Transport Committee on Sept. 12th, 2017

[Robert Ballantyne]

Thank you very much.

What I wanted to say is this. In our formal submission we did indicate that we support the proposed changes to the Coasting Trade Act that are included in Bill C-49. These give effect to a requirement of the Canada-European Union Comprehensive Economic and Trade Agreement. While it's a relatively minor element in terms of improving global supply chain efficiency, the requirement does do that for Canadian importers and exporters using containers. That is, what it's proposing to do is to allow foreign-flag ships to move empty containers between Canadian ports. That is, if containers were emptied in Halifax, the foreign-flag carrier could move them to the Port of Montreal, for example.

This is something we support. It is something that will slightly improve global supply chains for Canadian shippers, and for importers as well. There is a complication with regard to the large shipping alliances, where there are three or four shipping lines that come together in alliance. We think that the regulations should make sure that this provision would be able to be used within the full alliance, so all the member shipping companies within that alliance could access this provision.

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

Thank you very much for the summary.

This brings me to my question.

I understand that it's better to do a route with empty containers than with a completely empty vessel. However, as you so rightly said, the proposal in the agreement with the European Union does not give Canadian-flag ships the possibility to do the same thing and to fly the Canadian flag on European territory.

Is that an irritant for you?

[Robert Ballantyne]

No, actually, I haven't read the CETA, or haven't committed it to memory. My recollection is that it is reciprocal, that it would allow Canadian-flagged ships the same privilege within Europe. However, the number of Canadian-flagged shipping lines operating internationally is either very small or not existent at all. While I think that within the agreement it is reciprocal, the practicalities are that it would be used mostly in Canada.

I support it. I think it is a good thing. It's good thing for Canadian exporters and for Canadian importers that use containers. This really has to do with the movement only of empty containers between Canadian ports by foreign-flagged ships. I think it's a good move.

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

Thank you.

I don't want to contradict you, but I will check my sources, because my understanding was that there was no reciprocity. Based on what you said, I gather that it would be acceptable as long as there is a reciprocity.

[Robert Ballantyne]

Yes, it would.

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

Thank you.

I have a question for Mr. Audet.

First, we have just received your documents. Thank you. We will read them carefully.

In light of your tragic experience, how do you explain Canada's delay in rail safety? I would say that Bill C-49 is pretty much silent on the issue, although it's supposed to be the bill that will take us to 2030. It talks at length about voice and video recorders, which can allow the TSB to draw better conclusions after the incident. However, preventive measures are needed instead. I completely agree with you on that.

To your knowledge, does the absence of safety or security regulations fly in the face of international standards?

[Béland Audet]

Not to my knowledge.

The U.S. has what is known as the Positive Train Control. I'm not sure what the French equivalent is.

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

It doesn't matter.

[Béland Audet]

We have examined the technology and the type of reports it can do. It is really wonderful. Of course, the cost of the system implemented in the United States is huge. At any rate, 60% of CN's locomotives have this system, since they operate in the U.S. They therefore must have those systems, which are really amazing in terms of safety. That is a big step forward.

In terms of voice and video recorders, let me draw a parallel with the Beta recorders back in the day. If those were sold in stores today, we would miss the mark, which is to increase safety.

That's more or less what I think.

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

You spoke at length about the importance of training for first responders, and I entirely agree with you on that. My concern is not about the fact that this training is necessary, but the fact that municipalities are not familiar with the content of the hazardous products on the trains crossing their roads.

How can first responders react effectively if Bill C-49 has no measures enabling municipalities to find out what products are being carried across their territory?

[Béland Audet]

There's a new application, AskRail, that makes it possible to obtain all that information, but it is certainly not in line with the bill that was just introduced. Positive Train Control provides that sort of information very quickly.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent.

I'll begin by saying thank you to Monsieur Aubin for asking my planned first question to my intended witness and saving me two minutes of my life. It allows me to follow up on the Coasting Trade Act.

One of the things I'm curious about that you mentioned would be more efficient, and I agree with you, was to have European vessels carrying empty containers. I think that's fairly obvious. Today, are Canadian shipping companies moving empty containers? My understanding is that the bulk of the empty containers were being moved by truck to new ports.

