Regulations Amending the Transportation Information Regulations (Freight Rail Data): SOR/2022-278

Canada Gazette, Part II, Volume 157, Number 1

Registration
SOR/2022-278 December 15, 2022

CANADA TRANSPORTATION ACT

P.C. 2022-1321 December 15, 2022

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, makes the annexed Regulations Amending the Transportation Information Regulations (Freight Rail Data) under subsections 50(1)footnote a and (1.01)footnote b of the Canada Transportation Act footnote c.

Regulations Amending the Transportation Information Regulations (Freight Rail Data)

Amendments

1 The Transportation Information Regulations footnote 1 are amended by adding the following after section 50:

PART XIII

Class 1 Rail Carriers

Interpretation

51 The following definitions apply in this Part.

class 1 rail carrier
has the same meaning as in section 6 of the Act. (transporteur ferroviaire de catégorie 1)
class I rail carrier
has the same meaning as in section 8. (transporteur ferroviaire de catégorie I)
class II rail carrier
has the same meaning as in section 8. (transporteur ferroviaire de catégorie II)
FSAC
means the five-digit Freight Station Accounting Code. (FSAC)
SPLC
means the Standard Point Location Code. (CULD)
STCC
means the seven-digit standard transportation commodity code. (CTBT)

Report to Minister — Traffic Information

52 (1) A class 1 rail carrier that is also a class II rail carrier and earns revenue in Canada for the reporting period must provide to the Minister a report by electronic means that sets out the following information with respect to any traffic that is moved by railway car:

(2) The rail carrier must provide the report to the Minister on a monthly basis, no later than the last day of the month following the month to which the information relates.

(3) The first report is to be provided for the month in which this section comes into force.

Report to Minister — Waybill Information

53 (1) A class 1 rail carrier that is also a class I rail carrier must provide to the Minister by electronic means a report that sets out the following information with respect to any traffic that is moved by a railway car:

(2) The rail carrier must provide the report to the Minister on a monthly basis, no later than the last day of the month following the month to which the information relates.

(3) The first report is to be provided for the month in which this section comes into force.

Report to Minister — Service and Performance Information

54 (1) A class 1 rail carrier that is also a class I rail carrier must provide to the Minister by electronic means a report that sets out the following service and performance information with respect to rail traffic moving on its network during the reporting week:

(2) Instead of providing the report set out in subsection (1), the BNSF Railway Company must provide to the Minister by electronic means a report that includes the information set out in paragraphs (1)(a), (b), (c) and (k).

(3) The rail carriers referred to in subsections (1) and (2) must provide the report to the Minister on a weekly basis, for the period from Monday to Sunday, no later than 5 p.m. Eastern Time, on the Wednesday following the week to which the information relates.

(4) The first report is to be provided for the first full week of activity following the day on which this section comes into force.

55 The information referred to in section 54 is to be reported in accordance with the methodologies and requirements set out in Schedule XII.

2 The Regulations are amended by adding, after Schedule XI, the Schedule XII set out in the schedule to these Regulations.

Coming into Force

3 These Regulations come into force on the 90th day after the day on which they are published in the Canada Gazette, Part II.

SCHEDULE

(Section 2)

SCHEDULE XII

(Section 55)

Rail Service and Performance Indicator Methodologies and Requirements

PART 1

Interpretation

1 The following definitions apply in this Schedule.

bad order
means the status or designation assigned to railway rolling stock, whether railway cars or locomotives, that indicates that the asset is unfit for service. (mauvais état)
carload traffic
means traffic, whether empty or loaded, that is not intermodal traffic. (trafic de wagons complets)
fertilizer
means traffic classified under STCC 2812534, 2818142, 2818146, 2818170, 2818426, 2819173, 2819454, 2819815, 2871235, 2871236, 2871238, 2871244, 2871313, 2871315 and 2871451. (engrais)
final railway facility
means the railway facility from which a railway car is delivered to destination. (installation ferroviaire finale)
intermodal traffic
means intermodal containers, whether empty or loaded, regardless of the type of good that is being transported in the containers. (trafic intermodal)
railway facility
means railway-owned infrastructure such as a terminal or yard. (installation ferroviaire)
reporting week
means the period from Monday to Sunday. (semaine de déclaration)
terminal area
means a top 10 railway facility and the stations, interchanges, and other railway facilities that the rail carrier serves, either directly or indirectly, from that top 10 railway facility. (zone terminale)
through train
means a train that has the same railway cars when it enters and exits a railway facility. (train direct)
top 10 railway facilities
means the top 10 of the rail carrier’s railway facilities with the highest volume throughput, as calculated in accordance with section 31 of this Schedule. (dix installations ferroviaires principales)
western grain
has the meaning assigned by paragraph (a) of the definition grain in section 147 of the Act. (grain de l’Ouest)

