Calls for Government Intervention on Rail

Thursday, May 03, 2007 03:49 AM

CN train crossing bridge in Prince George ( photo opinion250 staff)

The President and CEO of the Forest Products Association of Canada (FPAC) Avrim Lazar, has issued a call for more competition within the railway freight system. He also wants some new measures to provide shippers with the means to challenge unreasonable costs imposed by the railways.

Lazar made the comments to the Senate Committee on Transport and Communications as part of its study of Bill C-11, An Act to amend the Canada Transportation Act and the Railway Safety Act and to make consequential amendments to other Acts.

Lazar says there needs to be more competition within the railway. "The forest products industry pays over $280 million annually in excess freight costs due to the monopoly power of the railways," says Lazar. "It is time for the government to take action. The lack of competition over significant parts of the rail system results in significantly higher transportations costs for Canadian shippers, particularly those in remote areas that are 'captive' to the railways. This affects both rates and service at the majority of our mills across the country."

The forest products industry is the largest user of rail transport in Canada, contributing over $2 billion annually to rail revenues.

Lazar says the transportation costs are hurting the forest industry's ability to be competitive "Uncompetitive and unreasonable transportation costs and poor service resulting from the lack of effective competition are undermining the industry's competitive position. Quite simply, a competitive rail network will greatly benefit not only the forest products sector but also Canada's export sector more broadly."

The industry is seeking amendments to the Canada Transportation Act, in particular, changes that will give shippers some way to deal with the railroads' cost and service.

During the Council of Forest Industry conference in Prince George last month, West Fraser CEO Hank Ketcham also asked for some change. He pointed to the challenges faced by the industry because of the "virtual monopoly" of the railroad and told the conference delegates "One day CN will have to start treating its customers as if they had another option." He complained of idle crews, lack of cars and shipments sitting on sidings.
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Posted on Thursday, May 03, 2007 03:49 AM in News by 250 News

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Comments

Posted by: herbster on May 3 2007 5:13 AM

Hey aren't these the same guys that told us the sale of BC Rail would mean overnight delivery of lumber to Chicago, and an end to poor service? What genius in the brain trust that make these decisions couldn't forsee that creating a monopoly would lead to higher prices and poorer service? Time to buy back BC Rail. I believe there was a provision for this in the original deal if CN failed to maintain the original level of service. If Campbell is too stupid to see what a diamond it is, then put out a Public/Private Partnership to finance the buyback. I'm sure there would be plenty of offers.

Posted by: REALIST on May 3 2007 7:35 AM

Campbell knew all this when he stole and sold what was not his. It was simply a gift to his friends. That is how he works. Now we are hearing exactly what we said was going to happen. This is not a surprise. This is yet another screw thew people of British Columbia discisions. What is worse is that this is only the tip of the iceburg.Hydro, schooling, medical system etc. are all going to cost a fortune to fix and the reason is Gordon Campbell. People are too eager to believe his word which lack any creditability at all( there is a word for this but I wouldn't want to be banned from commenting). We are all sheep. Keep an eye on the court case of Virk and basi and you will see how this guy works.

Posted by: Palopu on May 3 2007 9:14 AM

You cant absolve all the Lumber Industry Management in this Province, along with other Citizens and tax payers and blame Campbell for this fiasco. I agree he is a big part of it, however the rest of the Province sat on their hands and let this whole scenario take place.

One of the reasons is that most of our Top Management people no longer have any credibility and couldnt tell you the difference between a paved road and a rock garden. They get paid big dollars to do a job (which they usually get through freindly connections) and then do not produce.

It was obvious from the start that BC Rail should have been sold to the CP Rail or Burlington Northern Railway, or some other entity so that we could maintain the competitive factor. This never happened and that is why we have these problems to-day. In addition the Privatization of CN Rail has made them a much worse Company to deal with, and customer service is not their number one priority. Making money is number one.

