Transport Committee on April 25th, 2022

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting No. 13 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, January 31, 2022, the committee is meeting to study the state of Canada's supply chain. Today's meeting is taking place in a hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application.

Per the directive of the Board of the Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for the members who are at their place during proceedings.

I'd like to take a moment to make a few comments for the benefit of the witnesses and the members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike and please mute yourself when you are not speaking. In interpretation for those on Zoom, you have the choice at the bottom of your screen of either the floor, English or French. For those in the room, you can use the earpiece and select the desired channel. As a reminder, all comments should be addressed through the chair.

For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

Colleagues, appearing before committee today we have with us, from the Railway Association of Canada, Monsieur Marc Brazeau, president and chief executive officer; from the Canadian National Railway Company, Monsieur Sébastien Labbé, vice-president, bulk, rail centric supply chain; from Canadian Pacific Railway, Joan Hardy, vice-president, sales and marketing, grain and fertilizers; from the Montreal Port Authority, Monsieur Daniel Dagenais, vice-president, operations; from the Canadian International Freight Forwarders Association, Mr. Bruce Rodgers, executive director, and Julia Kuzeljevich, director, policy and communications; and, finally, from the Western Canadian Shippers' Coalition, Monsieur David Montpetit, president and chief executive officer.

We are now going to begin with the opening remarks of the Railway Association of Canada for five minutes.

The floor is now yours.

[Marc Brazeau, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Mr. Chair.

Good morning, honourable members.

My name is Marc Brazeau, and I am the president and CEO of the Railway Association of Canada.

The Railway Association of Canada represents nearly 60 freight and passenger railways that transport tens of millions of people and approximately $320 billion worth of goods across the country every year.

Furthermore, the rail industry is a major driver of the Canadian economy. Our members employ more than 33,000 Canadians in rail operations, technology, safety, security and management. Rail workers move almost 70% of the goods shipped by land and half of Canada's exports every year, allowing us to remain competitive in the global marketplace.

The number one priority for Canada's railway industry is safety. Over the past 10 years, rail operators have invested more than $20 billion to ensure the safety and efficiency of their Canadian networks, and they remain fully committed to fostering a robust safety culture.

In addition to being reliably safe, rail is also a very efficient and green form of transportation for Canada. Thanks to their substantial and continuous investments in innovation and technology, Canada's railways are more than just economic engines—they are environmental stewards.

Railways are among the lowest greenhouse gas emitters in Canada's transportation sector. In 2020, rail accounted for just 3.8% of total transportation GHG emissions. Given the environmental benefits of rail, as well as the railway industry's robust safety record, the need for strategic federal infrastructure investments has never been clearer.

The RAC and its members share the belief that growth drives investment. Every year, the Canadian rail industry invests between 20% and 25% of its own revenues back into maintaining and enhancing its 43,000-kilometre network, which is in fact 12% larger than our 38,000-kilometre national highway system.

Rail is one of Canada's most capital-intensive, vertically integrated industries, owning the rolling stock, equipment, real estate, track and infrastructure on which they operate. Again, in the last decade alone, members have invested more than $20 billion into the Canadian networks to improve the safety, the resiliency and the network fluidity, competing directly with a trucking sector that operates on public infrastructure.

A competitive business environment is critical to ensure that the rail sector can continue investing in its network and move more goods and more people in the safest and most cost-effective and environmentally sustainable way. Operating safely and creating safe working conditions can sometimes be challenged by extreme weather events, such as intense heat, frigid cold, wildfires, floods, storms and severe winds, to name just a few.

While Canada's railway companies have solid plans to deal with extreme weather conditions and help mitigate associated risks, the negative impact of climate change on critical transportation and communications infrastructure cannot be overstated.

When facing the consequences of catastrophic weather events, railway owners and operators are primarily responsible for protecting their assets and networks.

For some years now, the resilience of railways has been tested as never before, and this is largely due to the impact of climate change.

Last fall, for instance, rail resiliency shone through in the response to catastrophic flooding in B.C.'s Lower Mainland and interior. RAC members pulled off engineering miracles to get lines shored up, debris cleared, tracks replaced and trains running again all while facing incredible challenges and all within a matter of days.

