(Canada.com posted the following Canadian Press article by David Paddon on February 25.)
TORONTO — The federal government appears to be “on a path toward re-regulation” of the rail freight industry, an unnecessary step backwards that will undo the benefits of competition, Canadian National Railway says.
CN Rail complained that some companies that transport their goods by rail will find it easier, under changes proposed Tuesday, to ask a government agency to impose rates when only one railway serves an area. CN spokesman Mark Hallman said Ottawa’s proposal would mean that railway customers would no longer need to prove they face “substantial commercial harm” without a regulated rate.
CN argues that Canada has the lowest rail freight rates and the best service in the world as a result of industry deregulation that began in 1987.
The railway is concerned that “shippers will resort more to the regulator than deal with railways through commercial mechanisms,” Hallman said.
The Montreal-based company, the biggest railway in Canada and one of the biggest in North America, said it will lobby Transport Minister David Collenette to change that part of his sweeping policy statement.
CN stock (TSX:CNR) traded at $62.70, up 20 cents, on the Toronto Stock Exchange while its biggest domestic rival, Calgary based CP Rail (TSX:CP), declined 38 cents to $30.40.
Shares in Canada’s two largest airlines, Air Canada and WestJet, declined slightly. Air Canada (TSX:AC) was down four cents to $3.03 while WestJet (TSX:WJA) fell 39 cents to $15.85.
The 57-member Railway Association of Canada, which represents dozens of smaller railways in addition to the country’s two biggest carriers, indicated its support for Collenette’s overall plan.
“However, the railway association’s members are very concerned about signs of re-regulatory measures being proposed,” association president said Bill Rowat said in a prepared statement.
An expert panel appointed by Collenette indicated in its report that Canada’s rail system is generally competitive and working well, Rowat added.
“Railways are the most capital-intensive industry in North America. As a result, they need investment certainty, not threats of re-regulation,” he said.