By Western Grain Elevators Association
Canada’s grain shippers support the passage of the Extended Interswitching provisions in Bill C-47 – the Budget Implementation Act. The legislation extends the distance of the existing provision from 30 km to 160 km in the prairie provinces, where it gives shippers in all sectors who are physically located on a single rail line, the ability to automatically seek competing service and rates from an alternate carrier.
Over the 18-month pilot, it is expected to bring about an increased level of competition among railway service providers, and represents an incremental gain for supply chains and the Canadian economy more broadly. “The provision recognizes that competitive tension is one of the basic tenets of a well-functioning marketplace,” said the WGEA’s Executive Director Wade Sobkowich. “Shippers prefer to use the rail carrier that services their facility first and foremost, however, the provision offers an alternative when service or freight rates are less than adequate.” Sobkowich noted that the existence of competitive alternatives is a reality in all other sectors, and serves to encourage better service and pricing.
At the end of 18 months the WGEA will be asking the federal government to make the provision permanent regardless of how often physical interchanges occur. The intent of Extended Interswitching is to create competitive alternatives, which places an inherent discipline on all parties to take steps to avoid an interswitch in the first place. In its renewal, the WGEA will also be asking for an increase to the distance to give all shippers at least one other competitive shipping option.
“This measure is a very important start to the government’s full response to the Supply Chain Task Force’s report,” said Sobkowich. “In addition to making Extended Interswitching permanent, the WGEA looks forward to seeing additional measures that drive service levels toward what should occur in a demand-driven supply chain.”
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