Improving our country's trade reputation, growing our economy, protecting our national security interests cannot happen without substantial and sustained federal recapitalization of national trade gateways strategy and funding programs. This includes the creation of a federal capital funding program designed specifically to support short-line infrastructure investment similar to programs that exist in the province of Quebec as well as in the U.S.

Simply put, Canada requires a long-term plan for overcoming reliability issues in supply chains and trade corridors, along with proportional investments in infrastructure. This includes enhancing existing trade gateways and corridors, plus the long-term build-out of new marine and inland ports as well as road, rail and air transportation assets that would support the freight and passenger flows required for international trade.

Thank you, honourable members. I look forward to your questions.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Brazeau.

Our next speaker will be Mr. Sébastien Labbé.

Mr. Labbé, I turn the floor over to you.

[Sébastien Labbé]

Good morning, everyone.

My name is Sébastien Labbé, and I am vice-president of bulk at CN. Thank you, Mr. Chair, for the opportunity to participate in this examination of Canada’s supply chains. It’s an important topic.

As you probably know, there is no more important player in our supply chains than CN Rail. CN enables trade here and abroad. It enables Canada’s economy, and it does so safely and efficiently.

To an extent, the strength of our supply chains is a matter of confidence. Shippers and customers need assurance that the infrastructure required to stimulate and support economic growth is robust and protected. We all need to know that strategies are in place to cope with climate change, and we must see collaboration and knowledge transfer between government and industry. All of that is necessary if we are to create capacity and resiliency, and ensure our economy flows safely and efficiently.

Our supply chains have had moments of great stress in the past few years. One such was the so-called atmospheric river that appeared over British Columbia last December, and the severe flooding that followed. It was a catastrophic emergency, and CN had to respond quickly. During three weeks of widespread disruption, CN experienced 58 outages over a 150-mile stretch. The railroad mobilized more than 400 workers and over 110 pieces of heavy equipment, operating 24-7 to get the rail line back into service. We moved 282,000 cubic yards of rock, earth, and backfill materials to restore damaged locations. To put that into perspective, that’s more than 25,000 truckloads.

We also helped evacuate hundreds of stranded residents, brought urgent medical care to areas cut off by floods, and delivered vital medical supplies. Further, CN was able to use its exclusive access to the Port of Prince Rupert to divert shipments bound in and out of Vancouver. It took extra staff and resources, but we ensured consumer goods from overseas kept flowing to communities across the North American network. We were able to respond as nimbly and effectively as we did because of the strategic investments we’ve made in our capacity over the past few years. And we’re pretty proud of what we've accomplished.

Climate change is actually one of CN's most serious challenges. The floods in B.C. came after the province was scorched by the hottest weather on earth, followed by a winter that brought exceptionally brutal cold. CN's extreme weather readiness plans saw us through. Effective emergency response planning, constant risk and vulnerability assessments, and structural and physical engineering adaptations kept cargo moving, along with the deployment of our latest monitoring technology. This is our new reality.

We see the potential for government to work with industry, in particular to support, for example, the transition to greener technologies, including alternative fuels and battery-powered locomotives. One lever we would strongly encourage the government to continue using is the national trade corridors fund. The fund provides vital support across the supply chain. Increasing the funding, scope and efficiency of approvals can only strengthen supply chain fluidity. It will, quite simply, help move more Canadian goods to market.

We are looking forward. We expect to see a good grain crop this year, and we will stay focused on our customers. Given the current international climate, we know there will be a high demand for all commodities, particularly Canadian exports. As I said, CN may be one piece of the supply chain, but it is a crucial one. We and our partners will continue innovating and implementing solutions, and we welcome any help from our governments.

Finally, I want to thank you for the opportunity to appear before you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Labbé.

Next we have Ms. Joan Hardy from Canadian Pacific Railway.

Ms. Hardy, the floor is now yours.

[Joan Hardy, Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway]

Thank you, Mr. Chair.

Good morning, I am Joan Hardy, vice-president of sales and marketing, grain and fertilizers at Canadian Pacific. I appreciate the opportunity to share CP's perspective.

