Canada's House of Commons passes Class I-opposed 'fair' service act

Canadian Minister of Transport, Infrastructure and Communities Denis Lebel late last week hailed the passage of the Fair Rail Freight Service Act by the House of Commons.

The legislation would encourage railroads and shippers to negotiate service agreements. If negotiations aren't successful, shippers could "trigger a fast and efficient arbitration process" to establish terms of service through the Canadian Transportation Agency (CTA), Lebel said in a press release. An administrative monetary penalty of up to $100,000 could be issued by the CTA for each violation of an arbitrated service-level agreement.

The legislation would encourage railroads and shippers to work together, increasing the efficiency of the supply chain through enhanced collaboration, said Lebel. The bill also would help strengthen the Canadian economy and make the nation more competitive in international trade, he added.

"Once adopted, this new act will contribute positively to relations between shippers and railway companies, and enhance the effectiveness, efficiency and reliability of the entire rail freight supply chain," said Lebel.

CN and Canadian Pacific officials disagree. They oppose the legislation, which they believe would place innovation and supply chain collaboration at risk, and result in potentially unintended consequences for the rail industry and rail shippers.

There is no evidence of systemic rail service performance problems in Canada that warrant the federal government's imposition of level-of-service obligations on railroads through increased regulation, CN and CP officials believe.