Warns shippers' demands during RFSR facilitation process for intrusive
regulation would stifle service innovation, damage Canada's rail system
MONTREAL, June 22, 2012 /CNW Telbec/ - Claude Mongeau, president and
chief executive officer of CN (TSX: CNR) (NYSE: CNI), today commended
the federal government's Rail Freight Service Review (RFSR), saying the
process provided the impetus for CN and the rail industry to re-engage
with customers to improve service from one end of the supply chain to
Mongeau said: "CN has achieved significant improvements in customer
service in the past three years and has initiated - and continues to
embrace - supply chain collaboration agreements and service-level
agreements with a wide array of stakeholders and customers, both large
and small. These agreements already cover a significant proportion of
CN's revenue base, in forest products, grain, metals, coal and
intermodal traffic. The launch of the Service Review was a large factor
in CN stepping up its game."
CN also actively supported the facilitation process directed by Jim
Dinning to produce a template for service-level agreements and enhanced
commercial dispute resolution mechanisms.
However, shipper representatives, or the associations they represent,
chose to advocate a regulatory agenda rather than work within the
commercial approached encouraged by Mr. Dinning to reach for the next
level in supply chain collaboration and service agreements. They
continually demanded new intrusive, regulatory intervention.
Mongeau asked the federal government, now that the facilitation process
is complete, to carefully weigh the future regulatory environment for
Canada's rail industry.
"Shippers' demands for greater government intervention in rail service
are clearly misguided. This regulatory stance represents a missed
opportunity to take supply chain collaboration to the next level.
"Make no mistake - the intrusive, regulatory-based approach to service
demanded by shippers would be unprecedented in a market-based economy.
Such an approach would send mixed signals to customers and suppliers
around the world about the government's approach to commercial markets
for rail transportation in Canada.
"CN strongly urges the federal government to favour commercial solutions
to rail service issues. Canadian railways are widely known
internationally for their efficiency and reliability - which is a key
asset for a trading nation like Canada. The nation should not put such
an asset at risk through additional burdensome and unnecessary rail
CN response to RFSR facilitator's recommendations
CN welcomes the key recommendations of the RSFR facilitator, Jim
Dinning, principally his call for Canadian railways and their customers
to embrace the Service Agreement Template as a guide to facilitate
service-level agreement negotiations. Mr. Dinning also recommended that
the railways publicize their commercial dispute resolution (CDR)
policies. CN has a CDR process available on its website, and invites
its customers to use the process to resolve disputes.
The objective of the facilitation process was to develop commercial
measures to enhance the effectiveness, efficiency and reliability of
the rail freight supply chain. During the facilitation process,
however, shipper groups demanded, among other intrusive tools, that
Legislate service parameters and outcomes;
Give individual shippers effective veto power over service standards and
to enforce service standards through financial penalties on railways,
Require the imposition of third-party service-level agreements if a
railway and customers cannot agree on the terms of a service agreement.
Mongeau said: "The shippers' regulatory stance would, if legislated,
deter railways' willingness to innovate and to work collaboratively
with customers to develop more ambitious service standards. It would
chill the current service improvement momentum and would damage the
supply chains that CN serves in the Canadian economy."
CN - Canadian National Railway Company and its operating railway
subsidiaries - spans Canada and mid-America, from the Atlantic and
Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver,
Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala.,
and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit,
Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul,
Memphis, and Jackson, Miss., with connections to all points in North
America. For more information on CN, visit the company's website at www.cn.ca.
Certain information included in this news release constitutes
"forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and under Canadian
securities laws. CN cautions that, by their nature, these
forward-looking statements involve risks, uncertainties and
assumptions. The Company cautions that its assumptions may not
materialize and that current economic conditions render such
assumptions, although reasonable at the time they were made, subject to
greater uncertainty. Such forward-looking statements are not guarantees
of future performance and involve known and unknown risks,
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regulators, available on CN's website, for a summary of major risks.
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