The first point I would make is that there is no one single supply chain in Canada. Each commodity has its own unique, interdependent and complex supply chain that links the producer with the final end-user. In the grain context, this includes every distinct element in the chain that connects the farmer to the grain company to the railway to the port terminal for export. Each of our customers has a unique supply chain, and CP is just one element in the overall system.

CP is undertaking historic levels of capital investment to improve safety, increase capacity and enhance the resiliency of our rail network. Safety is foundational to everything we do at CP. We have led the industry with the lowest train accident frequency in North America for the past 16 consecutive years. Over the past decade, CP has invested more than $14.3 billion in our infrastructure, technology and rolling stock. This includes our $500-million investment in new high-capacity grain hopper cars.

Our capital program complements investments made by our customers and governments, including projects funded through the national trade corridors fund. CP supports federal investments in projects that improve supply chain efficiency and resiliency. We applaud the government for committing an additional $450 million to the NTCF in the recent budget. Unfortunately, it often takes years for projects to get approval under the NTCF. We encourage Transport Canada to move with more urgency to commit funding for projects that can provide immediate tangible improvements for Canada’s supply chains.

Measuring the strength of Canada’s supply chains is fundamentally a question of resiliency. To what extent can our supply chains endure extreme events or disruptions? Over the past year, CP’s resiliency was tested several times. In B.C. alone, we had to overcome extreme wildfires, flooding and catastrophic infrastructure damage, all while managing high COVID absenteeism.

The tragedies of last year’s wildfire season in B.C. are well known. CP went to extraordinary efforts to maintain safe operations through the B.C. interior during this time. We marshalled significant resources to protect our infrastructure and keep trains running. This included constructing four fire suppression trains and bringing in industrial firefighters from as far away as Texas.

Then in late November, an extraordinary atmospheric river slammed into B.C., causing catastrophic flooding along the Thompson and Fraser River canyons. The historic rains caused 32 separate track washouts on our main line and a eight-day service outage on the most critical part of our network that connects North America with the Port of Vancouver. CN was down for over two weeks during this period, which amplified the devastating impact to the rail supply chains servicing the port.

We worked closely with federal, provincial, local authorities and indigenous communities to restore service and deliver essential goods, such as water, food and medicines, to impacted communities in proximity to our network. Following the restoration of service, we took a balanced approach to the restart for all commodities, which allowed the rail system to recover in a few weeks.

Supply chain resiliency also requires the railway to be nimble to respond to shifting market dynamics and customer demand. A powerful example is CP’s response this winter to surging demand for the transportation of U.S. corn and grain into the Canadian Prairies for cattle feed. CP responded to the unanticipated and unprecedented demand by working with our customers to create a whole new supply chain for the delivery of cattle feed into Canada, shipping over 26,000 cars of feed to date, more than 20 times the prior year's volume.

Recovering from natural disasters and moving swiftly in concert with our customers are examples of how CP has demonstrated its remarkable resiliency over the past year. CP and our railroaders have overcome incredible obstacles to keep the rail system functioning in the service of our customers and the broader Canadian economy, and we are not just sitting idly by and waiting for the next disruption.

We are continuously identifying locations on our network where infrastructure improvements can strengthen that resiliency.

In B.C., we are improving our storm runoff infrastructure by reinforcing and re-establishing slopes, installing new culverts, and constructing new rock and debris fences. We are also investing in track and signalling at Cisco Bridge to enhance connectivity with the CN, which will improve our ability to keep trains running if there is an outage in the directional running zone between Hope and Kamloops.

In 2023, we plan to construct three new bridges to improve resiliency on our B.C. network. We will also be working with Transport Canada to advance projects under the NTCF that can strengthen the resiliency of Canada’s supply chains.

I would be pleased to answer any questions.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Hardy.

Next, from the Canadian International Freight Forwarders Association, we have Mr. Rodgers, as well as Ms. Kuzeljevich.

The floor is now yours, you have five minutes.

[Julia Kuzeljevich, Director, Policy and Communications, Canadian International Freight Forwarders Association]

Thank you very much, Mr. Chairman, for inviting Bruce and me to speak on this critical issue.

Mr. Chair, ladies and gentlemen of the committee, on behalf of the Canadian International Freight Forwarders Association, thank you for giving me the opportunity to address you today.

