Transport Committee on Sept. 12th, 2017

[David Graham, Liberal, Laurentides—Labelle, QC]

Thank you.

[Perry Pellerin]

I knew you were going to do that.

[The Chair, Liberal, Judy Sgro]

Go ahead, Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much,

I'll start with WCSC.

You spoke a bit in your opening remarks about the need for disaggregated data, whether it's by commodity, to make day-to-day decisions. I think my ears are a little bit slow. You had a lot of information densely packed together, which was very helpful. Could you perhaps walk me through the practicalities? How would it help the negotiations if you actually had the transparency in data that you're looking for in order to make sure you're negotiating effective rates and that the railway is operating efficiently?

[Lucia Stuhldreier]

I will answer part of that. Let's say you're a forest products shipper and you're negotiating with the railway. Perhaps you're not happy with the service you're getting. You're shipping pulp or paper in boxcars and you're getting global information about how many cars are online on the entire system for your product, similar products being shipped from the opposite end of the country, other kinds of products altogether, so you have no sense of whether or not the supply of cars generally available in the system has been reduced. That industry, in particular, is seeing shortage of railcars, and we have a number of members in WCSC that are in that industry.

There is no transparency in terms of whether there has been a reduction in capacity that the railways have implemented, because you can't see that. You can't see whether your shortage is peculiar to you, or whether that's something that is happening across the system. You can't tell whether the metal producers are getting more of these cars and your particular industry is not. None of that is there. You don't see where those cars are.

If you have a time sequence of cars in a particular area, you see cars that don't seem to be moving there. To the extent that you can, that may influence your decision to ship somewhere else where it may be more fluid. None of that granularity is available.

[David Montpetit]

You don't necessarily have a view of the overall network. We don't have that ability. We don't have the tools and everything else involved. That is our tool. There is no other way that we can really investigate or check for ourselves. If service has been transferred to one side and is taken away from another, we have no way of determining that. This helps determine that. This helps give us a better overall global outlook of how the network looks.

[Sean Fraser, Liberal, Central Nova, NS]

Sure.

I'm curious, as well, about the dispute resolution mechanism contemplated in the event that service obligations are breached. Do you think that the final-offer arbitration is an effective way to deal with these kinds of disputes? Is there a better way to do this, or is this an improvement over what we've had historically?

[Lucia Stuhldreier]

Final-offer arbitration typically is a forward-looking thing. It doesn't really directly deal with a past service problem. Most often final-offer arbitration is focused very much on rates. You can include other conditions, but the more conditions you layer in, the more complicated the process gets, and it's fairly tight to begin with. You can use that going forward to establish some terms, just as you could in the service-level agreement provisions.

But in terms of dealing with things that have already happened and addressing those, it really is only the complaint process, the level-of-service complaint process under section 116.

[Sean Fraser, Liberal, Central Nova, NS]

Sure.

If I can jump around conceptually for a moment, the bulk of the testimony that we heard today really was about interswitching, and of course the class 1 railways were saying this was something that we were going to complicate, and that it's going to force them to give their business away to competitors, essentially.

Do you agree that's the case, or is the real impact here introducing competition at the negotiation table, where it's actually going to cause them to be flexible in their price to the point at which you're offering reasonably realistic market rates?

[Lucia Stuhldreier]

I don't know any shipper whose first instinct is to start a complaint process or use a regulatory process. These are business people, and their preference is always to try to negotiate something.

Part of the usefulness of these remedies is that they provide, as David mentioned earlier, a kind of backstop in an environment where you don't have the option of saying, “Fine, I don't want to deal with you. I don't like your terms. I'm going to go to your competitor.” That doesn't exist, or it only exists for a small portion of your traffic. The fact that this is out there, that there is a remedy and that it is usable, performs that same function for a lot of shippers. It's as important for that negotiating function that the remedy work and be usable as it is for somebody actually wanting to ship traffic under an interswitching order.

[Sean Fraser, Liberal, Central Nova, NS]

That's whether it's used or not.

[Lucia Stuhldreier]

Exactly.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Auch, you spoke—

[The Chair, Liberal, Judy Sgro]

You have 20 seconds.

Thank you very much.

Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

To the Alberta Wheat Commission, you briefly mentioned cash flow. Could you expand on the issue of cash flow in this, since you mentioned it?

[Kevin Auch]

For example, in 2013, when the level of service was basically deplorable, we had a very large crop that year. Farmers had contracts for a harvest delivery, and because of the rail backup, some of these contracts weren't realized or weren't deliverable until months later. It was six months or eight months later before their contracts were delivered.

Even though we have a contract, the grain company does not issue us a cheque until we deliver it. That disrupts our cash flow. We have a contract. We are planning our cash flow. We have payments to make. We have to pay for our inputs that we've put in the ground, and we make these contracts in order to make revenue. The timeliness was terrible that year.

[Martin Shields, Conservative, Bow River, AB]

Even though that happened in 2013, the possibility of it happening again is still there?

[Kevin Auch]

We're not growing less than we did then. The trend in agricultural production has been up. We've been producing more and more efficiently. If you look at the real price of grain, we're selling grain right now this year for about the same price we did in 1981. The only way we can make money is by doing it more efficiently and producing more.

There's not going to be less grain in the system in the future if we keep following the current trends.

[Martin Shields, Conservative, Bow River, AB]

So you can get caught in that cash flow at any given time?

[Kevin Auch]

Yes.

[Martin Shields, Conservative, Bow River, AB]

That leads to income showing up in different years at different times, bills having to be paid without it and cash flow in another year. You have a challenge there.

Data has been mentioned a number of times already. For your organization, is that something of an issue?

[Kevin Auch]

It helps the people we sell to. We've heard their testimony. The grain elevators buy our grain and they ship to our exporting customers. So, if it's important to them, it's important to us.

[Martin Shields, Conservative, Bow River, AB]

Okay. I'll go back to the data one more time. I know you've answered this a number of times. Going through the process with municipalities provincially and with FCM federally and trying to get the railways to let us know on time what's in their cars as they go through our communities—because it's our firefighters who are dealing with what's coming through—has been one arduous process. We'd like to know in time, when it goes through, but of course they want to tell us a month later what went through our community.

So data to you, when you talk about businesses, is time, inventory, and shipping: that's how the world has moved. I bring in the inventory today; I don't have it stacked up here for a month, but I also must have it leave on time. Is that the business end you're talking about? Our business world is changing, so that's a critical piece then.

[David Montpetit]

You're asking for something, actually, that's even more accelerated than what we're asking for. We're asking for data and we're recommending or are trying to improve on a three-week delay to be a seven-day delay. You're asking for something that's immediate; it's fluid data.

Ultimately, we would love to have that available. For us at this point it's crawl, walk, run, sprint, and we're probably at the crawl stage. We do want to get to walk before we can sprint, but I would ultimately like to see that, because we would have real-time information on, for example, what's important to us going through our community. We would have real-time information on where our cars are, where they're located. There are whole different sets of useful data that we would love to have available to our group, but we need to take one step at a time.

Using what the U.S. currently has as a base model for our area, we think, would be beneficial just to start off. Ultimately, I agree with you.

[Martin Shields, Conservative, Bow River, AB]

But if you're building an economy and you want to advance our economy, as wide and big as we are, isn't that where we should be going?