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Archived - Government of Canada acts to improve rail freight supply chain (Winnipeg)

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No. H029/11
For release - March 18, 2011

WINNIPEG — At an event held in Winnipeg today, the Honourable Rob Merrifield, Minister of State (Transport), and the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food, met with stakeholders from across the rail-based freight supply chain to announce the Government of Canada’s response to the Rail Freight Service Review. The review was launched in 2008 to address ongoing issues with rail freight service, raised by users of the rail supply chain.

“Our government is focused on the economy. By launching the Rail Freight Service Review, our government made a commitment to help ensure Canada has the rail system it needs to support a strong economy, and our domestic and international trade,” said Minister Merrifield. “Today we are following through on that promise with measures to enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain.”

The review was conducted in two phases. The first phase comprised analytical work to achieve a better understanding of the nature and extent of problems and best practices within the supply chain, including those experienced by shippers, terminal operators, ports and vessel operators, with a focus on railway performance. An independent panel, chaired by Walter Paszkowski, led the second phase, which included extensive consultations with stakeholders across the supply chain. The panel’s final report was also made public today.

The government accepts the panel’s commercial approach and intends to implement the following steps to improve the performance of the entire rail supply chain:

  • 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;
  • 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 that sector and help identify potential solutions.

“Railways, farmers and all shippers depend on one another for their survival and profitability, and we’re making sure they have the tools they need to capture efficiencies and strengthen that partnership,” said Minister Ritz. “Today’s announcement is further evidence of our government’s consistent commitment to put farmers first and make sure the agriculture industry remains strong.”

“The Rail Freight Service Review has been a very important undertaking for Canada’s rail system, involving close consultation with key stakeholders,” said Minister Merrifield. “I would like to thank the panel for its diligent and thorough work. At the same time, I urge every stakeholder in the supply chain — including the railways and shippers — to work cooperatively to implement the commercial approach.”

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Contacts:

 

Robert Lynch
Office of the Honourable Rob Merrifield
Minister of State (Transport)
Ottawa
613-991-0700

Media Relations
Transport Canada, Ottawa
613-993-0055

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Backgrounder

GOVERNMENT OF CANADA RESPONSE TO THE RAIL FREIGHT SERVICE REVIEW

The Rail Freight Service Review

The Rail Freight Service Review (the review) was launched in 2008 to address ongoing issues with rail freight service and fulfil a government commitment as part of the 2008 process that amended the Canada Transportation Act. The amendments focused on shipper protection provisions related to rates and charges.

The review was conducted in two phases: analytical work to achieve a better understanding of the nature and extent of problems within the logistics chain (including shippers, terminal operators, ports and vessel operators), followed by consultations with stakeholders on issues and recommended solutions. This second phase was led by an independent panel of three eminent persons. Mr. Walter Paszkowski, who was appointed chair, has an extensive public policy background. Mr. David Edison has extensive railway experience and Mr. William  (Bill)  LeGrow has extensive experience as a rail shipper.

The panel consulted with 85 different stakeholders and received 141 written submissions from across the rail-based logistics chain. On October 8, 2010, the review panel released its interim report to the public. Then, after considering feedback from stakeholders, the panel submitted its final report to the Minister of State (Transport) on December 22, 2010.

Government of Canada Response

The government accepts 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.

The government’s response also goes further by taking a broader supply chain perspective:

  • First, 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.
  • Second, 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.

The government’s response combines a commercial approach, supported by a proposed bill to give shippers the right to a service agreement and takes a broader supply chain perspective to continue addressing logistical issues and develop public performance metrics. That is the best way to achieve timely, flexible and customized solutions, improve relationships and enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain.

Further information can be found on the Rail Freight Service Review website.

March 2011

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