CN, CP slam federal panel's Rail Freight Service Review

CANADA's two big railways, the Canadian National (CN) and the Canadian Pacific (CP) blasted the final report of the federal Rail Freight Service Review (RFSR) panel and warned that the government's proposal to table legislation based on the document would stifle supply chain innovation and Canada's competitiveness globally.


"CN disagrees with the focus and tenor of the panel's recommendations. Like the dissenting panel member, we are concerned that the panel's recommendations are drifting backwards towards more regulation instead of encouraging the current momentum for positive change," said CN president and CEO Claude Mongeau.


His views were echoed by rival CP's president and CEO Fred Green, who said additional regulation for relationships outside of commercial agreements is completely unwarranted. "Isolating the rail sector will not produce the desired results."


The review was launched in 2008 to examine Canadian rail freight service. It was conducted in two phases: analytical work to achieve a better understanding of the nature and extent of problems within the logistics chain (including shippers, terminal operators, ports and vessel operators), followed by consultations with stakeholders on issues and recommended solutions.


Said Mr Green: "While the report suggests negotiated commercial principles are preferred, I am concerned about the application of some of the recommendations involving regulation. The devil will be in the details. We will work with government to ensure equitable accountability is achieved throughout the supply chain and fosters further gains in service reliability."


The Conservative government said it accepted the panel's commercial approach and its four key elements, that railways should provide 10 days' advance notice of service changes, that they and stakeholders should negotiate service agreements and that a fair, timely and cost-effective commercial dispute resolution mechanism should be developed.


CP added in a statement that it has "signed numerous commercial agreements with customers, terminal operators and ports that will drive improvements in supply chain performance. The company has also implemented a number of new initiatives which focus on improving first and last mile performance, including yard reliability programmes."


CN said the panel failed to recognise the "significant positive change" that had been taking place over the past two years to address key service issues, including initiatives to improve the first-mile/last-mile of rail traffic movements, and enhanced supply chain efficiency and transparency.


"Contrary to its mandate from the government to examine service provided by the 'rail-based logistics chain,' the panel focused solely on the railways - the only federally regulated segment of the supply chain - and missed the fact that all participants in the supply chain are accountable for transportation system performance, not just railways," CN said.


It bemoaned the panel's assertion that the railways' "market power" is a cause of service problems, claiming the panel did not provide any evidence "for its unsubstantiated claim."


Said Mr Mongeau: "CN is pleased that the government on its part recognises the positive momentum in the railway industry, is anchoring its preference on commercial solutions, and is focusing on the end-to-end supply chain. This is the only way in our view to achieve lasting service improvements.


"We are, however, disappointed that the government considers legislation may still be needed. The Canada Transportation Act (CTA) already provides extensive safeguards to protect shippers' interests, and we believe a regulatory approach runs the risk of stifling innovation and thwarting the progress that has been achieved in the last two years," said the CN chief.


"In the end, supply chain partners need to embrace change to drive better service and efficiency gains. Burdensome regulation targeting railways alone is not the solution. Greater supply chain collaboration and more service innovation are what is needed to foster Canada's prosperity."
(Source:http://www.schednet.com)