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Report on Business Transportation agency launches probe into rail service in Vancouver area

Canada’s transportation regulator has launched an investigation into railway service in British Columbia’s Lower Mainland after receiving complaints from companies that rely on the Port of Vancouver to reach markets.

Marc Garneau, federal Transport Minister, has authorized the Canadian Transportation Agency to hold public hearings in January at which rail companies and shippers will testify, the independent tribunal and regulator said on Monday.

The hearings mark the first time the agency has used new powers granted by the federal government last year. The CTA said it determined an investigation was warranted based on information from shipper associations and other parties. The CTA said the probe will examine if some commodities are given preference over others, and whether railways in the Vancouver area are fulfilling their service obligations to customers.

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"One of the CTA’s responsibilities is to help ensure an efficient, smoothly running national rail system. The public hearing will give parties an opportunity to submit evidence as the CTA considers whether railway companies operating in the Vancouver area are fulfilling their service obligations and, if they aren’t, what remedies should be ordered,” said Scott Streiner, chairman of the CTA.

Complaints from railway customers about rail service are not new, but have become more pressing as Canada reaches new overseas trade agreements that drive up freight volumes and place new demands on all parts of the supply chain. A major Asian trade deal, the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, came into force at the end of December and is expected to open new markets to Canadian crops and other commodities. Canada recently reached a similar trade pact with Europe.

Derek Nighbor, chief executive officer of Forest Products Association of Canada, said rail delays in B.C.’s Lower Mainland have cost producers more than $500-million in the past two years. “We are seeing an unprecedented number of trade deals being signed and significant federal investment in infrastructure. Now is the time to understand why things are not working as well as they should be. We need to ensure the system in the Lower Mainland is able to respond to the current and future needs of Canadian exporters,” Mr. Nighbor said.

A Canadian National Railway Co. spokesman said the Montreal-based carrier would co-operate with the CTA. “The investigation should take into account the full supply chain and the dozens of players involved – including the railroads that operate in the investigated areas, the dozens of transload and ocean terminals at the waterfront, as well as the impact that heavy rain and high winds had on operations and on the downstream timeliness of vessels,” CN’s Jonathan Abecassis said.

CP said in a statement it “takes great exception” to being included in the investigation. “We have not been made aware of any formal complaints to the CTA relating to our service in Vancouver, nor has the CTA been in touch with us prior to launching this investigation,” Keith Creel, CP’s chief executive officer, said in a news release.

In an interview, a spokeswoman for the CTA declined to comment on details of the investigation nor the companies involved but said it is focused “on rail.”

The port of Vancouver is Canada’s biggest port, and is served by three major railways, CP Railway, CN Railway and BNSF Railway Co. It is home to 27 marine terminals, including container docks and several grain facilities owned by Cargill Inc., Richardson and others.

Wade Sobkowich, head of the Western Grain Elevator Association, said grain companies have been seeing decent service from CN and CP on the Prairies, but rail cars have been backed up before entering Vancouver’s North Shore grain docks served by CN. Shippers are being forced to pay vessels to sit at anchor waiting to be loaded at a cost to the grain companies of $35,000 a day, Mr. Sobkowich said by phone. These are charges that are levied after the farmer has been paid for the crops, and must be borne by the entire supply chain. “We don’t know what the problem is and why it’s happening,” he said, adding the service has improved in the past couple of weeks.

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