Feds respond to damning Rail Freight Service Review

WINNIPEG – The Canadian government says it will facilitate the development of a new template service agreement between railways and their customers, and will set up a new process to resolve commercial disputes.

It’s all part of the federal government’s response to a damning Rail Freight Service Review submitted to the Minister of State for Transport, Rob Merrifield, in December.

Speaking at an event in Winnipeg today, Merrifield, said the government originally launched the Rail Freight Service Review to ensure Canada has the rail system it needs to support a strong economy, and our domestic and international trade.

“Today we are following through on that promise with measures to enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain," he said.

Merrifield said the government has a four-pronged plan to improve rail service:

* initiate a six-month facilitation process with shippers, railways and other stakeholders to negotiate a template service agreement and streamlined commercial dispute resolution process;

* table a bill to give shippers the right to a service agreement to support the commercial measures;

* establish a Commodity Supply Chain Table, involving supply chain partners that ship commodities by rail, to address logistical concerns and develop performance metrics to improve competitiveness;

* lead an in-depth analysis of the grain supply chain to focus on issues that affect that sector and help identify potential solutions.

The review, launched in 2008 to address issues with rail freight service, involved consultations with 85 different stakeholders and 141 written submissions from across the rail-based logistics chain. An interim report was released in October 2010. The final report, written by Walter Paszkowski, David Edison and William LeGrow, was submitted to the government on Dec. 22, 2010.

The government accepted the 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.

While accepting the recommendation to initiate a six-month facilitation process, the government will go further than the panel outlined in its report. The facilitation process will not only focus on developing a streamlined commercial dispute resolution process but also develop a template service agreement, in consultation with shippers, railways and other stakeholders.

To support these commercial measures, the government will go further than the panel recommended and intends to proceed with tabling a bill giving shippers the right to a service agreement with the railways and provide a process to establish an agreement, should commercial negotiations fail. While it is always preferable to achieve commercially negotiated agreements, when this is not possible, the proposed bill would provide a recourse to establish such a service agreement between a shipper and a railway.

Transport Canada will establish a Commodity Supply Chain Table to provide a forum for exporters to address issues that affect the freight logistics system and develop supply chain performance metrics that would be publicly available.

And in collaboration with Agriculture and Agri-Food Canada, Transport Canada will lead an in-depth analysis of the grain supply chain to focus on issues that affect the sector and help identify potential solutions.