[Robert Ballantyne]

It's probably true that they are. This provision is included in the CETA agreement. I suspect it may be something that the Europeans wanted, though I'm not certain of that.

What happens now under the Coasting Trade Act is that any movements between Canadian ports have to be done in Canadian flagged ships. Essentially, the Canadian shipping lines are big, either in the coasting trade or in the Great Lakes and St. Lawrence Seaway. Canada Steamship Lines and Algoma, some of those companies, are the obvious ones.

[Sean Fraser, Liberal, Central Nova, NS]

Perhaps I can jump in for a moment. Reciprocity or not, the added efficiency probably doesn't come at great cost to Canadian business if most of the empty containers aren't being shipped anyway.

[Robert Ballantyne]

That's right. This is a relatively minor provision, and it seemed to make sense to me. My point here today is that the hundred companies that are in our membership support this.

[Sean Fraser, Liberal, Central Nova, NS]

Perhaps I can jump to Teck. You mentioned that five of your steel-producing coal facilities aren't going to have access because of the excluded corridor in British Columbia. My understanding—and maybe you'll correct me if I'm wrong, and Mr. Ballantyne alluded to this as well—is that the two excluded corridors at issue had competition to some degree, and the rest of the country did not have that level of competition. This justifies introducing some sort of mechanism. The Canadian and American freight rates were a little better, but they're roughly comparable. I'm curious to know how the rates of your competitors in the U.S., for example, or companies of a similar size, compare to the rates you get with Canadian rail service providers.

[Brad Johnston]

With respect to the rates my competitors pay in the United States, it would be variable—some are lower, some higher.

[Sean Fraser, Liberal, Central Nova, NS]

I very much got the vibe from your responses earlier that you feel there's a lack of competition, but it seems as though, just from this line of questioning, that you're in the middle of the pack of what competition might provide if it existed fully. Is that not accurate?

[Brad Johnston]

I'm not exactly sure what you mean by that question. Let me simply say that our five southeast B.C. steelmaking coal mines are all captive to a single rail service provider. They're captive for a significant portion of the movement of the material from the mines through to Vancouver. There is no competition for those mines at their origin, and there is limited competition for a portion of the movement through the Fraser River corridor. It is our view that those mines are very much captive to the rail service provider and that they do not have competition. Some of the elements we've suggested in our submission, including the provision for data, or enhancing the costing determination, or the access to it under FOA, we view will help us balance that lack of a competitive reality in which we operate.

[Sean Fraser, Liberal, Central Nova, NS]

My perspective is informed a bit by representing an area that mostly has smaller operators than you guys have. I guess what I'm getting at is that at the bargaining table, you guys are no slouches; you know what you're doing. I sense that your ability to negotiate at the table, with the single service provider you have, is roughly.... I don't think the lack of competition has the same impact on you that it might have on smaller companies in captive regions.

Am I totally off-base here?

[Brad Johnston]

Speaking as someone who has experience in negotiating with railways, irrespective of the fact that I'm with Teck, I would say that it does have its challenges. As a consequence of that, we've used remedies under the act, just like anyone else. In some ways, our size is not as much of an advantage as you might think. We have had to use processes such as FOA under the act. It's very important to us to have a very robust remedy, because we have used it in the past and we see that it's quite possible we could use it in the future.

[Sean Fraser, Liberal, Central Nova, NS]

Let me move to follow up on my colleague Mr. Graham's line of questioning.

There was something I'm not sure I quite follow going on, but I was fascinated by it. It was something about running rights and the circumstances in which someone can't or won't ship your product.

Is what you were suggesting running railways almost as we do public highways? Subaru and Honda and Chrysler don't all have separate highways that only their cars can drive on.

Are you suggesting that the current infrastructure that is privately owned move to a public model that different operators could provide services on?

[Brad Johnston]

No, I'm not suggesting any such thing, not at all. But it is a fact that across North America there are literally hundreds of running rights arrangements in place today. Railways run on each other's lines all over North America and in Canada. The directional running zone in the Fraser Canyon is a prime example of that. That is a running rights arrangement. They do exist.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Fraser.

Mr. Hardie.