Company particularly disturbed by proposed interswitching changes that
could undermine rail viability, investment and harm Canadian economy
MONTREAL, March 26, 2014 /CNW Telbec/ - CN (TSX: CNR) (NYSE: CNI)
expressed disappointment with Canadian government legislation tabled
today by Agriculture Minister Gerry Ritz and Transportation Minister
Lisa Raitt to increase regulatory intrusion and oversight for rail
grain transportation, and to introduce new rules for the extension of
interswitching limits in the rail industry.
Claude Mongeau, CN president and chief executive officer, said: "CN is
disturbed that the government has decided to punish railways with
re-regulation for an outsized crop and winter conditions totally beyond
their control. The legislation does not address the root cause of the
current grain situation and will do little to move more grain, now or
in the future. We also have deep concerns about the potential
consequences of the government's proposed new interswitching rules."
Interswitching involves the transfer of traffic from the lines of one
railway to the lines of another railway. Currently, where a shipper is
served by only one railway, the shipper is entitled to transfer its
traffic to another railway at a regulated rate set by the Canadian
Transportation Agency if the shipper's facility (either at origin or at
destination) is located any point within a 30-kilometre radius of where
the two railways connect.
Mongeau said: "The government is opening the door to extended
interswitching limits for specific regions or goods without any due
process to assess the potential consequences for railways and the
Canadian economy. This action could hit Canada's railways by opening
their business to unfair poaching by U.S. railways without any
reciprocity. Beyond causing financial harm to CN, it could drain
traffic away from Canadian ports and cause the loss of jobs, reduce
investment and undermine tax revenues across Canada."
In addition, the legislation would give the Canadian Transportation
Agency a highly intrusive role in railway operating matters in
arbitrating service-level agreements for specific shippers, with the
potential to cause costly inefficiencies in the system.
"CN firmly believes that commercial incentives and effective supply
chain collaboration are the best ways to promote rail investment in
infrastructure and resources to transport increased volumes of grain
and other freight."
Mongeau said the ministers' action represents a missed opportunity to
take an even-handed approach and encourage supply chain collaboration.
Instead, they decided to subject railways to an unnecessary layer of
reporting, oversight and regulation that can only result in greater
rigidity in the supply chain and undermine innovation.
"If the government is going to go through with this legislation, we urge
it to also subject grain elevator companies to greater regulatory
oversight in order to ensure proper coordination and adequate resource
allocation, with a view to creating surge capacity when crops are more
sizable than the norm."
Mongeau concluded: "It's a sad day for Canada when the government
decides to hit one sector of the economy in order to placate a vocal
constituency, instead of fostering sound commercial solutions to
strengthen Canada's transportation infrastructure."
CN is a true backbone of the economy, transporting approximately C$250
billion worth of goods annually for a wide range of business sectors,
ranging from resource products to manufactured products to consumer
goods, across a rail network spanning Canada and mid-America. CN -
Canadian National Railway Company, along with its operating railway
subsidiaries -- serves the cities and ports of Vancouver, Prince
Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the
metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago,
Memphis, Detroit, Duluth, Minn./Superior, Wis., 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 is "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, uncertainties and other factors which may cause the
actual results or performance of the Company or the rail industry to be
materially different from the outlook or any future results or
performance implied by such statements.
Important risk factors that could affect the forward-looking statements
include, but are not limited to, the effects of general economic and
business conditions, industry competition, inflation, currency and
interest rate fluctuations, changes in fuel prices, legislative and/or
regulatory developments, compliance with environmental laws and
regulations, actions by regulators, various events which could disrupt
operations, including natural events such as severe weather, droughts,
floods and earthquakes, labor negotiations and disruptions,
environmental claims, uncertainties of investigations, proceedings or
other types of claims and litigation, risks and liabilities arising
from derailments, and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the United States.
Reference should be made to "Management's Discussion and Analysis" in
CN's annual and interim reports, Annual Information Form and Form 40-F
filed with Canadian and U.S. securities regulators, available on CN's
website, for a summary of major risks.
CN assumes no obligation to update or revise forward-looking statements
to reflect future events, changes in circumstances, or changes in
beliefs, unless required by applicable Canadian securities laws. In the
event CN does update any forward-looking statement, no inference should
be made that CN will make additional updates with respect to that
statement, related matters, or any other forward-looking statement.
For further information:
& Public Affairs
Vice-President, Investor Relations