AWC reaffirms need for accountability in grain transportation system
FOR IMMEDIATE RELEASE
(Calgary, Alberta) September 15, 2016 –The Alberta Wheat Commission (AWC) has reaffirmed its support for improved railway accountability through the introduction of reciprocal penalties as the Government of Canada wraps up its consultations on the Canada Transportation Act (CTA) Review on September 16.
In a submission to Transport Minister Marc Garneau, AWC urges the government to implement a model that would provide shippers the ability to negotiate penalties and contract terms equal to those that are being charged by the railways today. The Commission says the Emerson report failed to recommend a mechanism to address the imbalance in market power between railways and shippers.
“Now is the time when our government can provide long-term solutions to our grain transportation system, which will ultimately advance Canada’s economic growth,” says Kevin Auch, AWC Chair. “The current imbalance of market power allows railways to dictate operational terms instead of operating in a competitive commercial arrangement.”
AWC promotes three major recommendations for improving the transportation system:
- Service Level Agreements (SLA’s) that include mandatory reciprocal penalties for failure to perform to binding contract terms. The ability to achieve agreements will allow shipping companies to negotiate contracts that include penalties equal to those being charged by railways today. SLAs will ensure costs due to poor railway performance are not downloaded to farmers by shippers.
- Retain the Maximum Revenue Entitlement (MRE) to protect producers against excessive rate increases. Freight costs are transferred to the producer by shippers. Retaining the MRE will ensure these costs do not prevent producers from being competitive in world markets.
- Continuous improvement of interswitching. AWC was pleased with the government’s actions towards extended interswitching measures from Bill C-30. Moving forward, we ask that the extended interswitching limits be made permanent and improved efficiencies are reviewed, such as increasing interchange capacities or extending limits to 250 kilometers to enable modern day train efficiencies.
“AWC believes these key recommendations will enhance Canada’s grain transportation system and create an environment that enables a competitive atmosphere to ensure Canada’s farmers are able to move their grain in a predictable and efficient manner,” adds Auch.
As Transportation Ministers from across Canada sit down on September 28, AWC will continue to push the need for improved railway accountability through effective SLAs that include reciprocal penalties. AWC believes enabling competitive commercial measures will provide long- term solutions to Canada’s grain transportation system.
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