It is very much to the credit of this committee that you're investing time on this critical subject. Our membership appreciates the committee's inquiry, and we look forward to the recommendations you might have.

If you're an importer, such as a retailer, or an exporter such as a Canadian-based manufacturer, transportation and border efficiency are critical. You likely don't want to spend time on all of the complex details of transportation and border regulations as you do business in many countries. Instead, you hire one of Canada's freight forwarding companies making up our membership, allowing their 20,000-plus employees to take control of your products and move them by the best mode of transport at the best price.

A significant percentage of Canada's freight is transported by forwarders, which means that our membership is, by far, the largest shipper in the country. Our members track the supply chains in and out of the country with a very intense real-time scrutiny.

From the witnesses you've already met, it's clear the committee understands that supply chain is still in a lot of trouble today.

Consider this. It takes about 22 days for a ship to travel the 10,000 kilometres from Hong Kong to Vancouver, but as recently as last Friday, the shipping company Maersk reported that the average wait time for a berth in the Port of Vancouver is still around four weeks, and yard congestion is at 120%. Consider that a port's optimal operational level is closer to around 80%, and the picture becomes clearer.

Two key factors determine how competitive we are as a supply chain: regulatory process and infrastructure.

[Bruce Rodgers, Executive Director, Canadian International Freight Forwarders Association]

Through the pandemic, the Canada Border Services Agency made efforts to reduce inspection delays, and these measures were very welcome, but our members are still facing a nightmarish situation.

Not long ago, we got a message from one of our members illustrating the situation. A specific container was identified for CBSA inspection. That was on October 23. The container did not get to the inspection location until November 24. CBSA did the inspection on December 2, which took less than one day to complete. The next day it was picked up, and returned to the port. Customs released it for delivery on January 4, so the process took 73 days to complete a one day CBSA inspection.

This example illustrates that even if the CBSA moves as quickly as it can, the system is still terribly blocked. This type of delay results in significant demurrage and detention costs to the importer and, ultimately, to the Canadian consumer. In this particular situation, the ocean carrier charged the importer $8,730 U.S. for demurrage.

One of the most important developments in the pandemic were measures that the regulatory authorities implemented to reduce delays. These were very welcome and demonstrated exactly the flexibility and scalability in our supply chain that so many of your witnesses have called for.

I urge the committee to call witnesses from the Canada Border Services Agency to first outline what it did, and what the implications were of the shortcuts in executing its mandates; and, second, to indicate whether we can keep these accelerated processes, or whether it plans to reverse the steps it took. Third, what other measures, such as better interdepartmental data sharing, is it implementing? The power of IT systems to facilitate trade is considerable, and we need aggressive action in this area. Finally, what measures exist and are warranted for more co-operation with American border authorities, especially in times of crisis?

Ultimately, the ability of the system to respond to increased volumes and maintain competitiveness relies on more modern infrastructure. The recent announcements by the government are encouraging if they are implemented efficiently.

Unfortunately, we have seen examples of promises not kept, or of seemingly endless reviews. The studies about the Roberts Bank terminal 2 project in Vancouver began in 2011. We still have no assurance that this project will proceed.

There is one particularly egregious example. In 2015, the federal budget promised the purchase of a large-scale imaging system for rapid inspections at the new Tsawwassen container examination facility in B.C. Not only has the system not been installed, we have spent years trying to get an answer from the department about its status. I hope the committee will use its authority to get some kind of explanation for the delay.

You have had witnesses urging a change to our competitive law to prevent ocean shipping firms from organizing cartels. We would endorse that action. The Shipping Conferences Exemption Act is long overdue for amendment. Across the world, many countries have announced that they will no longer permit these monopolistic practices, and it's time Canada made the same decision.

Let me just wrap-up our opening statement by saying this: Effective supply chains are a benefit to everyone, in every region, and every walk of life. I hope this committee is able to make a big contribution to the effort to improve ours.

We look forward to your questions. Thank you very much.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Kuzeljevich and Mr. Rodgers.

Next we have, from the Western Canadian Shippers' Coalition, Monsieur Montpetit.

Mr. Montpetit, you have the floor for five minutes.

