No matter how the Canadian Transportation Agency’s (CTA) first self-initiated investigation into possible freight rail service issues in Vancouver last month turns out, it bodes well for rail shippers, shipper association officials say.
“It’s good to know the agency isn’t shy about using its new authority to launch investigations because that’s important,” Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA), said in an interview Jan. 14. “It’s important that the agency is willing to take a look at these perceived systemic issues as they arise and do an investigation. It has the potential for being a very important tool that this country has in correcting some of the rail service problems that we have.”
The WGEA represents most of Canada’s large grain companies.
Why it Matters: The Canadian Transportation Agency has new powers to help deal with railway service issues and this is the first time it’s testing them. Grain shippers hope the result is better service.
Until Bill C-49, the Transportation Modernization Act became law last spring amending the Canada Transportation Act, the CTA couldn’t investigate possible lapses in rail freight service until a shipper filed a formal level-of-service complaint. Now if the CTA suspects a problem it can “of its own motion, launch… an investigation, provided the minister of transport agrees,” the CTA said in a news release Jan. 14. “The minister’s authorization was requested and provided Friday (Jan. 11).”
Level-of-service complaints are usually a long, expensive process. Often the problem that sparked a shipper complaint is resolved or works itself out by the time the CTA, a quasi-judicial organization responsible for administering the transportation act, renders a decision.
In lobbying the federal government to give the CTA the power to launch investigations, shippers hoped it might prevent small service disruptions from turning into big ones, Sobkowich said.
“It’s nice to know that the agency is watchdogging the system and is prepared to look deeper into issues as they arise,” he said.
The Freight Management Association of Canada, which represents a number of companies that ship consumer goods, minerals and grain, also supports the CTA’s actions, association president Bob Ballantyne said in an interview Jan. 18.
“There was enough evidence coming from CN and CP that there is a problem because of the embargoes that they put out, and just enough general information from our members that they are seeing more and more congestion in the Vancouver area, and also because it’s the first time that the new power is being used and it’s in the interest of all shippers to see how this new provision works and what comes out of it,” he said.
The CTA announced in a news release Jan. 14 an investigation into possible rail service issues in the Vancouver area, including an oral hearing Jan. 29 and 30 in Vancouver.
The CTA made its decision after hearing from shippers and others about freight rail service levels in and around the Vancouver area in December 2018, a CTA official said in an email Jan. 17.
“It (CTA) will look into, for example, the issue of whether railway companies may not be meeting their service obligations in respect to certain shippers or classes of shippers as a result of measures such as the imposition of permits or embargoes, or preferential treatment of one or more commodities over others,” the official wrote.
“The investigation is looking at the industry as a whole, including all major carriers operating in the area.”
The CTA has directed shipper associations and railway companies to provide information related to the investigation.
The CTA appointed an ‘inquiry officer’ to gather and report to the CTA.
“Should the CTA find that the railway companies did not fulfil their level-of-service obligations, it could order the railway(s) to take certain corrective actions,” the official wrote. “The CTA will come to a final decision as quickly as possible, but it will take the time required to gather all the facts first. The act provides that a written determination must be issued within 90 days.”
Ballantyne said he heard most of the complaints involve forestry products and manifest trains, not intermodal (containers) or grain trains.
While there were some delays in unloading grain cars at Vancouver in December, it didn’t appear to interfere with the railways fulfilling car orders at country elevators, Sobkowich said.
As of mid-January rail service for grain this crop year has been generally good, he said.
Congestion at Vancouver in December was temporary, CN spokesman Jonathan Abecassis wrote in an email Jan. 18.
The CTA’s investigation needs to look at the entire supply chain, including “the impact that heavy rain and high winds had on operations and on the downstream timeliness of vessels,” he added.
“CN acted swiftly and efficiently to serve its customers during this period and played its role in moving record volumes through Vancouver’s complex and multi-commodity supply chain. During this period, CN moved 10 per cent more freight through Vancouver than last year.”
In 2018, CN invested a record $3.5 billion to improve rail movement, brought on 25 per cent more qualified train conductors in Western Canada and added over 10 per cent more active high-horsepower locomotives to its network, Abecassis wrote. These investments enabled CN to move record volumes of freight in November, December and in January so far.
The CTA investigation might or might not result in “some quick fixes,” Sobkowich said.
“But there’s value in just better understanding the problem and if that’s all that comes out of this then that’s a step in the right direction,” he said.
The investigation could reveal possible future capacity constraints at the Port of Vancouver, Ballantyne said. Canadian exports to Pacific Rim countries are expected to continue growing, yet there’s little land in Vancouver for port expansion, he said.
“So this is probably a longer-term problem and it will require significant capital investment for new yards, new trackage… ” he said.
“It will be interesting to see if that kind of thing is identified by the agency’s investigation.”