The Forest Products Association of Canada (FPAC) is calling on the federal government to act quickly and decisively on the problem identified by the Rail Freight Service Review panel. Early in 2008, the federal government committed to addressing the deficiencies in rail service to rural industries. After two and a half years of process and deliberation the time has come to act.
The interim report from the Rail Freight Service Review panel correctly recognizes "there is a need for change" and that "improvement in rail service is required". It goes on to make several positive recommendations that would help address some of the service inadequacies faced by all Canadian shippers. However the panel is relying on CN and CP to voluntarily bring in the changes and says the government should only consider regulatory measures after 2013.
"If the railways were serious about improving service they would have done so by now. Service is poor because there is no effective competition. A delay is simply unacceptable and a deep blow to resource communities in rural Canada that depend on rail shipping," says Avrim Lazar, the President and CEO of FPAC. "Why would the government want to give the railways another three years of virtual monopoly status, three more years to underserve and overcharge, and three more years of failing to adequately serve rural communities. The government needs to do its job now."
He points to the panel report that notes "the major cause of rail service problems is railway market power, which leads to an imbalance in the commercial relationships between the railways and other stakeholders."
"It simply makes no sense for the panel to identify the problem as the lack of commercial competition in the railway system and then suggest giving the railways three more years to find commercial solutions." says Lazar. "From our perspective the government did the right thing in setting up the panel. The panel did the right thing in making concrete recommendations for change. The one thing that is terribly wrong here is the notion of deferring action for another three years."
Most resource shippers are located in remote regions of the country where only a single rail company can transport their products. For the forest products industry, most mills served by rail are captive to such a rail monopoly. The government launched the review of rail freight service two years ago in recognition of the need to create conditions to help Canada's rural economy get the necessary rail service to prosper. At the outset of the review process, the forest products industry was assured that the government would act to improve rail service at the earliest opportunity.
Lazar says regulatory action is needed to ensure a strong commodities sector that can compete in international markets, create wealth to benefit all taxpayers and preserve jobs and communities.