Transport Committee on May 5th, 2022

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Lewis-Manning.

Maybe I didn't quite phrase my question correctly. My understanding is that those changes are incredibly important and they have a very long-term impact, but in the short term, regardless of whether ships are running on biofuels, LNG or any of these things, we have extreme weather in our face, and we're going to have it every single year from here on out in different parts of the world. We saw it last year in British Columbia. It's one of the reasons we're here studying the supply chain.

I'm wondering what companies are doing to prepare for inevitable extreme weather events next year, the year after that, in 2026 and so on.

What are the plans?

[Robert Lewis-Manning]

I'm sorry. It may have been my interpretation of your question. I will take 50% of the blame.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I will take more than that.

[Robert Lewis-Manning]

You're right. I don't think this is something that just appeared last year. It has been happening over the last decade. Companies that are operating trans-Pacific and trans-Atlantic trade have been dealing with the effects of climate change for years. It may not have made the headlines, but the reality is that they have had to alter the way they manage their vessels. This includes more accurate and better predicting of weather events, and then adjusting their routing to achieve that.

One of the colliding challenges here is when we have such disruption of trade on a global scale, and the delays that are happening largely—they are consolidating in ports right now—is you have to be able to adapt to all of those trade imbalances and that supply chain congestion in addition to dealing with the climate change. Part of that is routing. Part of that is making sure that your vessel is in a safe place at the right time when we see more extreme weather, and that extreme weather isn't unique to Canada.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Lewis-Manning.

I'll shift to Mr. Darby. I was interested to hear your comments about investment in Canada and attracting more investment to Canada. That's something lots of people support.

I believe you said that more investment in Canada will make us more resilient. It struck me that it must depend on what kind of investment that is. If we get a whole bunch of investment in thermal coal infrastructure over the next five years, that doesn't make us more resilient. That makes us more brittle as an economy, because the world is moving away from thermal coal—or it should be—as quickly as possible.

Maybe you could unpack that comment a bit. Can you speak about what kinds of investment Canada needs to attract to make our supply chain more resilient in the face of all the kinds of threats that we have been talking about over the past number of meetings?

[Dennis Darby]

Of course, your example is an interesting one.

Make the whole manufacturing sector more resilient. What that means is being able to compete and be the substitute for those parts. You need investment in automation and in plants and equipment to allow companies to be....

We have been falling behind the U.S. for years. Investment per worker in manufacturing in the U.S. versus Canada is multiple times higher in the U.S. than here. That means that they are getting the advantage of better technologies and more, greener technologies in some cases, in order to produce the same products.

Remember, the U.S. is both our largest customer and our largest competitor. We make things together, but we compete as well.

The investment I'm talking about from manufacturing and exporting is in the equipment, plants and automation. For the overall infrastructure, I think I said earlier that Canada needs to invest in making its infrastructure more resilient to be able to handle the ebbs and flows, and ups and downs in the economy.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Darby, and Mr. Bachrach.

Next, we have Mr. Muys, for five minutes.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Great. I would love to, as the member of Parliament from Hamilton, ask some questions of Ms. Fenn, if I may call you Larissa, from the Hamilton-Oshawa Port Authority. You spoke well to the size and importance of the Hamilton port and, in your words, the immense potential opportunity. I know my colleague on this committee, Mr. Badawey, given the presence of HOPA in Niagara, shares that perspective.

First off, let me give you the opportunity to finish your comments on the international orientation of HOPA and the Hamilton port, because you were cut off from Ms. Gladu's question.

[Larissa Fenn]

I think I had said mostly what I had wanted to say there. We really do need to think about the Great Lakes as a gateway to the heartland of southern Ontario and the manufacturing supply chains that run through there. It very much is a gateway that is essential to some of the most critical industries in Ontario, namely, manufacturing, construction and agriculture.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

You talked a bit about short sea shipping. I know that's been something that's been brought up throughout the course of this study on supply chains. You mentioned a trial that was taking place between Hamilton and Montreal.

Can you elaborate a bit more about that? That sounds like an interesting opportunity.

[Larissa Fenn]

Last summer, our local partner, Hamilton container terminal, started a trial moving containers from Montreal to Hamilton. That's a unique sort of activity in Canada. There is also a trial, a similar service, running out of the port of Cleveland, but it's a new thing to be moving containers in the Great Lakes.

For a long time, the economics of it didn't make sense. There is now a sort of convergence of factors around companies wanting to green their supply chains, congestion on the road, and driver shortages that make taking advantage of the excess capacity on the Great Lakes St. Lawrence Seaway System to move some of those containers a real opportunity and possibility now like never before.

We need to make sure that our systems and structures are set up to anticipate some of those changes. The Canada Border Services Agency, for example, seems to not be set up to anticipate the large-scale movement of containers in the Great Lakes, so there is some work to be done there to put the structures in place to make those kinds of movements viable. The opportunity for building redundancy and resiliency, and making a massive difference to our GHG impacts of transportation in that corridor is a really interesting one. We would do well as a country to make sure that we're putting our energy behind more success in that way.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

The next question is for the two agricultural organizations that are witnesses today, even though from differing vantage points.

You talked about the layering effect. Obviously, there are a number of factors impacting the farm economy, such as increased input costs, the carbon tax, supply chain issues and rail strikes. We would be remiss if we didn't talk a bit about tariffs on fertilizers, the fertilizer shortage and the impact that's having on the farm economy.

I'd like your perspective on that, because that's certainly top of mind for all the farmers with whom I'm speaking.

[Tyler Bjornson]

I can take a stab at that question.

It's equally critical for the fertilizer sector and for farmers who are relying on rail for both the export of their grain products, as well as incoming shipments of fertilizer. Many people might not realize that in Canada, of course, we're planting crops in April and May, so shipments of grain products that go from Canada, for example, to the United States for further processing turn around and come back here fully laden with fertilizer products that are necessary for the spring shipping season.

