Transport Committee on Sept. 12th, 2017

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

Thank you, Madam Chair.

I want to stick with the running rights issue a little bit, in the context of what has been described to us as a congestion issue in that corridor between Kamloops and Vancouver and offered as one of the reasons LHI wasn't considered.

Mr. Hume introduced himself to me a little earlier.

It occurs to me, sir, that you've actually had some experience in negotiating running rights on that corridor for West Coast Express, have you not?

[Forrest Hume]

It wasn't on that corridor. It was on the corridor between Waterfront and Mission City.

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

But that's still part of the—

[Forrest Hume]

It's a part, but only a small part of it.

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

Sure, but can you reflect on that experience and consider opening up that corridor for the long-haul interswitching system?

[Forrest Hume]

In my view, there is no reason to exclude shippers in that corridor or in the Windsor-Quebec corridor. There are shippers within those corridors who do not have competitive options and could avail themselves of that remedy. It's a competitive remedy, at least as the minister contemplates it. I think it should be altered from the way it is currently written, so that it will continue as a competitive remedy, available to all shippers who find themselves having a need to access that remedy.

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

The argument of the congestion currently on those corridors isn't material, then, as far as you're concerned?

[Forrest Hume]

I don't think congestion is the concern of the railways; I think reduced revenues is the concern of the railways. U.S. railways making incursions into Canada constitute competition from the shippers' perspective. The Canadian railways can retain the traffic: all they have to do is sharpen their pens and provide competitive service. Competition is what the remedy is about, and competition is what will prevail for Canadian railways, if in fact they choose to compete once the LHI remedy is injected into the negotiations.

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

Certainly the experience so far with the former interswitching regime suggested that they can sharpen their pencils, because they didn't really lose that much business to the American carriers.

[Forrest Hume]

Mr. Hardie, on that issue, if I may—

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

I have a limited amount of time and I really want to get to Mr. Ballantyne with a question as to who should be considered the shipper. We heard, for instance, from the short-lines a little while ago who had issues handing off cars to the main lines. Would we have a more efficient system if that short-line or the producer car user was considered a shipper with the shipper's rights?

[Robert Ballantyne]

I would say the simple answer to that is yes. The definition of a shipper should be quite broad. Usually the term that's used is the beneficial owner of the cargo as the real shipper, but it could be a freight forwarder. It could be a short-line railway, and I think that would make a lot of sense, actually, for the short-line railways to have some of those rights.

I think Mr. Pellerin's comment about the short-lines being able to take cases before the agency, similar to the way shippers can for service problems, for example, makes a lot of sense. So I would make it a very broad definition.

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

Mr. Johnston, I'll pose the same question to you as I have done to a few of the other panellists along the way. Could you define for me what, to you, constitutes adequate and suitable service?

Try to be magnanimous, fair about this. Enlightened self-interest is a beautiful thing, but everybody has to make money and it all has to work for everybody. What constitutes that, particularly with respect to a win-win outcome for people?

[Brad Johnston]

That's a great question. In terms of adequate and suitable service, I'll speak as a shipper. That's what I am. There are a multitude of ways in which a railway can ensure that it's profitable, whether through negotiating an agreement with a shipper such as me or issuing a tariff.

To me, “adequate and suitable” means that my goods will move through to their destination. It's not a debate about if, but about when. We cannot entertain any discussion about whether our goods will move. They must move. The common carrier obligation also dovetails into adequate and suitable service. The railways have an obligation to move our goods. It can't be a debate about if; it has to be a discussion about when.

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

What constitutes a good “when”?

[The Chair, Liberal, Judy Sgro]

Mr. Hardie, you've run out of time again.

Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

I'll let you finish the answer.

[Brad Johnston]

I think I did. Did I overlook something?

[Martin Shields, Conservative, Bow River, AB]

Yes. The question was about the “when”.

[Brad Johnston]

“When” is in a fashion that works for both the railway and the shipper. It is our view that the common carrier obligation and adequate and suitable does not mean I get what I want when I ask for it. That is not our view. However, it can't mean that the scheduling or the eventual provision of the service can be in a time frame that just does not work for the shipper. In our view, that does not fulfill the common carrier obligation.

[Martin Shields, Conservative, Bow River, AB]

You were going to talk about the loss that we heard CP and CN might have to the U.S. market because of the TIH. You were starting into an answer about loss to the competitive U.S.

[Forrest Hume]

I want to point out that in the time that extended interswitching was in effect, from 2014 to 2017, the railways earned record profits and were able to provide extensive capital infusion to their infrastructure. In other words, there was no hit whatsoever. In my opinion, the idea that cost-based provisions or regulatory intervention is somehow damaging to the railway's ability to make money and to invest in infrastructure is a false claim.

[Martin Shields, Conservative, Bow River, AB]

[Inaudible—Editor] indicators to you there. Thank you.

Going back to Teck, you described some amendments that you would make, and you talked about transparency, costing determination, and service definition. Those are the amendments you feel would be practical to this piece of legislation.

[Brad Johnston]

Yes, that's correct.

[Martin Shields, Conservative, Bow River, AB]

Could you expand a little on those three, or pick one of them that's more critical than the other two?