OTTAWA — Fed up by what they say are illegal billing practices by Canadian Pacific Railway Co. and Canadian National Railway Co., some of Canada’s largest shippers are appealing to the country’s transportation regulator for relief, the National Post reports.
The Canadian Industrial Transportation Association, which represents 200 rail users who spend $6-billion on freight transport a year, said it is filing a complaint today with the Canadian Transportation Agency over the railways’ so-called incidental or accessorial charges.
In its complaint, the association said the fees — which cover things such as railcar waiting times and switching — cannot be imposed unilaterally by the railways under the 1996 Canada Transportation Act.
“The rules and charges do not reflect competition and market forces; they reflect the behaviour and market power of monopoly service providers,” argued the group’s filing, a copy of which was obtained by the Financial Post.
“This is going to have a huge impact on railways because I think they’re very much relying on imposing accessorial charges,” said Lisa MacGillivray, managing director of the CITA.
David Goffin, vice-president, business and economics at the Canadian Chemical Producers’ Association, said 26 of 55 members surveyed “had serious concerns” about the trend.
“You know how banks charge these fees and jack them up from time to time without any consultation or discussion or opportunity for input before you find out that they’ve gone up on your bill … that’s pretty much what the railways have done,” he said.
“People are very mad, but one problem is that with only two rail systems in town, and a number of companies with some of their plants having access to only one, they are reluctant to go forward publicly.”
Railway shipper contracts are confidential so it is difficult to get information on tariffs, said Ms. MacGillivray. But in one instance, a grain shipper saw fees for holding cars rise to $75,700 a month from $7,600 during the year. In total, the charges can amount to hundreds of thousands of dollars for large shippers, she said.
Of more concern is that shippers often do not learn of the new charges until the 15-day appeal period for new fees has expired, and even when they do complain the railways stonewall, Ms. MacGillivray said.
With traffic volumes stagnant or declining, railways such as CN, which has promised earnings per share growth of 5% to 10% in 2002, must charge more to meet analysts’ expectations.
Another factor is the railways’ quest for efficiency. A key element here is improved railcar cycle times — or the speed with which cars are loaded, moved and unloaded. Shorter cycle times enable a railway to maintain fewer cars while deriving more useful work from each. Cycle times at both CN and CP have fallen sharply in recent years and by encouraging shippers through fees to move cars more quickly the railways can save money. Ms. MacGillivray said the association is not asking for penalties to be levied, nor does it expect fees to be rolled back even though CITA’s reading of the Transport Act has railways unable to impose new charges.
Instead, the group is hoping the agency will order the railways to consult with customers.
“Railways should have the ability to sit down and negotiate with their customers when they have some sort of reason to cover the costs they incur. . . [but] we’d like the accessorial fees to have some relationship with what the actual costs are and, second, there has to be some give and take,” said Ms. MacGillivray.