In the case of the recent looming CP strike, that was very catastrophic for grain farmers who were potentially not going to get fertilizer in the very small window that they needed it in. It further underscored just how critical the railway system is to the functioning of our entire economy.

[The Chair, Liberal, Peter Schiefke]

Thank you.

Ms. Koutrakis, the floor is yours for five minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair, and thank you to all our witnesses for appearing here this afternoon.

Mr. Bjornson, in your testimony you referenced Bill C-49, the Transportation Modernization Act. On May 24, 2018, there was a story on the GlobeNewswire:

“This day has been a long time coming for grain shippers and the farmers we serve,” said Executive Director of the WGEA, Wade Sobkowich. “Grain shippers extend our thanks to Transport Minister Marc Garneau and Agriculture Minister Lawrence MacAulay for their leadership in bringing the Bill through the parliamentary process with the provisions that are of critical importance to the grain sector.”

With that in mind and with the perspective of several years gone by, what is your view of these reforms, what worked, what didn't work, what remains to be done and how can we do better?

[Tyler Bjornson]

Obviously, from those comments, you can realize that we held out great hope for the amendments that were made. Unfortunately, the impact of what I think the minister, the department and many shippers had hoped would happen simply has not come to pass.

An example of that is our service-level agreements. They are supposed to be a negotiation between railways and shippers that allows you to lay out various terms to give you more predictability and certainty in your rail service. But unfortunately, we are dealing with two monopolies in our country on rail, and it's next to impossible to negotiate those service-level agreements. Not one service-level agreement is in place between either of the railways and a major grain company today. That, to us—

[Annie Koutrakis, Liberal, Vimy, QC]

What do you think the federal government can do to do better in that regard? What would we need to be doing as a government to make sure that the service levels are what they were promised to be?

[Tyler Bjornson]

Instead of embedding reciprocal penalties into service-level agreements, we would put them directly in the regulation. In other words, if the railway promises to deliver 100 cars to Weyburn, Saskatchewan to load a train, and they don't show up, then they pay a penalty—as we do for vessels. If we don't load a vessel on a particular day, and it's waiting there, we pay demurrage. We pay a penalty.

Right now, the railways do not pay any penalties for non-delivery, and we think it should be embedded directly in the regulation.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you for that.

This is a general question to all witnesses. I would love to hear your thoughts.

We've heard, throughout your testimony, what needs to be done in terms of regulations and changes that need to be done to remove bottlenecks and whatnot. But what, in your view, could be a game-changer in terms of Canada's supply chain? If you needed to focus in one particular area, what actions would have the greatest impact on improving our system?

[Janice Tranberg]

Maybe I'll start then.

Normally we would have enough feed to feed our animals, and with the drought this year we didn't, and we had to bring in shipments from the U.S. That highlighted for us how critical the rail lines really are to us. Then on top of it, when CP Rail started to have its strike and we only had several weeks of feed supply, that again brought forward just how critical that supply system is.

I would say the game-changer for agriculture and a lot of the associated industries would be to make rail an essential service. Because we do have this monopoly, we soon realized that in Western Canada it was CP Rail. We couldn't even rely on CN because of the way the routes were. I would say that would be a game-changer.

[Kathleen Sullivan]

I would just say two things from a food and beverage manufacturing perspective. The first is around labour. A game-changer would be investing the resources necessary to overhaul our immigration system to make sure we have the people and the systems we need to process immigration and residency applications in a timely way.

The second thing, just building on what Janice and many others have said, is making sure that when it comes to infrastructure we put in place the measures that ensure we don't have these unnecessary stoppages in infrastructure. Virtually every single year we face some sort of strike or threat of a strike, either rail or port. As Tyler said, we can't necessarily stop the natural disasters, but if we make sure that we have excess capacity in our inner infrastructure, we ensure that we don't have these unnecessary breakdowns when there are other ways to deal with these things.

In some cases we're talking about food, which is essential for people to eat. These are essential products, essential goods, that we're providing. It is absolutely insane to think that companies sit there and don't know when they're not going to be able to get their supplies into the country, their packaging into the country, their goods out of the country, live animals moved. We have to figure that out. It is just unacceptable in a country like Canada.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Sullivan.

Mr. Barsalou‑Duval, you have the floor. You have two and a half minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

My question is for Mr. Darby.

A witness from the Institute for Research in Contemporary Economics has suggested a measure that he believes could help make our businesses more competitive and level the playing field. He proposes the introduction of carbon pricing on imports.

In Quebec, steel is produced from hydroelectricity. In other countries, it is often produced from coal. The manufacturing process is therefore much less polluting here, and the effect on the climate is far less damaging.

Our companies are subject to environmental standards that are often much higher than those found in other countries.

Couldn't carbon pricing on imports be an interesting avenue?

[Dennis Darby]

Thank you.

Let me tell you that border carbon adjustment taxes on imports are something that would help level the playing field. It's a complex area, but I agree, it's an area that could help Canada remember that a third of our economy is exports, so we we have to be able to export our goods and materials and food products competitively. If we are able to do that with a lower carbon footprint than a substitute from another market, we certainly have a place within our whole greenhouse gas reduction and our whole competitiveness to look at those carbon adjustment taxes. I agree, it would then level the playing field and in some cases, like you said, it will provide an advantage to Canadian manufacturers—so yes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

My next question is for Mr. Buy from the Canadian Ferry Association.

There has been a lot of talk about the supply difficulties experienced in recent years in cities and major centres, which were not used to this kind of problem.

I know that ferries often serve remote areas where supply difficulties were already present. Have these difficulties changed or are they just a continuation of what they have always been?