SUPPORTING RAIL COMPETITION
Q. What is extended interswitching and how will it help shippers?
A. Interswitching is a competitive access measure that enables rail shippers to access an alternate rail carrier at a nearby interchange, at a regulated rate set by the Canadian Transportation Agency. The current interswitching limit is 30 km. Extended interswitching would increase that limit to 160 km in the prairie provinces. Giving more shippers access to this measure is expected to enhance competitive dynamics, providing shippers with alternatives for rates and service.
Q. The National Supply Chain Task Force recommended extended interswitching across the country. Why is this pilot limited to the prairie provinces?
A. While that report called for interswitching to be extended across the country, this more geographically and time-limited pilot will limit the potential for unintended consequences, particularly in the already congested Vancouver-Kamloops and Quebec-Windsor corridors. If there is a significant increase in interswitching movements as a result of this extension, this could have negative impacts on system fluidity and congestion. For this reason, it is prudent not to increase the interswitching limit in those areas where congestion is already a concern, until more analysis can be completed.
Q. This Government had previously decided that extended interswitching was not the best option. Why are you proposing to do this again?
A. The National Supply Chain Task Force was clear that more needs to be done to improve the resilience of rail-based supply chains and ensure that rail shippers are able to access the service that they need. Canada’s supply chain is facing new pressures versus those almost 10 years ago. Implementing a temporary extended interswitching pilot will allow the government to reassess, through an evidenced-based approach, the benefits of extended interswitching, alongside an assessment of any potential negative impacts on the fluidity and throughput of the broader supply chain. The Government is supportive of the outcome that works best for the supply chain and will use the data collected from this pilot to make those decisions.
Q. Will this temporary measure address underlying issues, or help shippers outside of the prairie region?
A. The Government of Canada understands that reliable rail service is critical, not just in the prairies, but across the country. While the extended interswitching pilot is expected to provide immediate benefits to shippers in the prairies, additional steps are also being taken to provide a more holistic understanding of the issues facing the freight rail sector, and to inform further actions to improve resilience and reliability. For example, on January 9th the Minister of Transport announced amendments to the transportation information regulations. Upon coming into force on April 4, 2023, these amendments will usher in a new era of transparency around freight rail performance in Canada. Canada’s main railways will be required to report weekly on an enhanced suite of service and performance information, which will provide greater insight and accountability into freight rail performance in Canada.
Further, Budget 2023 announced new investments to ensure that Canada’s transportation and supply chain is resilient and reliable, bringing goods to our communities and enabling our businesses to export their products around the world.
To further strengthen Canada’s transportation systems and supply chain infrastructure, Budget 2023 proposes to undertake a number of concrete actions, including:
- Provide $27.2 million over five years, starting in 2023-24, to Transport Canada to establish a Transportation Supply Chain Office to work with industry and other orders of government to respond to disruptions and better coordinate action to increase the capacity, efficiency, and reliability of Canada’s transportation supply chain infrastructure
- Provide $25 million over five years, starting in 2023-24, to Transport Canada to work with Statistics Canada to develop transportation supply chain data that will help reduce congestion, make our supply chains more efficient, and inform future infrastructure planning
- Collaborate with industry, provinces, territories, and Indigenous Peoples to develop a long-term roadmap for Canada’s transportation infrastructure to better plan and coordinate investments required to support future trade growth