[David Montpetit, President and Chief Executive Officer, Western Canadian Shippers' Coalition]

Thank you very much.

Good morning, Mr. Chair and members of the standing committee.

On behalf of the Western Canadian Shippers' Coalition, WCSC, I would like to thank you for the invitation to participate in this session. My name is Dave. I am the president and CEO.

WCSC is based in western Canada and represents shippers from multiple resource commodity sectors, many of whom are completely dependent on one railway. Our membership includes some of the largest Canadian and North American shippers in these sectors. Collectively, members provide tens of thousands of direct and indirect jobs in communities across Canada, ship billions of dollars' worth of product annually, and spend over $3.5 billion on total transportation. The point of commonality for our members is a reliance on market-dominant providers of rail freight, truck and port transportation.

Shippers have faced significant supply chain disruptions since the fall of 2019, following CN Rail's strike and service issues related to unusual weather conditions. While shippers were in recovery mode in 2020, blockades disrupted railway lines across Canada; Transport Canada issued a slow order in response to a train derailment in Saskatchewan; and supply chains and operations began experiencing additional stress due to the COVID-19 pandemic. The downward spiral continued in 2021 with extreme heat, the B.C. wildfires and flooding, bringing the supply chain in some areas of western Canada to a standstill or a crawl. CP's labour disruption in March of this year and the effect of the war in Ukraine are further testing the resilience of an already strained supply chain. As a result, WCSC members are operating in a very challenging business environment.

Supply chain shortages in all modes—rail, trucking and containers at port—increased costs, scheduling issues and shipping delays have taken a toll. The driver shortage in the trucking industry is not a new phenomenon. Class I railways drastically reduced head counts and active equipment in 2020 and 2021, and they have been slow to bring people and equipment back. In many areas they are, again, stretched too thin to meet demand and they lack the resiliency to manage normal operating procedures. In fact, given the system-wide rail service issues resulting from a combination of weather-related crises, which are no fault of the railway at all—and I must commend them for a great job of bringing everything back—and a personnel and equipment deficit, some of our members have been forced to take temporary plant shutdowns and operate at reduced capacity for prolonged periods of time. In addition to the impact on the member companies, these pressures are damaging confidence in the reliability of Canada as a supplier of goods and resources. Canada's competitiveness and reputation as a trading nation depend on our ability to get products to market.

We need to look ahead. WCSC believes that a comprehensive supply chain review is necessary to determine precisely what Canada's major trade corridors will require in terms of maximizing performance of our roads, rails and ports. This includes determining current and future capacity, first- and last-mile efficiencies and bottlenecks in congested areas, such as the Vancouver Lower Mainland and northern Alberta.

Another area we suggest focusing on is contingency planning. The supply chain must be better prepared in 2022 to move forward through potential things such as climate events—like the ones we have already seen—and other disruptions, such as strikes, blockades, pandemics and now a war. WCSC recommends that regional, federal and provincial task forces be organized similar to those successfully put in place in 2021 during the B.C. flood.

Another area is resiliency. Trade corridors are under much strain and, in some regions, have begun to break down. A comprehensive review of all modes to fully identify these challenges is necessary, including looking at bottlenecks and underutilized corridors, and identifying opportunities to move national trade corridor funding and infrastructure focus accordingly.

There is also seasonal versus winter planning. The narrative and direction for planning need to shift, as what we currently rely on is not working. WCSC suggests that a combination of climate event planning, other trade corridor disruptions, as I described earlier on, and seasonal fluctuations in commodities and manufactured goods in the supply chain need to be considered. What we need is basically a road map.

Finally, we also suggest focusing on data and metrics. More regionally detailed real-time information is required. Capacity data is needed to provide a benchmark so that we can understand what the trade corridors can handle. Shippers are responsible for internally building chain visibility dashboards and need regionally detailed metrics to compare their performance and supply chain against.

We will also be looking at and prioritizing some future legislation moving forward, including reviewing what was put forward in Bill C-49 and looking at areas and recommendations that were not previously considered. We're also looking at the ports modernization review and things we can do, including mechanisms similar to what we have in place for rail, looking at excessive fees and charges, and perhaps looking at some changes to the act to include some mechanisms for shippers to respond to that.

