Transportation capacity issues a major concern for FPAC

With a growing oil-by-rail program, a record grain crop last season and a Western Canadian lumber industry that is working not only to fill the growing demand for lumber in Asia but to, once again, meet the growing demand from a revived U.S. housing market, Canada’s railways are facing capacity problems. Recently, the Forest Products Association of Canada (FPAC), an Ottawa-based industry group that “provides a voice for Canada’s wood, pulp, and paper producers nationally and internationally in government, trade, and environmental affairs,” joined grain farmers and grain handling companies in urging the federal government to encourage increased railway capacity north of the border. In a statement the group said: “The Forest Products Association of Canada is calling for enhanced shipping capacity and a “right-sized” transportation infrastructure to ensure all sectors can get their goods to market to support jobs and growth.” “The forest products industry is one of the sectors now facing downtime and lost revenue because of the lack of an adequate transportation system in this country,” the President and CEO of FPAC, David Lindsay said. “Canada’s prosperity depends on exports yet we often can’t ship our products to market in a timely fashion.” He noted that the grain industry in Canada exports $21 billion of product each year while the forest products industry exports $28.5 billion. “We have made tremendous strides into new markets such as Asia, and this has supported jobs and growth, especially in rural Canada,” said Lindsay. “However our export agenda is being constrained by insufficient transportation capacity.” Forest Product Exports The forest sector is counting on expanding export markets to help it reach its ambitious goal of generating an additional $20 billion in economic activity by the end of the decade. “FPAC remains open to working with transportation carriers and others especially in the resource sector to find solutions to the lack of adequate shipping capacity,” he said. “Together we can find ways to right-size the transportation system so that Canada is considered an efficient and reliable global supplier. That means investment in capacity, enhanced remedies for poor service and a focus on greater competitiveness.” The association’s roadmap for the next few years is a document called Vision 20/20 and the group recently published its report card for the industry. Included in that report the FPAC says: “The opportunity to extract increased value from every tree harvested is dependent on ingenuity, continuous innovation and aggressive pursuit of new products and new markets. The activities of individual companies will continue to propel this growth. But no one company can do it alone. During the first two years of Vision2020, FPAC identified many ways that government policy, ongoing research and effective partnerships can assist in reaching the ambitious goal of generating an additional $20 billion in new products and markets: Industry can: • Develop and implement transformative strategies and invest in innovative technologies and practices across the forest products sector. • Monitor global shifts and articulate clear research priorities based on market needs, commercial opportunities and response to global competition. • Ensure company trade priorities are identified and positioned in the context of the government’s free trade negotiating agenda. • Create business connections and partnerships with manufacturers such as the auto and chemical sectors and small and medium enterprises (SMEs) to maximize opportunities in the bio-economy. Governments can: • Enable a right-sizing of Canada’s transportation system to meet growing demand for rail service and maximize delivery through the supply chain such as ports and border crossings. • Maintain successful innovation partnerships through support for FPInnovations and for university and college research to help facilitate transformation and increase the success of adopting commercial scale innovation. • Continue successful initiatives that bridge funding gaps in the innovation system. This includes the Sustainable Development Technology Canada (SDTC) Tech Fund that supports clean technology projects. • Expand and enhance free trade agreements on a global basis especially to key emerging markets such as China and India, maintain the support of the broad network of trade offices abroad and promote the “Canadian Brand” around the world to attract global partners to the industry. • Review pension deficiency regulations in order to make them seamless from one jurisdiction to another, responsive to a low interest rate environment and competitive with the practices now in place in the USA. Driver & Equipment Shortages In an interview with AJOT Joel Neuheimer, Director of Transportation for the association, said: “On the trucking end of things, in the last couple of years we’ve been working a lot more closely with the Canadian Trucking Alliance on things like the driver shortage on both sides of the (Canada/U.S.) border. And, one of the things is when Canadian truckers haul stuff down to the U.S. they can’t move any Canadian equipment that’s already there and they have to wait until the trailer they took down is ready to come back.

“If they were (allowed to move other Canadian equipment) to other locations in the U.S. where they could be used, that would be something that would make the process more efficient. “We’ve asked both governments if they can make these changes to the law that allow Canadian truckers to do more once they get down on that side of the border.” Also, Neuheimer said another issue was the strike by independent container truckers at Port Metro Vancouver. “That was a nightmare for our industry and for many other sectors. “Between the Province and the Feds they really have to do a better job of getting that sorted out.” He said the association is also concerned about what appears to be a lack of capacity in the rail system and pointed out two government initiative coming up fairly soon to deal with that issue. The first, coming out of Ottawa’s rail freight service review, is a new group called The Commodity Supply Chain Table. “That will be an opportunity for a number of sectors to sit down with the railways and the terminals and, hopefully, pull together the kind of metrics to get a better handle on how well or how poorly the system is working. The other is a statutory review of the Canada Transportation Act that is scheduled to take place this summer. “No announcement yet … which is another significant process about to kick off and it will be the rail components that will be dealt with first.” Neuheimer said statistics show that Canada’s lumber exports to China, for example, have gone up 375% over the last decade, which is an indication of how the railway capacity issue is rapidly changing and should be reviewed.