(The following column by Kevin Hursh appeared on The Star Phoenix website on April 9. Kevin Hursh is a consulting agrologist and farmer based in Saskatoon.)
SASKATOON — Our major railways do a wonderful job hauling grain. Just ask them. But don’t ask anyone else or you’ll get an entirely different story.
CN has issued a news release based on a presentation given by its senior vice-president of marketing, Jean-Jacques Ruest, to the Canada Grain Council annual meeting in Winnipeg. According to Ruest, deregulation has produced very competitive rates for the transport of grain by rail in Canada, as well as “significant efficiencies in the logistics system.”
What a fairy tale.
Ruest claims CN has achieved substantial improvements in recent years including significantly improved hopper car velocity resulting in increased loading at country elevators.
Those comments run contrary to the federal grain monitor, which in its 2005-06 annual report said car cycling time to Vancouver from country elevators averaged 18.3 days in 2005, about the same as the 17.9 days of cycle time back in 1992.
Meanwhile, the number of country elevators has dropped dramatically and much more of the grain is moving in 50 or 100 car blocks. Increased car velocity? It sounds more like the same continuation of lousy service even though the system has rationalized.
Meanwhile, rail rates from Saskatoon to Vancouver have increased from $33 a tonne in 1995 to $42 a tonne in the current crop year. A recent study commissioned by the Canadian Wheat Board estimates the two railways are earning more than $100 million more per year on grain movement than what most would consider a reasonable return on investment.
Ruest warns that re-regulation of grain transportation would discourage CN investment in the sector and could require a return to taxpayer subsidization of grain movements. That sounds like a veiled threat. Don’t mess with our exorbitant profits or you’ll see grain movement get even worse.
It isn’t just the CWB with a burr in its bonnet over rail performance. Farmer-owned inland terminals and many private elevators say the same thing. So do specialty crop processors. Railway performance ranges from poor to dismal.
The biggest cost is our reputation as an unreliable grain shipper. Customers know that grain from Canada probably won’t arrive on schedule, so we’re not the preferred supplier and our products are discounted.
In short, we have a third-world rail system for grain, even though the railways pretend that everything is efficient and cost effective.
Minister of Transport Lawrence Cannon has announced the start of the long-promised rail freight service review, so maybe there will finally be something definitive on the issue.
The federal government committed to a review of railway service to be launched within 30 days of Bill C-8 receiving Royal Assent. The bill provides for amendments to shipper protection under the Canada Transportation Act.
Cannon is inviting comments from interested parties on the draft terms of reference for the review. Those comments need to be submitted by
May 11 and the terms of reference are to be finalized by the end of May.
The review will focus on service provided to Canadian shippers and customers by CN and CPR within Canada, including to and from ports and border crossings.
It is proposed that the review be conducted in two stages that may take 12 to 18 months to complete. It’s unfortunate that the process will take that long, but it’ll be worth it to have definitive proof of railway incompetence and hopefully a road map for improvements.
The railways don’t want to be re-regulated, but they aren’t fond of competition either. That’s why they reject joint running rights, which are the best way to bring competition to the system.
If other players could use the rail lines and just pay a fee for access, there would be lower costs and better service. Unfortunately, no Canadian government in history has ever had the courage to seriously consider that approach.