Transcript Slide 1
Advancing Railway Service within the Freight Logistics Supply Chain Presentation to the 5th Annual Canada Maritime Conference Cliff Mackay, President & CEO The Railway Association of Canada September 15, 2010 Montreal, Quebec TABLE OF CONTENTS 2 1. Rail Intermodal Supply Chain 2. Benefits of Rail Regulatory Environment 3. Federal Rail Freight Service Review 4. Going Forward 5. Conclusion 3 Bottom BottomLine: Line:Canada’s Canada’srailways railwaysoperate operateand andcompete compete within withinan anintegrated integratedNorth NorthAmerican Americanrail railsystem system 1. Rail Intermodal Supply Chain 4 Intermodal represents approximately 22% of railway carloads originated and is one of the fastest growing market segments , with growth of 30% over the last 10 years Rail is an economic enabler, rail has shifted from local to global transportation markets; partner with Canadian ports International trade continues to seek most cost effective routings – Vancouver, Montreal, Prince Rupert, Halifax – US port/rail and sourcing competition remain strong Canada a convenient entry point for shippers looking to access NAFTA marketplace; competitiveness of ports and railways is highly linked Customers now look at overall effectiveness, cost and reliability of transparent, integrated supply chains that require efficient interchange points between modes Bottom Line: Transportation systems are becoming globally seamless 2. Benefits of the Rail Regulatory Environment Benefits to Customers 5 Regulatory measures taken, primarily through the passage of the CTA(1996), have greatly benefited railways and customers: Labour productivity up by more than 200% since 1990 Increased investment in capital investmentinfrastructure and rolling stock Growth in competition for transportation services Canadian Railway Performance: 1990 - 2008 350 300 Index: 1990 = 100 250 200 150 100 50 0 Labour Productivity Productivity benefits shared with shippers through lower rates; Canada’s rail freight rates are among the lowest in the world Bottom Line: Railways are incented to meet market demands as opposed to following prescriptive regulations Source: Railway Association of Canada Note: 2009 data is not yet available Price Volume 2. Benefits of the Rail Regulatory Environment Benefits to Customers 6 Examples of Customer Protection Provisions: Level of Service: Obligations as defined under the Canada Transportation Act Interswitching and competitive line rates (CLRs): forms of regulated competition that are available to most shippers Final Offer Arbitration (FOA): Can be used by shippers to challenge the rate offered by the railway through a negotiation process Charges for incidental services: Opportunity to challenge charges Bottom Line: These provisions provide an appropriate balance of the interests of railways and the shippers that they serve. Good record, through the CTA, in resolving rate and service disputes. 2. Benefits of the Rail Regulatory Environment Benefits to the Railway Supply Chain 7 Rail has also benefited: Operating in a commercially based freight transportation system-ability to attract capital Significant increase in capital expenditures, average of over $2 billion annually since 2005investments have improved transit time for shippers Creation of short line railways. Prior to 1996 there were only 12 short line railways in Canada versus nearly 40 today Growth in intermodal services Bottom Line: We are now in a period of regulatory stability and railways are investingmeeting the investment imperative 3. Federal Rail Freight Service Review 8 The RAC supports a fact based approach to assessing rail freight service in Canada-much of the evidence related to rail service is anecdotal The RAC supports the Rail Freight Service Review Panel’s stated objectives: – – – to conduct a review of the rail-based logistics chain with a focus on service to Canadian shippers; to identify problems and issues with respect to railway service including those arising from other elements in the logistics chain and to identify best practices and how they might be expanded and importantly ; and to make recommendations based on analytical analysis that will include commercial solutions and if necessary, regulatory ones It must be acknowledged that rail is one component within the freight logistics supply chain The RAC is suspect of solutions that are “one size fits all” in nature, flexibility is needed to serve customer commercial requirements Bottom Line: The Panel must recognize and appreciate that there are costs associated with increased regulation 4. Going Forward 9 The RAC encourages the Rail Freight Review Panel to build upon successes that have been realized over the last 15 years. Commercial solutions are preferable to prescriptive regulatory recommendations The over-arching goal must be increasing supply chain coordination Anecdotal finger pointing about past events is not a path to continuous improvement Fact based clarity on accountabilities and performance across all supply chain participants is welcomed by the RAC Both railways have implemented a number of important initiatives in the last two years to bolster service, especially on first/last-mile performance Bottom Line: Forward looking, commercial recommendations from the Panel can improve Canada’s world class railway supply chain 5. Conclusion 10 The railway supply chain requires a stable regulatory environment in order to attract capital and make additional investments in the freight rail system The regulatory framework must provide the appropriate balance between all participants in the freight logistics system Transportation service providers must better leverage their modal advantagesbetter data and coordination is required It should be acknowledged that provisions which favour one group of customers may negatively impact other groups of customers Railways will continue to work with their customers in order to meet their needs The RAC is looking forward to a fact based outcome of the Federal Rail Freight Service Review 11