EXTENDED INTERSWITCHING
- The temporary pilot extension of the interswitching limit in the Prairies supports rail competition by providing regulated access to additional railways
- This also enhances shipper leverage to help them secure better rates and service from their local carrier
- The pilot will provide the government with additional time and evidence to support decision-making on a longer-term approach, supported by new data.
SUPPLEMENTARY MESSAGES
- The National Supply Chain Task Force recommended that the interswitching distance be expanded Canada-wide, to enhance rail competition.
- We have taken a more targeted approach, with the extension limited to the Prairies, to limit potential impacts in critical areas like Vancouver and the Quebec-Windsor corridor.
- The approach will be similar to the approach taken in 2014-2017, supported by collection of additional data to inform decision-making on a longer-term approach.
- As the pilot rolls out, shippers and railways will also be encouraged to track and submit data to Transport Canada on the usage and impacts of the measure, to support the department’s longer-term analysis of the measure.
UPDATE
The Railway Association of Canada (RAC), CN and CP have expressed significant concerns with Budget 2023’s announcement of a temporary extension to the interswitching distance in the Prairie Provinces. Transport Canada officials have met with representatives of all three stakeholders. Each of them have raised major concerns over the re-introduction of extended interswitching, including interswitching resulting in limiting revenues and creating a disincentive for investment. The Railways and RAC also noted concern regarding the pilot encouraging a diversion of traffic onto U.S. carriers (BNSF in particular). Railways have publicly expressed the view that extended interswitching will provide limited benefits and instead greater negative outcomes in the form of increased GHG emissions, increased congestion, and longer transit times, worsening the supply chain issues the Task Force was supposed to be addressing.
BACKGROUND
- The National Supply Chain Task Force was established last winter, following a number of challenging years for Canada’s supply chains, and mandated to consider a wide range of issues and develop solutions. One of its key recommendations was to expand the interswitching distance, Canada-wide.
- Regulated 30 km interswitching provides shippers within a 30km radius of an interchange with guaranteed access to another carrier at that interchange, at a regulated rate set by the Canadian Transportation Agency, without an application. The approach provides cost certainty, and meaningful leverage to shippers in their negotiations with railways.
- The temporary extended interswitching pilot announced in Budget 2023 will mimic the previous extended interswitching initiative from 2014-2017, which was introduced on a temporary basis to addresses challenges with grain movement following a record grain crop and harsh winter in 2013-2014. During 2014-2017, of all traffic moved in the prairie provinces, less than 1% was moved under the extended interswitching measure.
- The extension will give eligible shippers located on CN or CP lines in the prairie provinces access to the measure at CN and CP interchanges. Those shippers will benefit from easier access to an alternate carrier, as well as added leverage in their negotiations with railways, to improve their service and rates.