Debate Continues Over Fair Rail Freight Service Act
While Canadian National Railway CEO Claude Mongeau continues to complain that new legislation introduced December 11, 2012 by the federal government will negatively affect the rail freight shipping industry, others are pleased with the new bill and some want amendments to provide more fairness to shippers (Edmonton Journal, Financial Post).
The Fair Rail Freight Service Act (Bill C-32) will provide shippers, who had been complaining for many years about poor shipping service by CN and CP, with opportunities for fair service agreements and hopefully for improved overall shipping services. Up until now, shippers have been more-or-less at the mercy of CN and CP when it came to shipping prices and quality of service, including delivery times, standard of freight cars, and recourse when CN and CP did not live up to their end of the service arrangements.
Mongeau has been making public pronouncements during the past several months, erroneously suggesting the legislation will somehow stifle positive commercial arrangements and business dealings. The fact is the new legislation will help level the playing field and hopefully ensure that CN and CP take customer service more seriously. The legislation will give shippers the right to service contracts, and if the railway is unreasonable in contract negotiations, shippers will have the right to an arbitrated service agreement. Railways will be subject to penalties for each violation of an arbitrated service level agreement.
Richard Phillips, Executive Director of the Grain Growers of Canada, writes in the Financial Post, “It is fair to say that shippers…expect to bargain commercially with the railways. However, with only two major railways operating in Canada, there continues to be an inability to fairly negotiate adequate service and price for freight. The railways, on the other hand, can unilaterally impose penalties, conditions on shippers, or refuse to provide any service at all…This is why the Grain Growers of Canada, working within the Coalition of Rail Shippers, a group representing 17 industry associations and over 3,235,000 jobs in Canada, has long been calling for some balance through legislation. And legislation has long been on the agenda as one of the recommendations brought forward by an independent Rail Freight Service Review Panel in 2010 where the report stated: ‘It has long been recognized in transportation law that regulations are required to address the potential abuse of market power by the railways’.”
Both the NDP Opposition and the Liberals will be seeking amendments to Bill C-32 to strengthen the bill to give shippers some of the reasonable demands left out of the bill, including performance standards, increased penalties against railways, and application of the legislation to shipments to the United States.