The Fair Rail Freight Service Act

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Fair RailThe Fair Rail Freight Service Act

Are you familiar with Bill C-52? This is the Fair Rail Freight Service Act that was recently passed into Canadian law. The goal of the act was to improve rail service for any business that depends on the railways for their logistics. According to the law publications, here is how the lawmakers framed the bill’s objectives:

  • “Give freight shippers the right to enter into service agreements with railway companies and establish an arbitration process in the event of a dispute between a shipper and a railway company regarding such an agreement;
  • Streamline administrative procedures related to air transportation;
  • Update certain provisions related to the administration of the Act.”

How would this new bill be put into practical application for your shipping? Especially when you deliver large goods across the country?

Consider the canola industry. This segment of the agriculture industry depends greatly on rail service to transport massive amounts of seed, oil, and meal to the export processing depots. Without reliable rail service, the supply chain of this industry could collapse and it wouldn’t take much disruption to bring everything to a halt. Because of this, the Canadian Canola Growers Association (CCGA) were one of the leading advocates on getting this bill passed into law.

For too long, poor rail service across Canada has impeded growth for many companies. With the implementation of this bill, they are eager to see if the changes will have a lasting impact on their bottom line.

One of the key components of Bill C-52 is the ability for shippers to secure a service agreement. These agreements should spell out, in no uncertain terms, what is expected of the rail agency in regards to shipment protection and delivery deadlines. These agreement will also include a clause that will activate an arbitration process if there is a failure on either the part of the rail company or the individual businesses to finalize the agreement.

What is crucial to make a bill like this work is the penalty for poor performance. As indicated in Bill C-52, there could be fines of up to $100,000 charged against the rail agents for any case in which they drop the ball on a service agreement. Given some past occurrences, this could be a very costly clause if the railways don’t get their acts together. Will they pay the fines, improve service, or find ways around Bill C-52? Only time will tell.

To insure that the bill is being applied as it should, objective third party representatives will need to step in to monitor the situation. All of these work methods will come under intense scrutiny during the mandatory Canada Transportation Act review. This will happen next year and should shed light on all the areas that could benefit from improvement in the years to come. Hopefully, the railways will score high marks if they embrace Bill C-52 as a better way of doing business.