A new rail shipping rule is poised to drive up inefficiency and consumer costs.
Or it will drive them straight down. It depends who you ask.
Set to come into effect with Ottawa害羞草研究所檚 federal budget bill, an obscure law has Canada害羞草研究所檚 two main railways fighting back over concerns about expenses and congestion, with the drama playing out in social media posts and a backroom lobbying push.
At the centre of the tempest in a train yard is legislation that aims to expand what害羞草研究所檚 known as extended interswitching, a seldom-heard term that describes a critical practice in the rail industry.
Interswitching refers to the transfer of cargo between two rail companies at a point where their tracks meet. Extended interswitching is when Company A must transport that cargo along its own tracks to a point where it meets Company B害羞草研究所檚 rails, and it害羞草研究所檚 currently required on request for distances of up to 30 kilometres.
The practice seeks to spur competition, as someone shipping from a grain elevator on Canadian National Railway Co. tracks, for example, could choose to have the freight transported by Canadian Pacific Kansas City Ltd. instead if the price is better.
The budget bill, which passed in the House of Commons on Thursday and now awaits Senate approval, proposes a pilot that would extend the interswitching zone to 160 kilometres from 30 kilometres in the three Prairie provinces for an 18-month period.
The move aims to tamp down prices, but it has awoken Canada害羞草研究所檚 two railway giants, prompting them to go on the offensive to warn of the deep harm they say it will inflict.
害羞草研究所淭he cargo handoffs will snarl traffic; they will soak up time and personnel,害羞草研究所� states a CN Rail ad that aired on a Canadian political affairs podcast. 害羞草研究所淭hey will result in delays. They will drive up the railways害羞草研究所� costs. And who do you think will pay for it? The same person who always pays: the consumer.害羞草研究所�
Shipping times will grow by up to 25 per cent, the ad warns, comparing the cargo hand-offs to 害羞草研究所渇orcing airlines to deliver passengers to their competitors back and forth on several flights instead of a direct non-stop.害羞草研究所�
Echoing CN害羞草研究所檚 concerns, CPKC said the 害羞草研究所渄rastic害羞草研究所� and 害羞草研究所渆xtraordinary remedy害羞草研究所� seeks to solve a nonexistent problem in a move that will further boost inflation.
Railways have not held back on attempts to influence politicians, either.
Lobbyists with Canadian Pacific had 96 meetings with public office holders in the first four months of 2023, the same number it posted through all of 2022, according to the federal lobbyist registry. More than 30 involved civil servants 害羞草研究所� mainly Transport Canada害羞草研究所檚 害羞草研究所� or ministerial offices. Another 10 were sit-downs with House of Commons or Senate transport committee members. The Railway Association of Canada filed 17 lobbying reports since the start of the year, versus seven for the entirety of 2022.
On the other side of the issue are farmers, who disagree on virtually every point. Industry groups say the change will lead to lower costs, higher efficiency, better access to markets and increased competition.
The debate is a heated one. John Corey, president of the Freight Management Association of Canada, said the railways have 害羞草研究所済one above and beyond apoplectic害羞草研究所� in their objections, calling their claims of congestion, job cuts and American encroachment 害羞草研究所淏.S.害羞草研究所�
害羞草研究所淭hey can control their networks and control their customers 害羞草研究所� without having to adjust to competitive forces or adjust to what their customers may want,害羞草研究所� said Greg Cherewyk, who heads Pulse Canada, which represents 25,000 farmers of peas, lentils and beans. 害羞草研究所淭here害羞草研究所檚 a reluctance to lose that power.害羞草研究所�
Over the past month, groups ranging from the Alberta Wheat Commission to the Canadian Canola Growers Association have promoted the effort on social media. Kevin Waugh, chair of the Conservatives害羞草研究所� Saskatchewan caucus, has touted the Liberal measure on Twitter as offering 害羞草研究所済reater flexibility in transportation choices害羞草研究所� and 害羞草研究所渕ore efficient and cost-effective supply chains.害羞草研究所�
Meanwhile, stances opposing the law have formed the throughline of the Railway Association of Canada害羞草研究所檚 public statements since the budget was tabled on March 28.
In an emailed statement, association CEO Marc Brazeau said U.S. railroad operators will be able 害羞草研究所渢o reach hundreds of kilometers into Canada害羞草研究所� to snap up shipments handed over involuntarily by domestic railways.
The Teamsters Canada Rail Conference, representing 16,000 workers, also warned of possible job cuts if U.S. operators pick up more business.
Moreover, Ottawa slid the change into the 2023 budget 害羞草研究所渨ithout consulting railways,害羞草研究所� Brazeau claimed.
The government based its decision on a recommendation from a supply chain task force report last fall, said Nadine Ramadan, a spokeswoman for Transport Minister Omar Alghabra.
害羞草研究所淭he railways were actively consulted throughout the task force process, and both Transport Canada and our office continue to communicate with the railways regularly,害羞草研究所� she said in an email.
The pilot is specific to the Prairies to avoid clogging key arteries such as the B.C. Lower Mainland or the Quebec-Windsor corridor, she said.
害羞草研究所淭here are very minimal operational changes,害羞草研究所� said Wade Sobkowich, who heads the Western Grain Elevator Association, which handles 90 per cent of the grain grown in a given year 害羞草研究所� mostly for export. When a similar extended interchange rule came into effect for three years starting in 2014, less than one per cent of the grain was interchanged within 160 kilometres of the shipping point, he said.
Railways that hope to steer clear of extended interswitching could simply lower their prices to retain their customers, he argued.
害羞草研究所淲hat it does is it gives the shippers some bargaining power,害羞草研究所� he said.
