Claude Mongeau, CN president and chief executive officer, said: "CN is disturbed that the government has decided to punish railways with re-regulation for an outsized crop and winter conditions totally beyond their control. The legislation does not address the root cause of the current grain situation and will do little to move more grain, now or in the future. We also have deep concerns about the potential consequences of the government's proposed new interswitching rules."
Interswitching involves the transfer of traffic from the lines of one railway to the lines of another railway. Currently, where a shipper is served by only one railway, the shipper is entitled to transfer its traffic to another railway at a regulated rate set by the Canadian Transportation Agency if the shipper's facility (either at origin or at destination) is located any point within a 30-kilometer radius of where the two railways connect.
Mongeau said: "The government is opening the door to extended interswitching limits for specific regions or goods without any due process to assess the potential consequences for railways and the Canadian economy. This action could hit Canada's railways by opening their business to unfair poaching by U.S. railways without any reciprocity. Beyond causing financial harm to CN, it could drain traffic away from Canadian ports and cause the loss of jobs, reduce investment and undermine tax revenues across Canada."
In addition, the legislation would give the Canadian Transportation Agency a highly intrusive role in railway operating matters in arbitrating service-level agreements for specific shippers, with the potential to cause costly inefficiencies in the system.
"CN firmly believes that commercial incentives and effective supply chain collaboration are the best ways to promote rail investment in infrastructure and resources to transport increased volumes of grain and other freight."
Mongeau said the ministers' action represents a missed opportunity to take an even-handed approach and encourage supply chain collaboration. Instead, they decided to subject railways to an unnecessary layer of reporting, oversight and regulation that can only result in greater rigidity in the supply chain and undermine innovation, he said.