Abusiness survey done by the Royal Bank has found widespread dissatisfaction with the quality of railway freight service in Canada.

The survey was released in mid November as the federal government’s Rail Freight Ser vice Panel worked on its final report to Transport Minister Chuck Strahl on how to deal with shipper complaints about rail service.

RBC’s 2011 North American Railroad Shipper Survey, based on interviews with major shippers and industry associations, says overall rail service is generally good but not up to the needs of many shippers.

It also noted CN’s efforts to establish better relations with its customers under new president and CEO Claude Mongeau are paying off, while CP’s once shipper-friendly reputation has taken a beating.CN’s grades have risen

thanks “to a decline in fair ratings (from 39 per cent to 20 per cent) and the increase in good or excellent ratings (from 44 per cent to 54 per cent). In addition, 38 per cent of respondents remarked that CN’s service is improving, up from only 26 per cent last year.” Shippers praised CN’s collaboration and customer focus and knocked its billing accuracy and capacity.

At the same time, respondents repor ted “a mater ial decline in service delivered by CP this year, evidenced by the compelling majority of respondents (60 per cent) that rated CP’s service as fair or poor, up from 38 per cent last year.”

Shippers rapped CP’s consistency, terminal dwell, and poor internal systems and approved its ongoing communication and willingness to collaborate.

“Many shippers are distrustful of the sustainability and the rails’ commitment to ongoing service initiatives. Shippers often attributed any service improvements experienced this year to temporary market conditions and expect service upgrades to dissolve once the economy regains strength and regulatory changes are no longer being threatened by the U.S. or Canadian governments,” the survey said.

The report reinforces the findings of the freight panel’s interim report released in October.

The RBC report correctly notes the Harper government has no appetite for a big regulatory push on the railways and that shares in the two companies remain a good buy for investors.