Freight Rail Service And Rates: A Summary
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In Canada, shippers have a right to railway service, and options for resolving service and rate disputes with federally-regulated railway companies (railways). If you are a shipper, here's what you should know.
The railway must give you an adequate and suitable level of service
If you have freight you want to move by rail and access to a railway line, any railway using that line must accept your business, as long as you pay the applicable rate (see below). The railway must:
- promptly pick up, carry, and deliver your freight;
- have the right cars and equipment to move or transfer your freight; and
- handle your freight with care.
When picking up, carrying, delivering, or transferring your freight, the railway must give you "adequate and suitable" service. This means the highest level of service that can reasonably be provided in the circumstances.
You must pay the rate and possibly other charges
You must pay the railway the rate that applies to your freight. This means the rate for the haul. You may also have to pay other charges – for example, for any add-on services you need. Such services include things like storage and asset use (sometimes called “demurrage”).
If you are shipping crude oil, you must pay an extra amount per tonne, called a levy. The railway collects the levy from you, then passes it to the Government of Canada. It goes into a special fund that helps pay for damages caused by crude oil accidents in situations when a railway's insurance does not cover all costs.
You can choose between a contract and a tariff
You and the railway can work out specific service terms and a rate in a confidential contract, or you can rely on the railway's public tariffs. These are documents listing the standard rate, charges, and terms for different railway services.
If you need two (or more) railways to get your freight to its destination, you may have a right to a contract or tariff involving both/all of them.
You may have a right to interswitching
Your right to rail service may include a right to interswitching (the transfer of freight between two railways). Interswitching helps ensure that shippers have fair and reasonable access to service from more than one railway, which can increase competition in the system. There are two kinds of regulated interswitching:
- interswitching at a regulated rate for shippers whose traffic origin or destination is within 30 kilometres of an interchange (or is found by the CTA to be "reasonably close" to it), and
- long-haul interswitching (LHI), which is not limited to 30 kilometres, although other conditions apply.
We can help you resolve disputes
We help resolve disputes about rail service and rates. For instance, you can turn to us if:
- you believe the rail service you are receiving is less than adequate and suitable;
- you have tried without success to negotiate a rate or service terms with the railway; or
- you think the terms or charges in a public tariff are unreasonable.
These are a few examples only. We deal with many kinds of shipper-railway disputes.
You can choose the kind of help you want: informal or formal
If you need our help, we encourage you to try our informal services, facilitation and mediation. Our experts will work with you and the railway – often by phone, email, or videoconference – to help you reach an agreement. These services are confidential and free of charge.
If informal methods don't resolve the issue – or if you or the railway don't want to try them -- you can ask us in writing to have someone with decision-making powers make a binding decision that resolves your dispute. The two ways of doing this are arbitration and adjudication.
Arbitration is used when you and the railway cannot agree on important issues like future service terms and rates. An Arbitrator sets these for a fixed period of time going forward. Like facilitation and mediation, arbitration is confidential, but there are times you and the railway would have to cover some of the costs. There are two main types of arbitration:
- Service Level Arbitration (SLA) is used when you and the railway have tried unsuccessfully to negotiate service terms. If your case is eligible, an Arbitrator will set the terms for you, considering terms you and the railway each propose, as well as other terms that might be appropriate. The terms will last one year unless you and the railway agree on a different length of time.
- Final Offer Arbitration (FOA) is used when you and the railway have tried unsuccessfully to negotiate rates and related conditions. If your case is eligible, you make your best offer, the railway makes its best offer, and an Arbitrator selects one or the other. The rate the Arbitrator picks lasts for whatever period you and the railway agreed on when you applied. If you didn't agree, you as the shipper can choose, when you apply, a period of up to two years. Note that in some cases, you can apply for FOA with other shippers who have the same issues with the railway.
Adjudication looks back at some past or ongoing situation where you think the railway failed or is failing to meet its obligations to you. If the Adjudicator agrees this is the situation, they can order a remedy. The remedy will depend on your case, but could be:
- a way to correct the situation, and/or
- compensation for expenses you have incurred because of a service failure.
For example, an Adjudicator who finds that charges or terms in a tariff are unreasonable could replace them with reasonable charges or terms, to correct the situation.
Adjudication is free. It is not confidential unless you or the railway can show the Adjudicator that releasing certain information would be harmful. The Adjudicator would have to agree.
We have the power to investigate suspected service failures
In addition to offering the above services, the CTA has the power to investigate whether railways are meeting their service obligations without receiving any formal complaints. This is called an "own-motion" power.
You cannot apply for an "own-motion" investigation the way you can apply for arbitration or adjudication, but we monitor potential problems in the rail system that may require one. This includes, for example, suspected widespread or systemic service failures that affect many shippers or the economy.
More information is available
The above descriptions are very general only. For more details, see our full guide to freight rail service and rates. You can also visit our rail disputes page or call our Rail Help Line at 1-877-850-7148