It seems Canadian Tradition calls on us to blame others or the Government of the day for all are problems, when in fact we are the Goverment and we allow all this crap to take place.

We spend more time building Hockey facilities, and watching games than we do on anything of significance and then complain when someone takes us to the cleaners.

A good example is what is happening with Alcan at Kitimat. Most people in this Province couldnt even tell you where Kitimat is let alone give you any explanation of what is happening there.

Now that we have created a rail monolopy I suspect that we will have to live with it for many years to come, because we do not have the Political will or the Intestinal fortitude to do anything about it.

Pass the beer and hot dogs.

Posted by: REALIST on May 3 2007 10:45 AM

Too true Palopu. I was very involved with trying to prevent B.C.Rail from being sold. At one meeting I heard two young B.C.Rail employees complaining that they were told they had to be at the meeting and that they would rather be at home watching the Stanley Cup playoffs. I wonder if those two are still employed by C.N. It reminded me of Roman times when the gladiators were created to distract the common people from noticing how badly they wewre being treated by their leaders. If we still owned B.C.Rail, we, the people, could set the rates for rail travel (through a government that actually had our society's best interests at heart),(what a dream that would be) as well as reap the profits here in B.C., instead of shipping our money to America. This is exactly why we should be getting rid of the lieberals. But as the joke goes Canadians do not assassinate our bad leaders, we re-elect them.

Posted by: Chadermando on May 3 2007 4:43 PM

Make it open port rail lines. Any rail operator can ship on any rail line in BC by paying a perkm/ton cost allocation.

Run track safety and repairs through a seperate entity.

Our rail tracks would be no different than the national highway system.

Posted by: Palopu on May 3 2007 7:50 PM

I kind of think that you might have a problem getting this concept off the ground Chadermando. For one thing CN Rail is now one of the biggest if not the biggest Railway in North America. In addition to CN Rail in Canada, it also owns the Duluth Winnipeg Pacific, the Illinois Central Railway, the Wisconsin Central, the Grand Trunk Western, and many more. Once CN was privatized and sold to investors (Mostly American) we no longer have any control over how it will be run, except through the present Government Legislation. What we need is Private Business to take over the CN Line from Prince Rupert to Edmonton Alta,, and another Private Business to take over the CN line from Prince George to Vancouver, this would allow us to ship to Edmonton and then onward via CN or CP, or ship to Vancouver then onward via CN, CP, or BN Railway.

Not much chance of this ever happening, however one can dream.

Posted by: Chester on May 4 2007 6:06 AM

With the huge potential of increased rail traffic between Prince Rupert and points east and southeast, how the heck are we going to meet the service and scheduling demands when we can't even deliver adequate service today? Chester

Posted by: Palopu on May 4 2007 9:32 PM

The service that CN provides is the service that Shippers will get. The service out of Prince Rupert will be no better than the service out of Vancouver.

Railways will always tell you that they have great service from Vancouver or Prince George BC to Chicago and boast that they can get to Chicago in less than 90 Hours, however what they neglect to tell you is that it takes them anywhere from 48 to 96 hours just to get a car on a train and out of town. Then another 48 to 96 hours to get it spotted to your facility. Their expertize these days is in hauling unit trains of Potash, Sulphur, Grain, Coal, Containers etc; that requires little manpower and generates huge revenues.

Quite often it takes days and days just to get a rail car to load.

As long as the Railways on the West Coast and Mexico continue to provide the same bad service that Canadian Railways provide we can stay in the business, however if they should improve their service we will have to do the same.

There are plans in the works to widen the Panaman Canal. If this happens the job will be completed in 10 Years. Once this happens a large portion of these huge containers ships will then go through the Panama and on to the US East Coast and on the Europe and there will be a huge decline in Container Traffic on the West Coast.

The Container Port in Prince Rupert could very well be a short term investment, and help to alleviate the congestion until the Panama is completed. The service is adaquate to maintain the status quo.