2 The following are the types of commodities that are used in the methodologies:

3 The following are the detailed types of commodities that are used in the methodologies:

4 The following are the equipment types that are used in the methodologies:

5 The following are the geographic regions that are used in the methodologies:

6 The following are the periods of dwell time that are used in the methodologies:

7 When calculating the indicators set out in Part 2 of this Schedule, the following cars are to be included:

8 When calculating the indicators set out in Part 2 of this Schedule, the following cars are to be excluded:

PART 2

Indicators

General

9 All indicators described in this Part are to be reported to one decimal place.

10 (1) The first report must be accompanied by a list of the events that are used in the calculations of indicators set out in sections 15 to 18, 20, 21, 23, 25 and 26 of this Schedule.

(2) The first report must be accompanied by a list of the STCC of the commodities that fall into each type listed in sections 2 and 3 of this Schedule.

(3) The list of events must be updated following any subsequent change and submitted with the next report.

Cars Online

11 (1) The report must set out the following:

(2) Instead of the information required by subsection (1), the report for the BNSF Railway Company must set out, for all carload traffic and intermodal traffic, the Canada-wide daily average number of cars and intermodal containers online for the following:

12 The number of cars and intermodal containers referred to in section 11 of this Schedule includes cars and containers that the reporting rail carrier has placed for transfer at an interchange to another rail carrier until they are picked up by that other carrier and excludes cars and containers placed for interchange to the rail carrier by another rail carrier until they are picked up by the reporting rail carrier.

13 The calculation of the daily averages is to be based on a daily snapshot taken at the same time each day for all indicators that use a daily snapshot.

14 The first report must set out the time at which the snapshot is taken.

Cars Not Moving

15 (1) The report must set out, in the case of carload traffic, the daily average number of loaded cars not moving at origin, except for cars containing fertilizer, broken down by each of the periods of dwell time set out in section 6 of this Schedule, broken down for each geographic region set out in section 5 of this Schedule, and further broken down by each type of commodity, excluding fertilizer, set out in section 2 of this Schedule. Rail carriers are also to report the Canada-wide daily average number of loaded cars not moving at origin for each period of dwell time set out in section 6 of this Schedule, and further broken down by each detailed type of commodity set out in section 3 of this Schedule.

(2) The report must set out, in the case of intermodal traffic, the daily average number of loaded intermodal containers not moving at origin, broken down by each of the periods of dwell time set out in section 6 of this Schedule, further broken down by each geographic region set out in section 5 of this Schedule. Rail carriers are also to report the Canada-wide daily average number of loaded intermodal containers not moving at origin broken down for each period of dwell time set out in section 6 of this Schedule.

(3) The daily average number of loaded cars and loaded intermodal containers not moving at origin is to be calculated as follows, based on a daily snapshot:

16 (1) The report must set out, in the case of carload traffic, the daily average number of loaded cars not moving en route for each of the periods of dwell time set out in section 6 of this Schedule, broken down by each geographic region set out in section 5 of this Schedule, and further broken down by each type of commodity set out in section 2 of this Schedule. Rail carriers are also to report the Canada-wide average for each period of dwell time set out in section 6 broken down by each detailed type of commodity set out in section 3 of this Schedule.

(2) The report must set out, in the case of intermodal traffic, the daily average number of loaded intermodal containers not moving en route, broken down by each of the periods of dwell time set out in section 6 of this Schedule, further broken down by each geographic region set out in section 5 of this Schedule. Rail carriers are also to report the Canada-wide daily average number of loaded intermodal containers not moving en route for each period of dwell time set out in section 6 of this Schedule.

(3) The daily average number of loaded cars and loaded intermodal containers not moving en route is to be calculated on the basis of a daily snapshot and is to include all loaded traffic that has departed origin but has not yet arrived at the final railway facility or been placed at destination. The time during which a car or intermodal container is not moving is to be calculated as the time that has elapsed between its last recorded movement event and the time of the daily snapshot.

