Over-regulating rail is over-simplification: ways to improve Canada’s supply chain

In any conversation about complex global supply chains, facts matter. So, let's start there. Canadian railways have invested more than $20-billion in supply chain capacity to improve fluidity over the last decade. That's roughly 20 to 25 cents of every dollar earned reinvested to improve a critical component of the supply chain, year after year. These private investments have produced innovations like high-capacity railcars, state-of-the-art locomotives, loop tracks at rail terminals, and predictive analytics. More importantly, these railway investments have also increased the capacity of the Canadian supply chain. By working collaboratively with others in the supply chain, including rail customers, railways have transformed grain shipping. CN and CP are delivering record grain volumes this fall, continuing a proud agricultural legacy, and moving other vital commodities and consumer goods. Marc Brazeau is president of the Railway Association of Canada. Photograph courtesy of the Railway Association of Canada Canadians can be proud that they have strong rail service with rates amongst the lowest anywhere in the world—18 per cent lower than in the United States and at least 45 per cent lower than in other industrialized countries around the world. Canadian railways are doing that with the best safety record in North America, while supporting their customers' competitiveness. Competition yields real benefits to the shippers and the global economy—despite, not because of, railways being among Canada's most regulated entities. Rail companies are subject to hundreds of rules and regulations, including reporting and transparency requirements. Railways operate "24 hours a day, seven days a week, 365 days a year. But a supply chain is only as strong as its weakest link. Every supply chain participant must do its share to maximize throughput and capacity. Events half a world away can affect what makes it to our doorsteps or local store, yet railways are upholding our end of the bargain by delivering $320-billion worth of goods each year. Data show that rail traffic, as measured in gross ton miles, grew by 25 per cent over the past decade—a rate double that of Canada's overall economy. This would not have been possible without railways' massive investments in track, vehicles, people, and technology, and they prove that rail is a key economic driver (not a bottleneck). These important facts demonstrate the significant contribution of railways to the Canadian economy. The rail industry does not need more regulation. There is no need to fix what is not broken, and there is a significant risk of breaking what does not need to be fixed. Extended interswitching—the transfer of traffic between two railway companies—is particularly ill-advised. If implemented, it would increase supply chain congestion, undercut past and future investments, and increase costs for all. At a time when Canadians are already grappling with 40-year-high inflation, the last thing we need is more regulation that will drive up consumer costs. It would be a step backward, as several reviews – including some by the federal government itself—have repeatedly concluded. This unfounded singling-out of only one component of the supply chain—rail—is a case of over-simplification by over-regulation. Our industry is complex. It performs at its best in an environment that enables private investment, not regulation that stifles it. With Canada's economy facing strong recessionary headwinds, we need efficiency, resiliency, and performance across supply chains. As a trading nation, our economic fortunes depend on all supply chain players getting this right. So, what can and should be done? There is, of course, always room for improvement, and railways support initiatives that will truly be effective. If we want to improve the supply chain in Canada, then all participants in the supply chain – including grain producers, shippers, and port terminals – should be brought together to understand the issues and develop the solutions together. Canada needs a fact-based approach that encourages investment and a holistic view of its global supply chain competitiveness. The government can look at both tax incentives and improvements to programs like the National Trade Corridors Fund. Decreasing red tape, expanding eligibility, and speeding approvals will encourage even more private-sector investment from all supply chain players to get goods to market. We must demand more innovation, accountability, and data-sharing from all players in the supply chain, especially at operational levels where it matters the most. This will require more rigorous scrutiny of each supply chain link—not just railways, but of trucking firms, warehouses, storage facilities, rail customers, port terminals, and others. Let's jointly address port dwell times—the time trains must wait for loading at customer facilities and unloading at ports. These times have doubled since the onset of the pandemic. Why? Labour shortages at ports, terminals, and warehousing facilities, and some outdated rules that the federal government can and should address urgently. For instance, workers at the Port of Vancouver – where it rains 165 days a year – don't load grain in the rain. Workers at nearby ports at Seattle and Portland do. We believe that this can also be done safely in Canada. When that issue is fixed, trains and ships will be moving more quickly, resulting in higher capacity for Canada's grain supply chain. Similarly, incentivize supply chain players to work seven days a week rather than five (as some now do), and you add almost 30 per cent supply chain capacity overnight. We have shared these suggestions and more with the federal government and remain open to all good, fact-based ideas to improve efficiency and capacity. But we have also been clear that heavy-handed regulatory interventions based on anecdotes rather than facts will increase costs and deter investment. Canadians expect that when they buy something, they'll get it. When they produce something, they trust it will get to market. The recommendations we've outlined here will ensure we can collectively keep delivering reliably and efficiently for Canada and Canadians. Marc Brazeau is president of the Railway Association of Canada. The Hill Times

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Over-regulating rail is over-simplification: ways to improve Canada’s supply chain

The rail industry does not need more regulation. There is no need to fix what is not broken, and there is a significant risk of breaking what does not need to be fixed.

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