Rail Bill Does Not Deliver for Canada’s Largest Shipper – The Mining Industry

Trent Ernst, Editor

In the realm of federal bills, Bill-C-52 does not have the same degree of controversy as many government policies.

The new bill is called “the Fair Rail Freight Service Act”, and, as you might expect, deals with the issue of cost for freight being shipped by rail. The bill gives companies which ship goods by rail the right to a service agreement with railways and creates an arbitration process to establish an agreement when commercial negotiations fail.

The issue, says Bob Ballantyne, head of the Coalition of Rail Shippers, is that there is little competition for rail services in Canada. You want to get coal from Tumbler Ridge to Prince Rupert, you have one option. This creates an effective monopoly for the railroad companies.

While the bill has already received first reading, the mining industry is seeking amendments to Bill C-52 to improve service. The Mining Association of Canada (MAC) recently informed the House of Commons Standing Committee on Transport, Infrastructure and Communities that Bill C-52, the Fair Rail Freight Service Act, “does not go the distance in overcoming the rail service failures that gave rise to the bill in the first place.”

The mining industry is the single largest customer of Canadian railways. In 2011, Canadian miners accounted for 54% of total Canadian rail freight revenue, and just under half of total commodity freight volume carried.

“While our industry appreciates the government’s initiative in attempting to partially correct the imbalance of railway market power through its initial review and the tabling of this bill, we believe it does not deliver on the government’s promise to enhance the efficiency and reliability of the entire rail freight supply chain,” said Pierre Gratton, MAC’s President and CEO. “As currently written, we do not believe the bill will achieve the government’s stated intention.”

The mining association is urging the federal government to make amendments to the bill to correct issues that were identified during Transport Canada’s Rail Freight Service Review, and to improve the bargaining relationship between railway companies and shippers.

For example, although Bill C-52 gives shippers a statutory right to a Service Level Agreement, say the MAC, it does so without defining that service. Without specifying the elements of service that a shipper needs, an arbitrator will have no direction in a process that, unless amended, weighs heavily in the railway’s favour. MAC has proposed a half dozen amendments to the bill.

“The current imbalance and associated service failures have resulted in unreliable service and higher costs for the mining industry, its partners and customers. We urge the government to consider our amendments given that insufficient rail freight service adversely affects the entire logistics supply chain and, in turn, the Canadian economy as a whole,” said Gratton.