17 (1) The report must set out, in the case of carload traffic, the daily average number of loaded cars not moving at destination for each of the periods of dwell time set out in section 6 of this Schedule, broken down by each geographic region set out in section 5 of this Schedule, and further broken down by each type of commodity set out in section 2 of this Schedule. Rail carriers are also to report the Canada-wide average for each period of dwell time set out in section 6 of this Schedule broken down by each detailed type of commodity set out in section 3 of this Schedule.

(2) The report must set out, in the case of intermodal traffic, the daily average number of loaded intermodal containers not moving at destination, broken down by each of the periods of dwell time set out in section 6 of this Schedule, further broken down by each geographic region set out in section 5 of this Schedule. Rail carriers are also to report the Canada-wide daily average number of loaded intermodal containers not moving at destination for each period of dwell time set out in section 6 of this Schedule.

(3) The daily average number of loaded cars and loaded intermodal containers not moving at destination is to be calculated as follows, based on a daily snapshot:

18 (1) The report must set out the daily average number of loaded cars not moving and the daily average number of loaded intermodal containers not moving that are either destined for one of the rail carrier’s top five major destination areas referred to in paragraph (3)(a), or transiting through one of the rail carrier’s top five major destination areas referred to in paragraph (3)(b), for each of the periods of dwell time set out in section 6 of this Schedule.

(2) For each major destination area described in subsection (1), the report must identify

(3) The top five major destination areas are determined on the basis of the highest number of loaded cars and loaded intermodal containers for the preceding three years that were

19 (1) The first report must be accompanied by a list of the top five major destination areas determined in accordance with subsection 18(3) of this Schedule.

(2) The list must be updated three years after the day on which this Schedule comes into force and every three years after that in accordance with subsection 18(3) of this Schedule and submitted with the next report following any change to the list.

20 (1) The report must set out the daily average number of empty cars not moving and, in the case of intermodal traffic, the number of empty intermodal containers not moving for each of the periods of dwell time set out in section 6 of this Schedule, broken down by each geographic region set out in section 5 of this Schedule and Canada-wide, and further broken down by each equipment type set out in section 4 of this Schedule.

(2) The daily average number of empty cars and intermodal containers not moving is to be calculated based on a daily snapshot , with the time during which an empty car or, for intermodal traffic, the time that an empty intermodal container is not moving, calculated as the time that has elapsed between the last recorded movement event and the time of the daily snapshot.

Origin Dwell Time

21 (1) The report must set out in hours the average dwell time at origin for all loaded traffic that departs an origin station during the reporting week,

(2) The origin dwell time is to be calculated as follows:

22 The number of cars and intermodal containers included in the calculation of the average dwell time at origin must be reported as follows:

Destination Dwell Time

23 (1) The report must set out in hours the average dwell time at destination for all traffic that the rail carrier placed at destination during the reporting week, as follows:

(2) The average dwell time at destination is to be calculated as follows:

24 The number of cars and intermodal containers included in the calculation of the average dwell time at destination must be reported as follows:

Terminal Dwell Time

25 The report must set out the average terminal dwell time in hours for the reporting week for the terminal areas served by each of the top 10 railway facilities of the rail carrier, for

26 The report must set out the average terminal dwell time in hours for the reporting week for all the terminal areas served by each of the top 10 railway facilities of the rail carrier combined, calculated at the car level, for

27 Cars on through trains are excluded from the calculations referred to in sections 25 and 26 of this Schedule.

28 Intermodal containers that have remained at a railway facility for more than 30 days are excluded from the calculations in sections 25 and 26 of this Schedule.

29 For carload traffic, the following rules apply to the calculations in sections 25 and 26 of this Schedule:

30 For intermodal traffic, the following rules apply to the calculations in sections 25 and 26 of this Schedule:

31 (1) The top 10 railway facilities of a rail carrier are to be determined according to throughput, calculated as the average annual number of loaded and empty cars, excluding through trains, processed during the previous three calendar years.

(2) When accounting for intermodal traffic in the calculation of throughput, intermodal railcars are to be counted, but not intermodal containers, and articulated cars and multi-packs are to be counted as one car regardless of the number of platforms.

