Warns shippers' demands during RFSR facilitation process for
intrusive regulation would stifle service innovation, damage
Canada's rail system
MONTREAL,
June 22, 2012 /PRNewswire/ -
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 the other.
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
regulation."
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 Ottawa:
- Legislate service parameters and outcomes;
- Give individual shippers effective veto power over service
standards and to enforce service standards through financial
penalties on railways, and
- 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.
Forward-Looking Statements
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, 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 factors that could affect the above
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
maters, or any other forward-looking statement.
SOURCE CN