBSA in particular, related to the arrival and the departure of ships in Canadian waters could be submitted electronically through a single portal without duplication. This concept offers tremendous potential to expedite the flow of trade by managing the marine border in a way that eliminates paper processes, minimizes redundancy and reduces the possibility of error and delay with respect to cargo and vessel reporting. A number of countries, including those in the EU, are already in various stages of implementing this concept on a national basis, and we strongly urge Canada to take the necessary steps to ensure that our processes are aligned with those of our international partners.

Although we've tried to be as focused and concrete as possible in our presentation to committee, I'd like to take this opportunity to provide a few comments from a broader policy perspective.

Given that a key role of our transportation and logistics system is to serve the needs of Canada's importers and exporters, it is essential that the government have a vision or a strategy for developing Canada's trade corridors that is national in perspective and closely tied to the broader trade agenda. Such a strategy needs to support the transportation system's ability to efficiently serve all the new markets that have been or will be negotiated as part of Canada's trade diversification agenda, whether through the revised CPTPP, the recent CETA, or the ongoing Mercosur negotiations. Such a strategy also needs to align all the departments and agencies that interact with the carriage of international trade so that supply chain efficiency becomes an integral element of how they operate.

Thank you to the committee for your attention. I look forward to answering any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair. I apologize for arriving a couple of minutes late.

Mr. Orb, you have presented to this committee on a number of occasions. I appreciated the opportunity to meet with you and some of your colleagues who are here representing SARM. I'm going to direct my questions to you. It should come as no surprise, since I am from Saskatchewan.

Given the fact that we have experienced a wet and cool fall, I want to hear whether you have heard that this year's harvest is forecast to be lower in tonnes than in recent years.

[Ray Orb]

I can't speak on behalf of the shipping industry, but only on behalf of producers. In the meetings that we've had with the shippers, they were forecasting a normal-sized crop, I think, within the five-year average, with good quality.

However, at least one third of the crop is still out in Saskatchewan. In Alberta, I believe there's even more than that. We're looking at a lot of crop downgrading. We are a bit concerned about the railroads being able to move this grain, because now we have different grades and different quality issues facing us.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Do you think this shipping year would be a good benchmark to assess whether the changes to the Canada Transportation Act in Bill C-49 will have a meaningful impact for farmers and shippers?

[Ray Orb]

We are certainly hoping that's the case. I can tell you that since Bill C-49 was passed, the two major carriers, CN Rail and CP Rail, have been a lot more apt to sit down with organizations like ours. In fact, I'm scheduled to have a meeting with CP Rail next week in Saskatoon.

They have come forward with their plans. They've also come forward now with their winter plans, which obviously we're facing. I think they are being scrutinized a lot more. This year might actually put them to the test. Although it might not be the volume, we have other issues to deal with right off the bat, including the weather.

Thank you.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I know the Saskatchewan government has opposed the Liberals' carbon tax quite vehemently. I'm wondering if you would be willing to share your association's view of the carbon tax as it relates to transportation.

[Ray Orb]

Of course, it's no secret that we've been supporting the Province of Saskatchewan in fighting against any kind of federally imposed carbon tax. That's basically because we believe that the province has come up with its own action plan to mitigate greenhouse gas emissions, and we support that action plan.

We're concerned. We have contacted the railroads and asked them about the carbon tax. They informed us that there will be a tax on diesel fuel in particular. We're also concerned, obviously, that the cost will be passed on to farmers in the way of freight trade increases. It's a huge concern.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

When we did a study of the Navigation Protection Act, or the Canadian Navigable Waters Act, you provided testimony. Here we are again.

The minister's mandate letter asked him to reverse all of the changes that were made back in 2012-13. I'm wondering if you would also comment on Bill C-69. What are some of the greatest concerns you have in regard to infrastructure and transportation being impacted as a result of reversing those changes?

