Thanks for the great question. It's something that we're a bit confused about ourselves.
On one hand, we have a situation where both railways have said that they're concerned about extended interswitching because of poaching from the U.S. carriers into the Canadian marketplace. On the other hand, we have Canadian rail carriers that already have extensive networks in the U.S. Those are two elements, I guess, to this discussion.
We found that initially the rail companies were objecting to the extended interswitching provisions when they were coming into play, but they began using the extended interswitching. They began soliciting business under extended interswitching and using it as it was intended to be used, which was as a competitive tool. That's what we're after here. I mean, how many times.... This is the fourth time I've personally appeared before the transport committee on different bills to amend the Canada Transportation Act. The recurring theme is, how do we get the rail freight market to behave like a competitive marketplace?
That seems to be a well-accepted premise, yet when we get close to doing that, people seem to get scared and want to pull back. We are after a competitive environment. If the railways are providing good service at good rates to the locations they serve, then they will not find that shippers are looking for other competitive options. It's only when rates are too high or service isn't there that shippers begin looking for other alternatives to get product to the marketplace.
The railways, for reasons I understand, prefer to move product east and west because of the cycle times on the railcars. They prefer to move to Vancouver and to Thunder Bay because of the cycle times; they can get their assets back in the system quicker. When they go down to the United States, it takes a lot longer for them to get the railcars back—maybe 30 days—so they're not that interested in serving the U.S. markets that we find. When extended interswitching was brought into play, it allowed for Burlington Northern, primarily, to come in, fill that void, and take that traffic down to the United States.
Shippers were using it both actively and passively. If you look at the straight statistics on the use of extended interswitching, it seems that maybe it's not a lot of usage. That's active usage. Passively, what would happen is that a shipper would go to the railway and say, “I need service, and these are the rates that I think are reasonable.” The railway might say that it can't do that, it can't provide that service to the U.S., and that it's giving priority to shipments in other corridors, or whatever it is. Then the shipper would say that they're going to talk to Burlington Northern to see if they can get traffic switched over there, after which time the primary carrier would come back and say, okay, let's be reasonable here. They would give you a better rate, or they would provide you with that service.
The benefit of extended interswitching can't be measured just based on how much it was used.