A Canadian shippers group supports the federal government’s plan requiring freight railroads to provide service data as a way to improve visibility into supply chain flows.
The Forest Products Association of Canada (FPAC) says the data could help improve efficiency along the supply chain by highlighting which areas are prone to bottlenecks and might need additional investment from the government through Canada’s National Trade Corridors Fund.
“As an industry, we understand that congestion and service delays are inevitable when extreme weather occurs or when transportation partners are dealing with employees [out] sick because of COVID-19,” Joel Neuheimer, vice president of international trade, transportation and human resources, said Wednesday in a statement on FPAC’s website.
“But in the last few years, the increasing frequency and severity of disruptions to critical services have become untenable. Concurrent to this is the recurring problem of Canadian mills not getting enough rail cars to meet ongoing demand, which erodes confidence as more and more customers in Canada and around the world are turning to forest products for their climate benefits.”
FPAC’s request to the government comes in response to calls by Transport Canada in May to amend the Transportation Modernization Act. The act introduced temporary requirements for larger rail carriers to report service and performance information, as well as waybill data, but Transport Canada is seeking input on making those data requirements permanent. Doing so could significantly improve the service and performance indicators, while providing an opportunity for smaller rail carriers to have fewer data requirements to meet, the federal agency said.
The data’s primary purpose is to ensure long-haul interswitching measures are being met, according to Transport Canada.
In FPAC’s July 19 submission to the federal government’s request for public comments on the data collection, the shippers group provided 11 recommendations. Among them:
- Traffic volume data should include the subdivision level whenever possible.
- If no performance standards are defined for the rail carriers, then Transport Canada should require four-week and 52-week rolling averages for key data points by commodity and/or car type, including origin and destination dwell times; number of loaded cars not moving en route; segment transit times; loaded cars not moving by major destination area; empty cars online; locomotive fleet status; and number of train-operating employees available to move traffic.
- Data should include greater detail on fleet sizes and storage, including the average number of railway-controlled cars in service versus those in storage or being ordered.
- Detailed data on operating employee count by region.
- Data on loaded cars received at interchange by commodity and/or car type.
The full list of recommendations is available here.
Although not mentioned in the federal government’s request for input on the data regulations, FPAC also urged Transport Canada and the Canadian Transportation Agency to more closely monitor on-time performance of the larger freight rail carriers by compelling them to provide data across commodity groups and geographic areas as part of a broader effort to encourage rail carriers to improve operations.
Through this data collection, Transport Canada can then produce an annual report that includes input from the rail carriers on any significant performance issues in the past year.
“Without strong enforcement of performance standards, the lack of competition in Canada’s rail and marine markets will always undermine our country’s global competitiveness,” FPAC said in its July submission to the federal government. “To that end, we believe the Canadian Transportation Agency (CTA) needs to be better equipped to take a more aggressive and proactive approach to enforcing level-of-service obligations. We have seen strong examples of this approach in the United States, with the Surface Transportation Board and Federal Maritime Commission being empowered to challenge carriers’ underperformance under the Biden administration.”
FPAC suggested the creation of a national steering committee consisting of supply chain participants that would identify top bottlenecks and determine how those could be addressed, either through industry or public investments.
FPAC also mentioned additional amendments in its July submission. One of those recommendations is repealing long-haul interswitching (LHI), which uses a methodology that produces an average captive rate rather than a truly competitive rate for shippers, according to FPAC.
Interswitching is when a shipper has access to one freight railroad but wants access to a nearby competing freight railroad in order to cultivate a competitive pricing environment. A shipper can receive that access at an interchange between the two railroads. LHI pertains to interswitching beyond a 30-km radius of an interchange, while interswitching is similar to reciprocal switching in the U.S.
“[LHI] has served as a useful tool for rail carriers in arguing that a complainant shipper looking to access a remedy like final offer arbitration has access to alternative remedies — when, in fact, access to LHI offers no meaningful advantages,” the group said. “For that reason, FPAC believes that the repeal of LHI would be more useful to shippers than attempting to modify the remedy.”
The shippers group also provided recommendations for marine shipping and for-hire trucking.
Canada’s minister of transport should invoke the authority to look into the behavior of container shipping line operators, given the cost increases and logistical bottlenecks that have occurred in recent years, according to FPAC. An alternative is for the Canadian government to repeal the Shipping Conference Exemption Act, which FPAC views as anti-competitive.
For-hire trucking recommendations include working across federal and provincial governments to identify areas that might inhibit the recruitment of truckers and harmonizing driver-training requirements as well as vehicle weights and dimensions.
FPAC’s Neuheimer cited a recent survey of member companies in which 88% of respondents said rail service and fulfillment issues are “having a negative impact on customer confidence and global competitiveness of [Canada’s] forest sector.” Although some of these issues might have been related to the COVID-19 pandemic, others predate it. Furthermore, the two largest railways, CN (NYSE: CNI) and Canadian Pacific (NYSE: CP) “effectively operate dual monopolies across the country.”
“If we truly want to drive a green recovery, it is imperative that we accelerate change across our country’s vital trade infrastructure,” Neuheimer said. “Canada’s forest products sector believes that the federal government can play a much more effective role in addressing critical supply chain issues through fostering productive dialogue among stakeholders, enforcing performance standards for transportation carriers and investing to ensure adequate Canadian trade infrastructure.”
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