Transport Committee on Sept. 29th, 2016

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

Thanks very much, Madam Chair.

I would like to continue where my colleagues have left off. I think good is not the enemy of best, and any improvements that can be made as we move toward a transportation strategy should be made in an effort to address concerns that are being raised from our shippers and producers. I think that is why we took on the study of Bill C-30, recognizing that some of the issues will be embedded in a national strategy as we determine what sort of recommendations we might want to make after having a conversation with all of our stakeholders.

I know we focused a fair bit on interswitching with every panel, and what I heard today was that it was a tool in the tool box that somehow helped to rebalance the market powers that exist.

I want to follow up on some of the comments that have been made about the agency.

You talked about interswitching as a tool and about increased data sharing as another tool that would help. Are there any other measures or tools that you could share with us that need to be put in that tool box, that would help make this system a more efficient and effective system for our producers and shippers, while recognizing that we need the railways in order to keep our economy going?

[Lauren van den Berg]

I think all of those are exceptionally useful tools, and at the risk of beating a dead horse, I think probably the most important one, coming back to Brendan's point, is the data. It is the fact that operating as captive shippers, which I think all of us around this table would admit to, we find that the railways tell us that their data is fine and that we shouldn't worry about it, but we do, because that is our business. That is our livelihood. Those day-to-day operations are how we get by.

Going to the flip side, built into the contracts and the service level agreements that our shippers sign with the railways, there is a confidentiality clause stipulating that they can't even share data with associations such as us half the time, when we are trying to undertake a study that compares the rates to transport dangerous goods to the rates to transport safer products. Even telling us that it's confidential breaks the confidentiality clause.

It is a little bit tough to ask at this point, so before we talk about what other tools we can implement or what other tools we can line the tool box with, I think we should be finding out what the playing field actually looks like, looking at the data, assessing where the gaps are, and then addressing any regulatory measures we can or should implement.

[David Podruzny]

There is one, though, that maybe we should consider, and that is that the offer of the agency to actually instigate a study or to see something and react to it by undertaking its own work. There is an area of increased responsibility that could be granted that could have a very good result.

[Greg Northey]

I would like to build on that, especially that last point.

Right now the measures and remedies in the act, such as those related to level-of-service complaints, happen after the problem has occurred. This is why the ability of the agency to investigate and act on its own motion, ex parte...they have the data and they can assess what is happening.

For small and medium-sized shippers who may be reluctant to use very expensive remedies in a confrontational, adversarial relationship with railways, it is very expensive and it happens after the fact. To have an agency that has the power to address issues so that a shipper doesn't have to go and address those systematic issues in the system after a two-month service failure is very important. It would address a lot of the problems as far as service goes. It wasn't happening.

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

Following up, what would the mechanism be for the agency to know there is an issue? How would they know what to investigate, if it wasn't as a result of something that has gone wrong?

[Greg Northey]

It's data, real-time granular data, and expertise to assess it.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Aubin, we can get you in for a short round of questions, if you like.

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

Thank you, Madam Chair.

I will give Mr. Marshall time to finish answering the question asked earlier.

Mr. Marshall, what would you like to add?

[Brendan Marshall]

I want to add to that with respect to data, it's important that it's disclosed publicly. It cannot be only disclosed to the agency, because what we're trying to effect is a behavioural change between the parties at the negotiating table, and if that data goes behind closed doors, we're not going to see that behavioural change in the marketplace.

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

My next question is for all of you and the producers you represent.

Has Bill C-30 actually resulted in a notable improvement to service level agreements? Has it provided added value, or, on the contrary, has it not worked very well?

[Lauren van den Berg]

As I said in the beginning, the interswitching extension did have material cost savings for several of our members, but it's a minority of our members. If you're in that golden sweet spot, then you're golden. You have a more competitive environment to operate in. It provides companies with options. Instead of being accessible by only one carrier, you now have the grand option of two. It's not great, but it's still a much-needed improvement for a competitive market operator in getting goods to a competitive market, whether it's across Canada or internationally.

Part of the problem is the data. I can't give you a specific number of improvements. Partly that is because our members don't have it and partly it is because our members can't tell us. They can't tell us what their cost savings have been because it's confidential; the class 1 railway contracts don't allow them to share that. It's like trying to solve a Rubik's Cube with one hand tied behind your back. It's a little frustrating for all of us around the table, because we know the answers are out there, but they are tantalizingly out of reach.

I would be interested in what MAC's legal proposal would be to construct and analyze the data, because it would bear a great deal of fruit.

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

Mr. Northey, do you have anything to add?

