Legislate The railways wouldn’t agree to service agreements, so shippers want Ottawa to legislate
That’s because it clearly demonstrates federal legislation is required to make it happen.
“The Dinning process has done a great job informing the next stage, which is drafting legislation,” Cherewyk, one of two officials representing agricultural shippers during the Dinning process, said in an interview May 3.
“By not establishing an agreement on the mandatory elements of a service level agreement (with the railways)… we have given a pretty clear signal to the government that their legislation will have to provide that guidance.”
Some shippers, including Roger Larson, president of the Canadian Fertilizer Institute, is disappointed the “facilitated” Dinning process failed to deliver what shippers were seeking. But Cherewyk said he wasn’t surprised. After all, shippers had previously failed to convince the railways to enter into service level agreements voluntarily.
Federal rail legislation could be introduced this fall, Transport Minister Denis Lebel told reporters earlier in the day.
“It’s very difficult to have a timeline before the summer… If it’s in the fall, it will be in the fall,” Lebel said, speaking to reporters by conference call from Germany.
The government’s timeline makes sense, Cherewyk said. Former Alberta treasury minister Jim Dinning, who was appointed by the federal government Oct. 31, 2011 to get the railways and its customers to develop a template for service agreements and a streamlined commercial dispute resolution process, held his last meeting April 16. Now he’s preparing a report, which will assist the government in drafting legislation designed to make railways more commercially accountable to their customers and in so doing, improve railway efficiency.
The government has also promised to consult with shippers and the railways. With Parliament expected to recess for the summer in late June, there isn’t a lot of time to consult and prepare the legislation, Cherewyk said.
Meanwhile, the shippers’ coalition formed in 2006, has spelled out in writing to Dinning exactly what it wants in the legislation, including the right to service level agreements. Shippers also want regulations specifying elements that will be part of the agreements as well as a system to establish agreements and resolve disputes that arise from them.
“As someone described it, ‘we’re only asking for a definition for services we’re buying from the railways,’” Cherewyk said.
Railway performance has improved since Ottawa launched its Rail Freight Service Review in 2008. The railways say new regulations aren’t needed. But Cherewyk said shippers fear once the focus is off rail service, performance could again suffer. Shippers face penalties when they fail to meet rail requirements and argue the railways need to face similar discipline. If rail service remains good, penalties or other regulated “backstops” won’t come into play, he said.
The Dinning process stems from the service review, which resulted in the federal government announcing in March 2011 measures to enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain.
The government accepted the review panel’s commercial approach and its four key elements:
- Railways should provide 10 days’ advance notice of service changes.
- Railways and stakeholders should negotiate service agreements.
- A fair, timely and cost-effective commercial dispute resolution mechanism should be developed.
- Supply chain performance should be monitored through enhanced bilateral performance reporting between shippers and railways, and through public performance reporting.
Last month during the Canada Grains Council meeting Mark Hemmes president of Quorum Corporation, which monitors the grain handling and transportation system for the federal government, complimented the government for its careful and methodical approach to developing new rail legislation. He predicted the approach will result in good policy-making.
Cherewyk agrees. Instead of holding town hall meetings to hear anecdotal complaints about rail service, the review panel examined data.
Shippers are steadily moving the ball down the field getting closer to the end zone, he said. Cherewyk said their success so far stems from the strong consensus among all rail shippers — from grain, to coal, to cars — on what needs to happen.
“There have been rail service complaints forever, what’s different now is we’re united on where we’re coming from and the government has responded,” he said. “It’s very positive.”