Forest Industry To Government: Fix Rail Service Now

Rural communities and resource industries that were battered and bruised by the recent recession have been hoping for light at the end of the tunnel—at least the rail tunnel. They were counting on the federally-appointed Rail Freight Service Review panel to do what it had been established to do — create conditions to help Canada’s rural economy get the necessary rail service to prosper.      

The interim report from the panel makes positive recommendations that would indeed go a long way to improve freight rail service for Canadian shippers —proposals such as a fair dispute resolution process that could help save jobs and mills in the struggling forest products sector. However the panel is counting on the good will of CN and CP to implement the recommendations. In essence, it is asking rural Canada to wait until 2013 for the government to get engaged and consider regulatory action to impose the necessary change. This is completely unacceptable.

Simply stated, most resource shippers are located in remote regions of the country where they are effectively captive to a single rail company to transport their products. This lack of competition has resulted in excessive freight rates, inadequate service and even suffocating price hikes during the recent economic downturn. The unfair rail service monopoly has hurt Canada’s ability to reach international markets, to create wealth to benefit all taxpayers and above all to preserve jobs and communities. The past few years have been especially brutal for rural resource communities with the forest products sector alone losing tens of thousands of jobs and closing scores of mills. The companies, the employees and the suppliers have all strived to find cost savings right down to counting paperclips.  But the big obstacle remains the cost of transportation and the reliability of service.   

The government launched the review two years ago after recognizing the problem with rail freight service.  The panel has also concluded there is “need for change” and “further improvement in rail service is required”.  However shippers, employees and resource communities were counting on the review panel to ask the government to bring in that change and improvement now, not years from now.    

The stakes are high.   The government did the right thing in setting up the review panel.  The panel did the right thing in making concrete recommendations. The only thing that is terribly wrong is the proposal to give the railways another three years to voluntarily change their behaviour before the government considers action.  The railway monopolies have never showed much willingness to work with shippers in the past  ̶   why give them more time?

At the outset of the review process, the forest products industry was assured that the panel would act to improve rail service at the earliest opportunity.  That’s what rural Canada urgently needs.  The onus is now on Members of Parliament to insist that the government act NOW to ensure an effective, competitive, and efficient rail system.  For the sake of rural Canada and its economic future, let’s hope they get on with it.