Transport Committee on Sept. 20th, 2016

[Jean-Marc Ruest]

Yes. I'm not sure what numbers they are looking at, but they are the regulator and they do have sound data. The data I am aware of measures the use of extended interswitching, and that's anything beyond 30 kilometres. I'm not sure what's being used inside of 30 kilometres. What I do know is that there aren't a whole lot of shipping points that are inside of 30 kilometres. There are a few and presumably they make good use of the existing 30-kilometre interswitching. When we get to extended interswitching, the information that I have is that for the 2015-16 crop year, which is August 1, 2015, to August 1, 2016, 4,795 rail cars have been moved through interswitching outside of 30 kilometres. The longest distance in those areas was 125 kilometres and the minimum distance was 33 kilometres, so those are just outside of that 30 kilometres.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Ms. Cook, in your opening statement you mentioned $4 million in savings due to interswitching. Could you elaborate on that?

[Fiona Cook]

Yes, and we've since updated that statistic.

Mr. Ruest, I think you're more familiar with this.

[Jean-Marc Ruest]

From that same data that's been collected by Quorum Corporation, which is the grain monitor from the shippers—and they're self-reported numbers by the shippers—the shippers have reported savings of $5.2 million. That is from what they have seen as being the rates that were offered initially compared to what they ultimately got as a result of using the interswitching provisions. The savings resulted in $5.2 million.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you very much.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much.

To begin the second round of questions, we will start with Mr. Vance Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chairman.

I want to expand on the questions that I had for the Canadian Transportation Agency in looking at the bigger picture with respect to the economy, as well as using infrastructure related to transportation to try to boost our economy.

You made the comment earlier that we are competing on a world market, and to some extent we're having a tough time doing that simply because we may not have the proper infrastructure in place to have you as an enabler to that economy. It was disturbing this morning when I heard that the Canadian Transportation Agency made the comment “ that's not our mandate” when it comes to being a steward of an economic strategy that you folks are a part of. Having said that, one of the things I'd like to see moving forward is to change that and utilize the Canadian Transportation Agency in having an expanded mandate with respect to being a steward of an economic strategy.

Where I'm going with this is, do you feel that's the direction we should go into? Quite frankly, we do not have anyone that is a steward for economic strategy, from that strategy making proper policy, from that integrating a more integrated transportation system, and from that driving proper infrastructure investments that are based on those areas that are strategic in strength with respect to the economy and the transportation attached to that in the immediate and long term. I need to hear your thoughts on that, because I'm sure you folks often come up against that wall, where you don't have anyone that can be a steward, and ultimately what your needs are that then drive the overall national economic agenda.

[Jean-Marc Ruest]

We are absolutely an export-dependent country, and we sometimes look as a grain industry, for example, a little bit myopically at the environment. So we, for example, say it's good news for us that we're going to get lots of rail supply because other sectors are down. That's not a good-news story for Canada generally. We should be hoping that other sectors rebound and that they are successful as well and that we have adequate rail capacity, transportation capacity, to meet all of those sectors' demands. We should all be looking forward to the good-news stories. A large crop should not be a bad-news story. That should be a good-news story. We have to find a way by which rail supply and transportation supply generally, transportation infrastructure, is not the governor of our Canadian economic output. We have to find a way, when we talk about adequate and suitable accommodation, that it is adequate and suitable to be able to meet the demands of all of those sectors, so that they can all be successful and hitting on all cylinders and not simply in a constant rationing of rail supply basis based on what the rail carriers decide they're going to offer.

Whether that's through the Canadian Transportation Agency having the powers that we talked about, to be able to unilaterally go forward and review systemic issues or other fashions...but you're right, there needs to be a means of ensuring that all shippers in all sectors are successful.

[Humphrey Banack]

An issue that we've identified through our organization is the fact of the long-term viability of—and as you said, stewardship of—the transportation system. Whether it's replenishing the hopper cars that are there today, or maintenance of short lines and sidings that we can use for producer car loadings, all those things are integral to a strong transportation system for grain out of western Canada. I know that we have a number of short lines; I believe there are 13 short lines in Manitoba and there are 14 or 15 or 16 across the Prairies. Those are all part of the transportation system. They may be a small part, but they provide the producers in those areas the opportunity to get there.

And whether it's the CTA or some overarching organization someplace, someone has to have the mandate to make sure that the infrastructure is there in the future to manage this. We can't say, today we're short of railcars and by the time we realize it it's too late to build a railcar for next week.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great, thank you.

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

Very quickly. Nobody's mentioned Churchill. We've lost Churchill it seems. Is that important to you? A short answer, please.

[Jean-Marc Ruest]

A short answer, yes.

It's not significant from a grain shipper perspective. The size of the facility and the limited shipping season is such that it's not a significant facility in the grain-handling network.

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

Okay.

Ms. Cook, you mentioned that cost competition is one of the results of interswitching, but you also mentioned capacity. Will interswitching actually promote more capacity? And again, a short answer, please.

[Jean-Marc Ruest]

Yes, because there is the opportunity to access other rail carriers from the U.S. that bring in more capacity.

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

Thank you, Ms. Cook.

[Voices]

Oh, oh!

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

Actually, Mr. Ruest, I want to give you one more shot at this one. Very simply put, I asked a question of the CTA about this imbalance of commercial accountability. If the shipper's ship isn't there on time, they get dinged by the railway. If you haven't got your goods ready to move by the time the cars are there, you get nailed by the railway. But if the railway fails to perform, I get the sense that there is really no consequence to that, certainly not covered by Bill C-30. Is that correct?

[Jean-Marc Ruest]

Correct.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much for this brief answer.

I will now give the floor to Ms. Watts for six minutes.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Thank you very much and I'll be just brief in my comments.

We had just spoken about the proposed grain terminal in north Vancouver and some infrastructure in terms of that. Is the current capacity inadequate or growing the sector inadequate, when we look at the need for another grain terminal?

[Jean-Marc Ruest]

What we've seen through 2013 and onwards is that the terminal capacity on the west coast is sufficient. Now whether any individual players decide that they want to own and build their own assets, that's a commercial decision that they make based on their needs. But from an infrastructure standpoint on terminal capacity, what exists is we believe sufficient.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Yes, that was my question.

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

I'll ask a question. What do you think “compensatory and fair” to the railways means in terms of the regulated interswitching rates, and what percentage of the commercial rate is compensatory and fair, in your opinion?

[Fiona Cook]

It's very hard to comment on rates, because most of that information is negotiated confidentially. I'm afraid I don't have an answer for that one.

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

Okay. Thank you.