The federal Liberals have thrown their support behind rail shippers lobbying the federal government for regulations to “rebalance” their bargaining power with the railways.
But it isn’t the Liberals shippers have to convince, it’s Prime Minister Stephen Harper. While shippers can point to the interim report on rail service that concludes substandard rail performance is due to a lack of railway competition, realpolitik might be the best approach, according to Liberal Transport Critic John McCallum.
“My observation of this government and Stephen Harper is that votes always trump policy or ideology,” McCallum told reporters Dec. 13 during a telephone news conference.
“I would think, if you count votes, it’s a no-brainer to side with the shippers because there are lots of them, in lots of different parts of the country and only two big railways.”
The unprecedented consensus within Canada’s grain sector in support of rail regulation, matched by other shippers, will be hard for the government to ignore, said Saskatchewan Liberal MP Ralph Goodale.
Two of the three panelists appointed by the federal government to review railway service in Canada recommended in their interim report last month legislation to force the railways to deal with shippers in a more commercial manner, but only implement it in 2013 if the railways haven’t done it voluntarily.
The panel’s final report and recommendations were to be submitted to Transport Minister Chuck Strahl Dec. 22. The Coalition of Rail Shippers, which speaks for 18 shipper groups, including grain, urged the panelists to recommend Ottawa implement regulations right away. That way if the railways don’t agree to a commercial approach, shippers have a fallback position, Greg Cherewyk, Pulse Canada’s transportation expert, said in an interview Dec. 16.
“You wouldn’t have to rely on these (regulatory) provisions if the right things are happening,” he said. “It’s all about encouraging the things that you’d expect to happen in normal, competitive conditions.”
Shippers want service agreements that spell out expectations and penalties for all parties. Now railways penalize grain companies for failing to load and unload cars within specific time periods, but the railways aren’t penalized for failing to deliver cars on time.
The review found grain shippers receive “all the cars they have ordered only half the time,” Cherewyk told the House of Commons agriculture committee Dec. 9.
Shippers received 90 per cent of the cars the railway said they would deliver on the day they said they’d deliver them between 12 and 28 per cent of the time, he added.
Pulse Canada wants rail service, including reliability fixed “(t) hen we can ask if the freight rates are appropriate and allow us to be competitive internationally,” Cherewyk told the committee.
The Railway Association of Canada (RAC) accused the Liberal party of “failing to do its homework” and noted the review panel didn’t do any research into railway market power.
“Staying the course with a commercial framework is the best way to encourage investments and sustain service innovation with lasting benefits for all stakeholders involved resulting in a win-win situation for railways and the shipping communities alike,” RAC president Cliff Mackay said in a news release.
Goodale said the evidence of railway power is so obvious that it must be addressed.
“This is simply introducing an element of due process, balance and fairness, to say ‘shippers have rights too,’” he said. “They (regulations) can be the trigger for commercial behaviour.”
Coalition of Rail Shippers chair Bob Ballantyne welcomed the Liberals’ support for rail regulation, but added the federal government needs time to respond to the review panel’s final recommendations.
In its interim report the panel recommended the railways give shippers more notice before changing service, there be enforceable service agreements with shippers, a practical dispute settlement process and improved reporting of rail performance.
[email protected] (With files from Alex Binkley)
– RALPH GOODALE