Finally, we are looking at the Canada Transportation Act review and are wondering when the next review will be. We're going to be approaching 10 years since it was last launched. In fact, it's already been more than eight years since it was last launched, and it's something we should consider.

I want to thank everybody for their time, and I look forward to some questions coming up here in the future.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Montpetit.

I will now give the floor to Mr. Dagenais from the Montreal Port Authority.

Mr. Dagenais, you have five minutes.

[Daniel Dagenais, Vice-President, Port Performance and Sustainable Development, Montreal Port Authority]

Thank you very much.

Thank you for giving us the opportunity to speak as part of the committee's work.

Before I begin, I would like to acknowledge the government's strong commitment, as well as that of its parliamentarians, to improving the resilience of Canadian supply chains.

I am Daniel Dagenais, vice-president of port performance and sustainable development at the Montreal Port Authority. I represent a major public utility. As it is the only container port on the St. Lawrence River, it serves the markets in both Quebec and Ontario. With nearly one in three Canadian containers passing through our facilities, we are an essential and strategic link in a supply chain that serves thousands of businesses and contributes to Canada's economic vitality and the well-being of families.

Prior to the pandemic and the two labour disruptions that affected our operations, we experienced significant growth in container volumes while maintaining a steady trade balance. Today, we are a diversified platform supported by a logistics ecosystem of over 6,300 companies. More than 100 billion pieces of cargo pass through our facilities each year.

Despite the global disruption of supply chains, Montreal's customers do not experience the congestion seen at competing ports, particularly in the United States. As a port of destination, our business model allows us to offer a versatile, reliable and efficient solution. The reason is simple: ships are loaded and unloaded entirely in Montreal.

With several docks available, there are no ships waiting at anchor. As a result, the Port of Montreal's model avoids the greenhouse gas emissions associated with waiting ships. It also allows importers and exporters to benefit from a port that runs smoothly, whether by ship, by train or by truck.

Our performance is particularly due to investments made by our private partners and financial assistance from the government. Collaborations between the port's ecosystem and the Scale AI artificial intelligence supercluster have allowed us to innovate, be it with a predictive smart trucking portal or the development of an algorithm that focuses on the timely processing of cargo required to fight COVID‑19.

As we prepare for the largest expansion in our history with the opening of a new terminal of over one million containers in Contrecœur, today, the Port of Montreal is a greener, smarter and certainly more versatile port. We intend to remain so despite the magnitude of the labour, infrastructure, greening and innovation challenges that remain.

[The Chair, Liberal, Peter Schiefke]

Excuse me, Mr. Dagenais, but I would ask you to slow your pace. The interpreters are having difficulty translating your speech.

Thank you.

[Daniel Dagenais]

All right.

Jobs in the logistics and transportation sector are good jobs filled by competent people. As these jobs are changing, the workforce will need more training to meet the technological challenges of tomorrow. Over the past two years, the Canadian port system has demonstrated flexibility. However, there is no doubt that we need to develop capacity and show resilience, particularly in the face of climate change.

It is not enough to develop additional infrastructure. What we need is customized infrastructure to enable ports to optimize their operations, including the acquisition of land for cargo handling and storage. In the era of “just in case”, the administration is concerned about costs of maintenance and inventory management that increase the price of imported and exported goods. We must therefore be a strong ally to business. The establishment of strategic corridors could make joint investments possible and facilitate collaboration between governments. This is to everyone's advantage.

Low carbon supply chains are essential for the future, whether through electrification or the use of bioenergy, we can reduce the greenhouse gas emissions from our platforms with modern equipment. Ports must play a key role in the energy transition. Moreover, the Canadian government can accelerate the energy transition by reducing the risks for future private investment.

A chain is only as strong as its weakest link, and optimizing the supply chain cannot be done without a common framework between the key players: access to data, digitization and collaboration are essential. We must build a framework that promotes visibility and optimizes supply chains. Improved data governance and sharing regimes are low hanging fruit that only the Canadian government can pick. To make better decisions, we need better information.

In conclusion, I firmly believe that ports have a critical role to play in the resilience of Canadian supply chains. Working together, under the leadership of the Canadian government, we can address the challenges of labour, infrastructure, greening and innovation to provide Canadians with more resilient supply chains.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Dagenais.