[Greg Northey]

We see the provisions in Bill C-30 as building blocks that go into the overall strategy. No one of them is the solution, but they certainly represent key directional ideas for how things should go. A provision that hasn't been discussed a lot is this idea that the agency was given powers in Bill C-30 to award expenses for non-performance, and the general concept of financial consequences when a railway fails to perform is an important one. It goes to this idea that we talk about financial consequences. The idea's there and it's been established, and now we can build on it.

[Brendan Marshall]

I would like to add briefly to that. With respect to mandatory volume commitments, we think that's the wrong way to go. It's piecemeal, picking winners and losers in the rail freight market approach. In the long run, further policy steps in that direction are going to be detrimental, so we're wary of that.

I've already spoken about interswitching and the other components, so I'll leave it at that.

[David Podruzny]

Just to offer a point of perspective, I'll use the power of two here.

There are two mainline railways in Canada. In our business, what competitiveness means is that globally no company has 2% of global production or trade. That's competition. That's what we compete with daily as members in our sector, yet we're often up against a monopoly.

It is foreign territory for many of our companies to have to deal with someone who has the option of saying, “Common carrier provision or not, we're only going to bring you cars after midnight and we're in North Van.” You can imagine what the municipality has to say about that.

There is no reciprocity when you're dealing with a monopoly. That's why we count on the agency and that's why we count on the Transportation Act to provide the rebalancing. The information sharing will go a long way in that too.

[The Chair, Liberal, Judy Sgro]

Thank you.

The information you're giving us today has been invaluable to all of us, and I'd like to see if we could squeeze in one question from Ms. Block and one question from Mr. Iacono.

Ask brief questions, please, and don't take not too long with answers. Give us the most critical points for a few minutes, if that's all right with the committee.

Go ahead.

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

Thank you very much, Madam Chair.

My original question will be for Mr. Northey, and then others can take an opportunity to quickly answer it.

I think what I heard you share with us was a best practice. As an association, you are collecting the data weekly, so that you are basing some of your complaints or observations on real data and not anecdotal information.

My question is for all of you. Is there a table that you come together around as different industries to discuss issues and common themes that you might have when it comes to the level of service you're receiving from the railways? Do you have an opportunity to share that and then provide recommendations back to a group like ours?

[Brendan Marshall]

Yes. There is a commodity supply chain table that was established by the previous administration. MAC is represented by a member company, and I know that other industry associations and industries are also represented, as well as the railways.

I would also caution you that the discussion around that table to date has been limited through a reluctance to engage in substantive data sharing and analysis.

The only other piece that I would add to the context is with respect to the current data that the grain industry shares. I've said it is fantastic, and they should be commended, but it's not capacity data. I think it's really important to draw that distinction. I follow that data.

The grain industry recently has been getting better support from a cars-ordered versus cars-delivered standpoint. We still have no idea of what's happening in the rest of the network as a result. That could be CN and CP knowing that they're under the microscope, wanting to appear to be delivering good service everywhere, and being able to point to it through grain statistics. It's a challenging situation, despite good steps forward.

[Lauren van den Berg]

I'll add to that. There are several ad hoc working groups and consultation round tables that we participate in. Our members participate with us in representing the association. We work with government and Transport Canada, along with other shippers, to share this message about the power imbalance and what's it like to operate within those constraints. What they do with those recommendations, I couldn't tell you.

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

In deference to my colleague, who wants to make a short statement, I'll make a short statement. You don't need to answer and use up time.

I need to hear from you. I'd like something on paper that says what the barriers today are to sharing right now—your data, as well as the railways' data—and what kind of data you are looking for. Something back to us in a written form would be perfect.

[Vance Badawey, Liberal, Niagara Centre, ON]

We're obviously talking about an interim solution here to some extent, because we are moving forward with a strategy. As Ms. Block said, it's equally important that we do come up with that resolve.

However, the statement I want to make is that as we move forward with the strategy, there's going to be a lot more attached to it, including the interswitching issue. I really encourage you folks and I want to empower you to be a part of that process.

It's going to be some time before we can ultimately come up with that strategy, but there are going to be a lot of people involved and it's going to have a lot attached to it. We need folks like you to be part-authors of that strategy. I encourage your involvement.

[The Chair, Liberal, Judy Sgro]

Mr. Aubin, by any chance do you have one more question you'd like to get in? You're all right? Okay.

To all of you, thank you so very much for coming and for sharing not only the problems but the solutions, because we are at the point of looking for solutions and recommendations to go forward. If you have any additional information you want to share with the committee that is specifically solution-focused, we would very much appreciate receiving that quickly, as quickly as you can.

Thank you very much. I would ask you all to leave, as we have to do some committee business.

[Proceedings continue in camera]