November 6, 2023 | Circular No. 11597

Dear Member,

Transport Canada has initiated a rail review in order to obtain stakeholder input into some of the recommendations of the National Supply Chain Task Force, especially as relates to the role of the Canadian Transportation Agency in addressing shipper concerns regarding rail service and rate issues.

As part of this process, TC has issued a discussion paper, which focuses on eight key topics, including administrative monetary penalties, railway contracting processes, grain and winter contingency planning, extended interswitching, the maximum revenue entitlement for grain,  and shortline railways.

Although not all of these topics have a direct bearing on Federation members, we believe it is important to provide Transport Canada with comments on those questions that may be relevant from an ocean carrier perspective.  We are therefore seeking member input on the following questions in particular:

Railway contracting practices:

    • Background: Transport Canada is concerned that the confidential contracts that railways negotiate with shippers often include clauses which prohibit shippers from using the remedies for addressing rail issues that are available to them under the Canada Transportation Act (such as use of the final offer selection process).
    • Question: Is the above a concern for members (such as container lines) who contract with the railways for the door-to-door movement of cargo?  If yes, should TC implement mechanisms to prohibit the railways from incorporating such clauses into their confidential contracts with shippers?

Railway surcharges:

    • Background: Transport Canada is seeking stakeholder input on whether the Canadian Transportation Agency  (CTA) should have greater power to review ancillary fees (such as fuel surcharges) that are incorporated into confidential contracts between railways and shippers.
    • Question: Is this an issue that is of interest to ocean carriers, and if yes, should the CTA have more / expanded ability to oversee ancillary fees and similar charges?

Final offer arbitration:

    • Background:  Although final offer arbitration (FOA) is one of the remedies that is available to shippers to settle rate disputes with railways, this remedy is not available for the intermodal movement of containers, unless such containers arrive at (or depart from) a Canadian port that is served by only one railway.
    • Question:  Should the availability of FOA should be expanded to include all intermodal movements of containers?  Is this a remedy that container carriers would consider using if it  became available to them?

Grain and winter contingency plans:

    • Background: Under the Canada Transportation Act, both CN and CPKC are required to each produce an annual Grain Plan, which provides an assessment of their ability to move grain within the upcoming crop year; and a Winter Contingency Plan, which describes the contingencies they have made to move traffic when faced with winter weather conditions.
    • Question: Are the above plans useful to ocean carrier operations, and if yes, what elements are most useful?  Are there any additions or enhancements that should be made to future releases of these plans?

Canadian Transportation Agency investigative powers:

    • Background:  Transport Canada is aware that shippers are often reluctant to use the formal complaint mechanisms that are available for potentially resolving railway issues, due mainly to the fear of retaliation from the railways in the form of less favorable rates and / or service.  One way that the government has sought to address this is by giving the Canadian Transportation Agency (CTA) the power to initiate its “own motion” investigations without having to wait for a complaint to be filed by a shipper, which enables it to investigate not only shipper-specific service issues, but also systemic issues impacting multiple shippers and / or commodities and / or regions.
    • Question:  Is the CTA’s “own motion” investigative power a potentially useful tool for addressing railways issues from an ocean carrier perspective?   Are there ways this process could be improved and or expanded in order to make it more useful?

Given that Transport Canada is seeking comments on these questions by November 30th, we would appreciate receiving member input by November 20th at the latest.  We will incorporate any input we receive into our submission to TC, which we will share with members before submitting at the end of the month.


Karen Kancens
Vice President