GRAIN TRANSPORTATION
The Estey Report
by Brian Doidge, Market Analyst, Ridgetown College, University
of Guelph
Federal Minister of Transport David Collenette released the final
Phase II report of Justice Willard Estey’s review of Canada’s grain handling and transportation system on December
30 and asked for comments on the 15 recommendations by February 1. Estey requests that the recommendations be considered
and acted upon as a package.
The following summary highlights key recommendations on issues relevant to Ontario grain and oilseeds with comments
in italics:
Ports and Waterways
recommends the federal government work with the Seaway authority to encourage utilization by two-way traffic (grain
downbound; iron ore and foreign steel slab imports upbound) and that the Canada Wheat Board (CWB) make every effort
to promote sales served by the Seaway. Sounds good, but nothing
specific enough to track performance or audit results; all heard before.
Producer-loaded Cars recommends retention in the Canada Grain Act and suggests legislation may be required
to facilitate producer access to sidings and Canadian Grain Commission grading at site. Essentially favours status quo and recognizes this as a necessary “defensive protection
for the farmer.”
Ownership of the Hopper Car Fleet recommends sale of cars not be undertaken until the railways’ right of first
refusal is removed or expired in 2001. Recommends disposal to “anyone in or outside the grain transportation business,
for their fair market value, in a process consistent with the terms of all applicable trade regulations, and so
long as the sale is conditional on these cars remaining available to the Western Canada grain industry.” Obviously since Estey is reserving the cars exclusively for western grain, the
position of the Ontario grain and oilseed sector – suggesting sale of the cars conditional on the new owner(s)
providing annual access by eastern grain interests to up to 500 cars on a priority, as-needed, commercial lease
basis – has been ignored.
Car Allocation
recommends that the current allocation system under the Car Allocation Policy Group (CAPG) be discontinued, replaced
by a commercially driven system between railway and shipper with appeal first to a new federally appointed “standing
referee” then to the Final Offer Arbitration system. Estey admits (on page 26 of 87) that “the allocation split
between Board and non-Board grains sometimes works to the detriment of non-Board grains.” The Estey report obviously made this comment with only the western grain industry in mind;
but inadvertently confirms the truth of the Ontario grain and oilseed position that preferential treatment granted
western rail car requirements in their regulated transportation environment is detrimental to Ontario grains and
oilseeds in our non-regulated transportation system. One has to wonder why the Estey report can see the implication
in the west, but is blind in the east.
Rail Rate Cap
recommends the regulated tariff or schedule of freight rates governing transportation costs for both non-Board
and Board grains on all rail lines west of Armstrong, Ontario be repealed. Interesting
and long over-due. A regulated transportation system in one quarter of North America impacts all participants in
the other free-market three quarters; this recommendation is a welcomed step in the right direction.
Competition Between Railways recommends simplification and clarification of Canadian Transportation Agency provisions
governing access to connecting rail lines. The objective is the opening of “the Canadian rail system to competition
by and between all competent railway operators, including short-line railways” by granting running rights on federal
railways (CP and CN) to any person (as opposed to only just another federal railway company), for compensation,
who can demonstrate competency. The Ontario Grains and Oilseed
Group proposed a similar granting of running rights over Class 1 lines to short-line operators in a submission
concerning reforms encompassed by the new Canada Transportation Act several years ago. This recommendation, if
applicable in eastern Canada as well, would be welcomed by shippers on the rapidly expanding short-line network
in Ontario as a means of ensuring competitive rail freight rates and access. If the obverse also pertains – in
which Class 1 railways can obtain running rights over short-lines – we could also see U.S. carriers moving north,
which would again be welcomed by Ontario shippers. The fly in the ointment in any event would continue to be level
of service provision and availability of hopper cars.
Final Offer Arbitration shortens the current 90-day appeal process to seven days, prohibits assignment of damages,
forces selection of one offer or the other, and requires equal splitting of arbitration costs. Great, if it applies in the east as well.
Branch Line Abandonment recommends, among other things, that some portion of the benefit gained by the railway
in being free of the losses incurred in operating the segment of the railway line being abandoned, be paid directly
to the communities affected by the closure. I wonder if Barrie,
Collingwood, Port Colborne, etc., would be interested in retroactivity?
Trucks and Road Repair recommends federal and provincial governments must retain and apply some portion of collected
fuel taxes to the construction, maintenance, and repair of the municipal grid roads and secondary provincial highways
... where those roads and highways are an integral part of the roads from farm to market. The Ontario Grains and Oilseeds Group has been requesting this from Ontario to ensure that
roads down-loaded to rural municipalities are maintained to provincial standard and rural economic growth not stunted
due the balkanization of rural road infrastructure.
Overall, some interesting and encouraging recommendations except for the blindness on eastern grain industry access
to the Canadian taxpayer funded federal hopper car fleet.
1