To begin our questioning today, we have Ms. Marilyn Gladu.

Ms. Gladu, you have six minutes. The floor is yours.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair.

Thank you to all of our witnesses. I'm very excited to talk to every one of you. I have huge list of questions.

We'll start with Mr. Brazeau. You spoke about short-line infrastructure—I know it's not in super shape in Canada—and you mentioned that the U.S. has a program.

Could you expand on that and what the Canadian government ought to do to help that short-line infrastructure?

[Marc Brazeau]

Thank you for that question, because the differences between the U.S. and Canada when it comes to support for short lines has been an ongoing issue for some time.

Today, we have CN and CP, which are the two class I's in Canada with us. They have the capacity and the ability to reinvest in our infrastructure at a fairly high rate. As I mentioned, 20% to 25% of the revenues on an annual basis go back into supporting their infrastructure renewal. Unfortunately, the short lines don't have the room to make that kind of investment; they don't have that capability.

What we have been advocating for, Ms. Gladu, is a dedicated program similar to the one that exists in the United States. These are state and federal programs aimed at providing support specifically to short-line railways to ensure that they continue to reinvest in infrastructure and their rolling stock in order to keep up with the demands they see in that first and last mile connection back to the class I's in the U.S. We believe these types of programs have proven to be very beneficial to short lines in the U.S., and we've been advocating for similar programs in Canada.

I will give a shout out to the—

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Were they tax incentives or capital incentives?

[Marc Brazeau]

They're a combination of several incentives. There are tax incentives and capital project incentives, but there is direct funding as well.

It's no different than if a short-line were to apply to the national trade corridors fund. They would be entitled to have funds, or projects funded by the federal government with some matching contributions from the short lines. Unfortunately, the short lines are not getting a lot of support through the national trade corridors fund. That's why we believe there should be a dedicated fund for short lines similar to the one in the U.S. It's similar to what we see in Quebec, as well, because Quebec has a couple of programs that benefit our short-line members of that province.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Excellent.

Now, I'll turn to Ms. Hardy. I want to talk about the fertilizer situation in Canada, because we know that with the Russian aggression, we're seeing a real problem. Canadians ordered their fertilizer, the Russians got their money for it. Now, Canadians are being hit with a tariff, even though the Russians already have their money. There are a number of other things that are related to supply chains.

Can you comment on what you think the federal government ought to be doing, other than exempting the tariffs for product ordered before March 2?

[Joan Hardy]

Certainly the movement of fertilizer is very important for our Canadian producers and for U.S. producers as well for the potash that's moving out of Canada. It's important for the world because so much of the potash that the world needs is going to come from Canada.

Any steps the government can take to ensure that Canadian potash and fertilizers remain viable and can move in and out of the country easily are very important. We're certainly supporting some of the most important fertilizer producers worldwide moving the product out with Canpotex, Mosaic and Nutrien, so your support for those industries is very important.

Thank you.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Now we'll go to Mr. Rodgers.

I'm looking at the capacity limitations in the system and the pinch points. You talked about waiting for a berth and issues with the regulatory processes and infrastructure.

What specifically could the federal government do to help with this wait time for berths, and the regulatory burden we're seeing?

[Bruce Rodgers]

As I mentioned in my opening remarks, the Roberts Bank terminal expansion project out of Vancouver has been on the books since 2011. Even if that gets approved now, it won't happen until some time in the beginning to middle part of 2030. It's just taking too long—20 years—to put in. We identified a potentially critical situation with the volume and congestion occurring. From a supply chain perspective, we can't wait 20 years for these projects to get approved and be implemented. I would say that's most critical. That just allows for berthing; it allows for the off-loading of the containers.

The other issue we have, as we've just experienced out in western Canada into Vancouver, is that we've been landlocked out there since probably the end of August of last year. The government has assisted with funding so that we can get additional land in Vancouver to park some of the containers. That's been welcome relief just to relieve some of the congestion from what's happening out on the west coast.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

With respect to the CBSA that you mentioned, what is the issue? Is it that there are not enough CBSA officers to do the inspections? What is it that we need to do? Do we need a more streamlined process overall?