CN Rail’s president and CEO Claude Monglace says he has Prime Minister Stephen Harper on side with his view that improving grain shipping requires collaboration not regulation.
“Sincerely, we need to move away from the regulatory stance that is dominating the grain-handling system,” Mongeau said Feb. 17 during a speech to the Winnipeg Chamber of Commerce.
“When you meet with people, when you have dinner with them, you build as much accountability and bonding as you do when you try to measure railroad performance from Ottawa, trust me.”
He speaks from experience.
“One of the first people I reached out to in telling my story is Prime Minister Stephen Harper,” Mongeau said. “And they get it. They understand. The government agenda is there with innovation and productivity. I told the prime minister, I said, ‘we have to be bold because it’s not enough to talk about it, we actually have to do something.’”
COME ON OVER
Keystone Agricultural Producers would welcome an opportunity to bond with Harper and explain the farmer’s view, president Doug Chorney said.
“He (Mongeau) basically announced to the audience that the federal government is on side with his message,” Chorney said. “That’s a big concern.”
Grain farmers, elevator companies and the Canadian Wheat Board (CWB) have been lobbying the federal government for regulations to force the railways to enter into commercial agreements with shippers spelling out
penalties for both when either fails to fulfil the agreement. Shippers argue inadequate rail competition gives the railways too much market power.
That’s still their position, officials said after hearing Mongeau speak.
“I would take that direction to ‘trust him’ (Mongeau) if Prairie farmers had alternatives… ,” Chorney said in an interview. “There are two suppliers that control the whole transportation network (CN and CP). They know… they’ll eventually get the grain whether they deliver it today or tomorrow and that’s what they’ve been doing as a matter of practice for decades.”
In November, a federally commissioned panel reviewing rail service concluded the railways underperformed. Two of the three panelists recommended in their interim report legislation to force the railways to act commercially, but that it implemented only if the railways
hadn’t done so voluntarily by 2013.
The grain industry wants the legislation implemented now. It could be an uphill battle though. Mongeau confirmed what many already believed – the railways have the government’s ear.
Regulation blocks innovation and productivity, both of which are required to create wealth, Mongeau said.
“I don’t know about you but I don’t know a regulated utility that is good at innovation,” he said. “I don’t know how Ottawa can help. If we have to find solutions, it’s right here on the Prairies.
“It requires mutual trust, it requires a bit of an act of faith, it requires a deep belief that at the end of the day how we come together on matters, commercial incentives are more powerful than anything else.”
Regulations are needed to rebalance the market power of railways that don’t compete, said WGEA executive director Wade Sobkowich.
“If CN is committed to continued good service, the legislation we’re seeking will not impact on CN,” he said. “It will only kick in when service declines and if they fail to perform.”
Blair Rutter, policy manager of the WCWGA, agrees.
“It was good to see CN’s chief talk about moving away from an adversarial approach and move to collaboration,” Rutter said. “But it doesn’t change our position. We still think these safeguard measures the panel recommended should be put into place now.”
CN innovation has improved its grain-shipping performance, Mongeau said.CN met its daily car spot commitments 86 per cent of the time last year. That might not have happened with regulations in place, he said.
“He (Mongeau) told us customer service would be a priority for CN and he has delivered on that promise… ,” CWB chief operating officer Ward Weisensel said when introducing Mongeau.
“Under Claude, CN has quickly moved to a much more collaborative model, which we have greatly appreciated. That is not to say that CN and the wheat board agree on every issue.”
The CWB still wants rail regulations, said CWB spokeswoman Maureen Fitzhenry said.
While CN’s performance has improved CP Rail’s has declined, underscoring the need for regulation, said the CWB’s vice-president of logistics, Rick Steinke.CN has moved seven per cent
more grain so far this crop year compared to the last despite less grain production in its area due to excessive rains last growing season, he said.
Meanwhile, CP has moved 25 per cent less grain so far.
“That’s a big issue for us,” Steinke said. “CN has gained market share but the reality is we cannot move the crop without CP.
“This is costing the wheat board and farmers a lot of money.”
Not only is there demurrage as ships wait to load grain, but it hurts the CWB’s ability to make the next sale, Steinke said. [email protected]
– WADE SOBKOWICH