Thank you for the introduction, Mr. Chairman.
Canada's bulk grain shipments make up roughly 20% of total railway volume and revenue each year, making WGEA members some of the largest single users of Canada's railways and ports.
For decades, our industry has faced challenges in moving grain products to market. The committee will know that the Canada Transportation Act was amended in 2018. Parliament, at that time, made three changes to the act that were supposed to be helpful to shippers to address the monopoly-style imbalance of power that we faced.
Those included replacing extended interswitching with long-haul interswitching, allowing for reciprocal penalties in service-level agreements, and providing the Canadian Transportation Agency with own motion investigative powers. Since these measures were brought in, not one application for long-haul interswitching has been made, none of the WGEA members have been able to negotiate a railway service agreement with true reciprocal penalties, and the own motion power of the agency has failed to address very obvious service problems.
Grain shippers have had very poor service in 2022, with weekly car order fulfillment routinely less than half of what was required. In the railway grain plans, CN indicated it would provide 5,350 cars each week in winter months, while CP said it would provide 4,350 cars. Unfortunately, Canada's farmers faced one of the worst droughts on record, and total production was 35% lower this year.
As a result, Canada's grain shippers required a lot fewer railcars than planned. For example, in the week of February 13, grain shippers ordered 1,204 cars from CN, but only received 550, or 44% of what we ordered, even though we asked for only 1,204 cars, rather than the planned 5,350. CP is a similar story, and the month of January was actually much worse. The railways provided incredibly poor service in the critical winter months this year despite a major drought and dramatically lower demand.
None of the new remedies from 2018 resulted in any meaningful change. The current measures in the act are fundamentally flawed. They do not allow shippers to hold railways accountable for their service performance on a day-to-day basis. If we want to change behaviour, it has to be done through the railways' pocketbook; otherwise, there is no proper incentive to deliver. That could include bringing back extended interswitching, and making reciprocal penalties automatic. It could include holding the railways accountable to the numbers from their annual grain plans, and it could go so far as to introduce joint line running rights.
I would like to provide a couple of final remarks on two other interrelated concerns.
For more than a decade, a strike or a lockout has occurred, or been threatened, every year at one or both national railways. On each occasion, Canada's food processors and international customers are told that they may not receive the grain they need to make staple food products. They are then left scrambling to determine how they'll manage their operations, and are forced to consider alternative, non-Canadian, sources of grain. This damages Canada's reputation.
Providing a framework for the fair and orderly resolution of labour disputes between railways and their unions through binding arbitration, thereby avoiding the needless harm from rail service interruption, has unquestionable merit, particularly if both parties truly believe their negotiating positions to be reasonable.
Concerns that such an approach threatens the integrity of labour relations fail to take into account the unique market dynamics of a single carrier, monopoly rail service, and are far outweighed by the harm caused to the Canadian economy by incessant railway disruptions.
The grain sector is part of a growing chorus of business groups across Canada urging the federal government to designate rail as an essential service.
Finally, the WGEA believes that the governance of Canada's port authorities requires an overhaul. These entities are legal monopolies with sole decision-making power over aspects of strategic importance to Canada's marine gateways and the economies they serve. Governments normally put in checks and balances where this imbalance of power may lead to questionable outcomes.
Proper checks and balances do not exist today. In some cases, this has led to conflicts of interest, exorbitant rent and fee increases, lease renewal issues, encroachment on jurisdiction by municipalities and provinces, and questionable infrastructure-setting priorities at times.
We would implore this committee to include the need for amendments to the Canada Marine Act to address these concerns.
Thank you for your time. I would be pleased to answer any questions that committee members may have.