OTTAWA, Ont. – Bill C-52, the Fair Rail Freight Service Act, introduced in Parliament this week, likely has enough support to survive intact through the legislative process and be passed into law by late spring or early summer, according to Bob Ballantyne, who as head of the Coalition of Rail Shippers played a key role in the bill’s introduction.
The bill, which gives companies which ship goods by rail the right to a service agreement with railways and also creates an arbitration process to establish an agreement when commercial negotiations fail, received first reading this week and will probably go through its second reading after the Christmas break. After that it will go to the standing committee on transportation, infrastructure and communities for further review and then likely through stakeholder hearings before receiving its third and final reading before being passed into law.
“I think support for it is pretty strong and pretty wide spread. We’ve had conversations with the Conservative government and the other main parties. The indication is that the other parties will support this,” Ballantyne told CT&L.
Ballantyne, who is also the long-time leader of the Canadian Industrial Transportation Association, added it’s likely rail interests, which oppose the bill, will push for significant amendments such as requiring shippers to prove that substantial commercial harm is being caused by their current rail relationship before an SLA is imposed or limiting SLAs to situations where the shipper is captive to one railway. But Ballantyne doesn’t believe the bill will be watered down.
“I don’t think there is much danger of that. I think the government is committed to keeping it the way it is. Even in situations where there are 2 rail suppliers, it may not be an absolute monopoly but the competition is very limited,” he said.
Both CN president and CEO Claude Mongeau and CP president and CEO, E. Hunter Harrison remain opposed to a legislative approach to service level agreements, arguing that “commercial undertakings, coupled with a stable regulatory regime, remain the best approach to promoting supply chain coordination and investment.”
Ballantyne, however, counters there is good reason why shippers need legislative support when it comes to setting up service level agreements.
“Most shippers would say that they would love for that (commercial service level agreements) to happen. The reality is we can’t get the railways to negotiate on a reasonable basis. They employ a take-it or leave-it approach. The only way to rebalance the power is though a legislative backstop,” he said. “This will be important in re-balancing the bargaining power between the railways and their customers and lead to a more precise definition of the service that the railway is obliged to provide. I think it should lead to service improvements, but how quickly and how effectively remains to be seen.”
Ballantyne also countered rail concerns the legislation will lead to inefficiency.
“There is more than one shipper’s commodities on most trains and the average shipper is not trying to set up the train to work like dedicated trucking. That kind of traffic has been leaving the railway industry since the rise of the trucking industry,” he argued.
He also stressed the importance of the arbitration process part of the bill, calling it fundamental to getting the railways to negotiate. In addition the penalty provision of fines up to $100,000 should also lead to an improvement in service quality, he said.
Key to getting Ottawa to act on such legislation was the coordination and collaboration amongst the 16 organizations making up the Coalition of Rail Shippers, which has been lobbying for such legislation since 2006.
“With 16 associations in the group, people had to put water in their wine for some situations,” Ballantyne acknowledged.
He sees the success of their mission as good indication the group with stay together a long time. The Transport Canada Act is up for review in 2015 and he sees the Coalition playing a central role in that review.
As successful as the Coalition’s lobbying for legislated service level agreements has proven to be, the shipper groups did not get all they wanted.
For example, the bill’s provisions do not apply to shipments carried beyond the Canada-U.S. border. And the legislative proposals do not cover existing confidential contracts, forcing companies to potentially wait for years before they can access the measures outlined in the legislation.