Evidence of meeting #24 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 railways.
A recording is available from Parliament.
September 29th, 2016 / 9:30 a.m.
Liberal
Gagan Sikand Liberal Mississauga—Streetsville, ON
I've spent years living in Sarnia, which, as you know, is colloquially called the chemical valley, so I do have an interest there. I have also had a spill in my home riding, where I grew up. It wasn't a chemical spill, so I guess I'd be remiss if I didn't ask what measures are in place to keep the public safe and what the respective roles are for rail and the companies when transporting chemicals?
Vice-President, Business and Economics, Chemistry Industry Association of Canada
This is something we take very seriously.
What we have started to do for the last 40 years, under a responsible care ethic, is engage in training exercises for first respondents. We do what we can to have a safe vessel that goes to the railways, but in addition, we regularly, and across Canada, host first respondents training programs. They are held in communities right across the country.
A month ago we were in Lac-Mégantic for a training session, where first respondents—police and fire respondents—could be trained in how to handle the products and the right and wrong things to do. This is part and parcel of our ethic in managing our goods from the beginning to the end. There are courses that we are giving—we have one coming up in Hinton shortly—right across the country.
We believe that safety is paramount. That's why we move by rail in the first place. We know that trucking has many more incidents, because you need four trucks per railcar. There are many more instances of risk on the highways than there are on the railway. Training and preparing the emergency responders is important in the event of an emergency.
I always say every spill ends up being a chemical spill, because that's how it gets interpreted in the media. We take it beyond our own products to any hazardous products being moved.
Liberal
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you, Madam Chair.
I will first make a brief comment that's meant to be constructive rather than critical. I think it's practically a sin to be in the presence of such experts but to have so little time to give them. For future committee work, perhaps we could limit the number of witnesses per session.
I'll ask my questions in quick succession. My first question is for Pulse Canada's representative.
There has been a great deal of talk about interswitching, and much less talk about the maximum revenue entitlement program. Mr. Emerson's report proposes that the program be eliminated.
If you want to keep the program, what would be the benefits? What would be the impact of its elimination?
Director, Industry Relations, Pulse Canada
The grain industry is fundamentally different from most other shippers in that the people who produce the product and ship the product are different. The MRE recognizes that and ensures that the producers of grain, the farmers, actually pay the freight. The MRE was put in place because it's a fundamentally different type of supply chain. In any consideration of the MRE, it's important for us to look at it from an evidence-based position in terms of how that would affect the supply chain, purely for protection reasons, as far as freight rates go, because the railways do have incredible market power. It's an important way to keep rates reasonable.
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you.
My next question is for Mr. Marshall.
In your presentation, I believe you said the 500,000 tonnes imposed on rail companies likely caused harm to other types of natural resources that require rail transportation. However, you didn't refer to an unfair situation. That said, the representatives of the main rail lines told us that with or without Bill C-30, they would have transported the same quantities of grain.
Can you give me clear examples of harm caused by Bill C-30?
Vice President, Economic and Northern Affairs, Mining Association of Canada
Sure. I can make a couple of points.
Part of the reason our members feel so strongly about data disclosure for performance and capacity is that we don't know whether the claims the railways make are true. The railways can say that with this measure in place, we would have shipped the same amount of grain, but if you had asked the grain industry five years ago whether they were getting that level of service or not, the answer may have been very different. Coming back to ask for a very specific example, a quantitative example, of the harm that's done is a very difficult thing to do when there's so little data disclosure available on the network.
We do have members who internally quantify their costs related to business lost because of rail service failure. I believe one of our members has accumulated, in the most recent years, over $80 million in lost business opportunities due to rail-related service, but we would need some pretty significant data to relate that number specifically to the policy measure that drives grain capacity.
NDP
Director, Industry Relations, Pulse Canada
The order in council had a specific impact in that it essentially set a requirement for the railways. What the railways ended up doing was cycling things to Vancouver. We actually have numbers on the impact it had for our shippers. Our shippers will utilize the U.S. corridor, which will go east, or go to small transloaders in Vancouver. The OIC had incredible detrimental effects for our shippers as well.
If there's going to be a tool like that, it needs to be very specific. It need to establish clear expectations for the railways, under which they would have to move specific products through specific corridors for specific commodities, as opposed to an overarching goal. Otherwise it has detrimental effects on all kinds of movement throughout Canada.
NDP
Robert Aubin NDP Trois-Rivières, QC
Out of generosity, I will turn the floor over to another committee member.
Liberal
The Chair Liberal Judy Sgro
Thank you for your kindness. See, that's the committee working well together.
Go ahead, Mr. Hardie.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Thank you, Madam Chair.
To triangulate on what we've been hearing over the last few days, particularly on the issue of interswitching—Mr. Northey, you lit the light—it seems that the competitive pressure you can put on the class I railways here in Canada is all tied up in access to the American railroads. What we heard from CN and CP is that whereas the American railroads can come and basically poach business from Canadian railways, they're not allowed to do the same. I'm just putting that out there because there may be some kind of balancing act needed.
I also wanted to touch on something else. Somebody from the grain industry was saying that they would like to move towards a demand-based framework for the supply of railcars and service and away from the supply-based framework. Supply at a fixed price equals rationing, which is everybody's problem, it seems. Has anybody done the math to figure out what the costs would look like, especially the increased costs, if we said to the railroads that we'll pay as much as it takes to get the capacity that we need?
Director, Industry Relations, Pulse Canada
On your first point regarding U.S. competition, it's important to note that interswitching or competitive line rates or any pro-competitive measure only works if you have the two railways willing to compete for each other's business. CN and CP haven't always shown a willingness to compete for each other's captive shippers. The only time it's effective is when a third party come in. That point is very important.
In the U.S., the shippers look at our interswitching, and they want it as well. They call it “competitive switching”. In July, the Surface Transportation Board announced that they were going to do a regulatory study on improving their current provisions on that. Through the fall, they're having hearings with shippers and others in the rail community there to establish the same thing.
Director, Industry Relations, Pulse Canada
We have a performance measurement program. Every week we publish data on over 90% of the grain movements in Canada. It is built on the concept of shipper demand. Shippers right now sell, or we market, based on what we think the railways are going to give us for capacity. Sometimes it's 20% below what we could actually be selling on the world market.
We market our crops and we—
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
I understand all of that. The question is whether you are willing to pay a higher shipping price in order to get more capacity.
Director, Industry Relations, Pulse Canada
We already pay a lot. We have invested incredible amounts of money since 2013-14 to increase the capacity on-farm and in elevators, so—
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
It's the rail capacity that is the issue here. Are you willing to pay to get it?
Director, Industry Relations, Pulse Canada
Well, the railways can pay for their own capacity, just as we do in the system. We actually pay for our own capacity to store grain in order to handle variability and make sure it's predictable.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
I don't think that's a very satisfactory answer, to be honest with you.