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Forestry Industry Asks for Rail Service to be Regulated

by on October 15, 2010

Regulations.

A word that elicits a collective shudder from the offices of rail executives, it seems, and a wake-up call after hitting the snooze button one too many times on unresolved problems and unanswered complaints.

Bad rail service must be fixed now, forestry industry tells Ottawa,” reads a headline of a recent newspaper article written by Derrick Penner.

The forestry industry has made it clear that they want their complaints about Canada’s major railways service affecting their businesses addressed through legislation now, rather than having to wait another three years for proposed “commercial measures” to take effect, as recommended by a federal review panel of freight rail services before further regulating railways.

The recommendations made by the panel include voluntary minimum notification for rail service changes, negotiated good-faith agreements, more transparent service performance reporting, and having the railways and shippers to establish their own dispute resolution process.

B.C. – based Ainsworth Lumber Company told the review panel that the level of service it gets depends on the location of its mills. In areas where both CN and CP compete, the company says that service is generally good. But in locations off rail mainlines, Ainsworth faces restricted loads and inconsistent delivery of rail cars.

“Such service failures are chronic and rarely any week goes by without having such an occurrence at one or other of our operations,” said Ainsworth’s GM of transportation, Sean Mullany. Often the company is “only made aware of a failure when no cars show up at our facilities.”

Forest Products Association of Canada CEO Avrim Lazar told the review that forestry industry companies’ problems with rail service include not knowing how many railcars will show up as compared to the actual order placed with the railway, as well as changes to services.

Lazar stated that these are common complaints, industry-wide.

Lazar also noted that there currently is not much of a dispute resolution process in place, to address problems with rail service. He characterized the current attitude being projected by the rail companies as being “If you don’t like it, see who else is going to send you a railcar.”

Interestingly, both CN and CP denied behaving monopolistically, despite the review panel report implicating them otherwise, and despite the service discrepancies reported by the forestry industry.

If it is true as CN and CP assert that no further regulations are needed to fix this serious issue, why was it allowed to get to this point in the first place?

And why does it take the looming threat of possible regulation to get the rail industry’s attention?

The forestry industry has seen some difficult years. It’s unconscionable that the rail service that the forestry sector depends upon has hobbled, not helped this industry fully to get back on track.

The forest industry might want to note that it took a full 7 years to re-regulate the railways concerning the issue of noise and vibration to help protect communities after previous legislation was overturned by rail interests themselves. Self-regulation failed… 

When we read statements made by CP in response to the panel’s interim report that it has “embarked on initiatives to improve reliability,” the question that immediately came to mind was why was it allowed to slip in the first place, given the litany of complaints to the railway. Why the delay in addressing the problem? Never mind turning this around to use as a case against the need to regulate. Too little, too late.

Both CN and CP state that they are responding to customer’s complaints and improving service: further regulation is unnecessary. From the sounds of what forestry is saying, given such terms is relation to poor service as “chronic” or “industry wide,” the response has been slow to say the least. Why should forestry be forced to wait another three years in uncertainty?

Railways have a troubling pattern of setting their interests above everyone else’s, it seems. We have rail customers who don’t know how much of their order of rail cars are going to show up, or if it will show up. We have communities negatively affected by rail operations carried out in such a way as to be oblivious at times to the residents around them, and we have rail employees concerned about some of the conditions under which they work.

We also have rail companies – CN notably – recently trying to dictate to a customer that they will change their business hours and stay open 24 hours a day, 7 days a week in order to best accommodate the interests of the railway. In this instance, Northgate Terminals of Vancouver objected to the hours of operation that CN sought to impose upon it, and appealed to the Canadian Transportation Agency. Northgate won. CN then took the issue to the Federal Court of Appeal. Northgate won. CN says it’s studying the ruling, and hopefully some new and modern approaches to customer service that sway away from the approach of, “It’s a privilege for you to do business with us. What can you do for us today?”

We really can’t think of any other Canadian industry that is simultaneously at odds with customers, residents and even some of its own employees, and still thinks that it is a good business practice to play a frantic game of catch up whenever whispers calling for regulation fester into an angry roar.

Talk about not being able to see the forest for the trees…

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