[Ray Orb]

Of course, we have opposed the amendments, the changes to the legislation. Actually, both Bill C-68 and Bill C-69 affect fisheries and navigable waters. We feel that the changes are actually going to impede what municipalities need to do as far as work is concerned. The projects will be delayed. We have a lot of examples that we showed to the committee of how that would add costs and time delays. We've relayed those concerns. We understand that now the Senate will be looking at that bill. We're actually hoping there will be some amendments to that to make it easier for municipalities, not only in Saskatchewan but across the country, to do their work while still protecting the environment.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

What I would finish with is to ask you to give us your thoughts on what steps could be taken to ensure that rural communities share in the benefits of increased traffic through Canada's major trade corridors.

[Ray Orb]

With regard to how they could share in the benefit, I think some of it is working with the municipalities, as well as the major carriers.

I know that through FCM, the Federation of Canadian Municipalities, there is a good relationship between the carriers and the municipalities, in that they, of course, need to observe rail safety. Mr. Rogers would be familiar with that because he was on the board of directors for some time.

I know that some of the municipalities in the urban centres across the country are concerned about the increased traffic, but at the same time I think that the railroads know they need to work together to solve some of the issues.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Mr. Hardie, go ahead.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Madam Chair.

Welcome back, Mr. Orb. It's good to see you again.

Where do you make your home, Mr. Broad? Where are your offices?

[Michael Broad]

I'm in Montreal. We have offices in Montreal and Vancouver.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Last week, we were on the road looking at trade corridors in the Niagara region, as well as on the west coast.

I'm wondering—and I'll ask both of you as customers of the system—what level of confidence you have that there is an overriding strategic view of what our trade corridors in their totality need to be providing.

[Michael Broad]

I think there needs to be a more defined strategy for the trade corridors. I don't know of any....

Karen, is there any—

[Karen Kancens, Vice-President, Shipping Federation of Canada]

As far as we know, we have the national trade corridors fund. We saw the first round of funding applications, and there were Transport Canada criteria for fulfilling those applications. However, we really don't see an overriding strategy. We need something national in basis that also has a regional lens.

How do you find the right balance between investments and decisions that have to be made in response to regional needs and capacity constraints, and the need to make investments and decisions that have benefits across all trade corridors, for the good of the greater whole?

We need a strategy that has a clear linkage to Canada's overall trade policy. We don't see enough of that. I think we need to try to get more alignment between the efforts of the government to diversify trade and identify new trading partners, and the ability of the relevant Canadian trade corridor to efficiently carry that increased cargo. We need those kinds of discussions.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I'd like to pose the same question to you, Ray.

Sitting there on the Prairies and dealing with your constituencies, what's your level of confidence that—I'll be very colloquial about it—the metro Vancouver leg of the trade corridor has its act together?

[Ray Orb]

That's one of the reasons we went out last July. We were invited by the Vancouver port authority to tour the terminals and the facilities there. We went on the water to see a lot of the facilities, and we saw some of the problems they were going through.

Organizations like ours have been calling for a national transportation strategy that would take in all facets of transportation, including rail. Some of that, of course, is passenger service, and some of that is bus service. There are lots of people in the rural areas who don't have good bus service. A good example of that is what happened this past summer with the Greyhound buses. That's been discussed by a lot of the municipal organizations across the country.

We need to have a better strategy. We're increasing the trade. I mentioned the production on the Prairies alone. We're forcing the crops, which are increasing in size, through the same transportation corridors in this country. We need to adapt pretty quickly.

With the Port of Vancouver and the federal government investing $167 million, that's probably a good start. However, when you look at the strategy.... I have never seen a number, but I would suspect that it needs to be in the billions.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

In that regard, certainly in the testimony last week during the first two stops on our study, we heard that all the component parts—the railways, the ports and the local road systems—seem to be working as hard as they can to maximize their capacity or to do what they need to do. We didn't get the sense that there was somebody or some body overlooking the whole thing as a network and determining whether things were properly balanced and whether the investments were going forward.

Do we try to deputize somebody like, say, the port to take this on in a region, or is there another place where this responsibility should lie?