Watchdog probes commodity discrimination by rail

January 30, 2019

By: The Working Forest Staff

The Canadian Press — A preliminary report from the Canadian Transportation Agency appears to confirm shippers’ complaints about a relatively high number of restrictions on commodities they tried to move by rail through the Vancouver area.

Industry groups have accused Canada’s two largest rail companies of “discriminatory treatment” against some commodities, the report notes, highlighting the use of embargoes that temporarily stop traffic at specific loading points or interchanges.

The report is part of a CTA investigation launched on Jan. 14 following complaints from shipping associations about rail service in B.C.’s Lower Mainland over the past three months.

In a statement last week, Canadian Pacific Railway Ltd. chief executive Keith Creel called the investigation’s abrupt launch “irresponsible.”

He pointed to record grain shipments and a busier port in recent months as global trade tensions work in Canada’s favour, with a Chinese tariff on U.S. soybeans and retaliatory European tariffs on U.S. corn spurring more Canadian exports.

Canadian National Railway Co. has cited harsh weather and the complex supply chain that feeds into Canada’s busiest port.

A two-day hearing is slated for next week, with presentations scheduled from both railways and several shipping associations.

Drawing on interviews and data, the report states that some shippers view the railways’ exceptionally high embargo numbers as “an effort to push through the maximum overall volume” at the expense of forestry products and other commodities.

CP imposed no embargoes between October and January for three straight years, then issued three embargoes in the past three months, according to the report.

CN issued a combined 20 embargoes during that three-month period in 2017-18 and 2018-19, nearly seven times more than it imposed during the same period in the two prior years.

CN shipments of grain, chemicals and containerized loads have mainly gone up over the past four years in the October-to-January period, while forestry product volumes went down 11%, the report shows.

The report also notes that since 2015, shipment volumes in the Lower Mainland have increased 15 %  during the three-month period for CN, and 19 % for CP, straining supply networks as demand for Canadian commodities continues to grow in Asia.

Derek Nighbor, head of the Forest Products Association of Canada, warned the railways this week against playing “commodity whack-a-mole.”

He said the embargoes cost the pulp and paper industry $500 million in contract penalties, shipping charges, rebooked routes and storage costs.

Both railways have pointed to congestion problems in the Vancouver area and said they will co-operate with the investigation.

 

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