Does competitive or ‘open’ access to freight railways make sound economic sense? If not, what alternatives exist? This paper looks at the options facing policymakers determined to keep Canada’s future rail policy on track.
Document Highlights
The federal government is currently preparing a new transportation policy based on the recommendations of the Canada Transportation Act Review (CTAR) Panel. The greatest policy debate for railway is over the issue of competitive or ‘open’ access to freight railways, which is industry jargon for allowing guest railways to operate on CN and CPR track—regardless of whether CN and CPR like it.
The CTAR Panel reviewed the issue in detail, and found that open access does not make economic sense for Canada. After reviewing a number of policy options, the Panel settled on two remedies. First, it recommended a new competitive connection rate (although the trigger for the rate needs a tighter definition). Second, if the shipper does not want this rate, it can still seek final offer arbitration. With these two remedies in place, competitive access is redundant and would likely cause more problems than it resolves.
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