32 If one of a rail carrier’s top 10 railway facilities is part of the terminal area of another of the rail carrier’s top 10 railway facilities, only the railway facility with the greatest volume throughput is to have a terminal area designated for reporting terminal dwell time, in which case the facility with the smaller throughput is to be replaced by the next largest railway facility in terms of throughput that does not already appear in the top 10 railway facilities.

33 A rail carrier must update the list of its top 10 railway facilities three years after the day on which this Schedule comes into force and every three years after that using the calculation set out in section 31 of this Schedule.

34 (1) The first report must be accompanied by the following information for each terminal area:

(2) The information referred to in subsection (1) must be updated following any change to the list of top 10 railway facilities and submitted with the next report.

(3) The information in subsection (1) with respect to a terminal area must be updated each time a change in the rail carrier’s operations results in a change to the list of facilities and stations served by the facility, and submitted with the next report.

35 The report must include the following information for each terminal area and for the top 10 terminal areas combined:

36 Despite sections 25, 26 and 35 of this Schedule, the report for the BNSF Railway Company must set out

Segment Transit Time

37 (1) The report must set out the average segment transit time in hours for cars, in the case of carload traffic, and for intermodal containers, in the case of intermodal traffic, that fully transit a segment that connects any of the rail carrier’s top 10 railway facilities with the next of the rail carrier’s top 10 railway facilities on the car or container’s route.

(2) If any of the top 10 railway facilities of a rail carrier is within 40 km of another of the carrier’s top 10 railway facilities, the facility with the smaller throughput is to be replaced by the next largest railway facility in terms of throughput that does not appear in the carrier’s list of top 10 railway facilities, for the purposes of calculating the segment transit time indicator only.

(3) The report must also set out the average segment transit time for cars and intermodal containers that fully transit a segment that connects any of the rail carrier’s top 10 railway facilities with the largest railway facility in a province in which none of the top 10 railway facilities is located.

38 The measurement of segment transit time begins with the last event related to the car’s or intermodal container’s passing by or departing from the railway facility that begins the segment and ends with the first event related to the passing or arrival of the car or intermodal container at the railway facility that completes the segment.

39 (1) Segment transit time is to be reported for

(2) For each segment transit time reported, the report must set out the number of cars and of intermodal containers included in each calculation.

40 The segments reported under segment transit time must be updated each time a rail carrier changes its list of top 10 railway facilities.

41 (1) The first report must be accompanied by a list of the length in kilometres of each segment.

(2) The list of segment lengths must be updated following any change and submitted with the next report.

Velocity

42 (1) The report must set out the average velocity — daily average car kilometres — for each equipment type set out in section 4 of this Schedule, for all cars and intermodal containers, whether or not they have moved.

(2) The average velocity is calculated by dividing the total daily car-kilometres by the sum of daily cars online for the reporting week.

(3) The report must set out the daily average number of cars and intermodal containers included in the calculation of each velocity reported.

Locomotive Fleet Status

43 (1) The report must set out for each geographic region set out in section 5 of this Schedule and on a Canada-wide basis the following:

(2) The information referred to in subsection (1) includes the locomotives, whether owned or leased, within the network of the rail carrier and the foreign locomotives that are operated by the rail carrier on its network but does not include locomotives in passenger, work and company service.

(3) The calculation of the daily averages referred to in subsection (1) is to be based on a daily snapshot.

Number of Employees

44 (1) The report must set out, for each geographic region set out in section 5 of this Schedule and on a Canada-wide basis, the number of railway operating employees, other than trainees, who are employed by the rail carrier, who were available to move traffic during the reporting week and whose primary occupation is one of the following positions:

(2) The number of employees is to be based on a weekly snapshot taken on the same day of each reporting week, with the first report setting the day on which the snapshot is taken.

(3) If a carrier uses human resources systems that are not updated every week, the weekly snapshot for a reporting week may be used for any following reporting week for which the car1rier is unable to produce updated information.

(4) When determining the number of employees, employees who are available to move traffic in more than one of the geographic regions set out in section 5 of this Schedule are to be included in the count for only one of those geographic regions.

(5) An employee may be considered to be available if they are on short-term leave, such as sick leave, personal leave, vacation leave or an elective or mandatory rest day, at the time of the snapshot.

(6) An employee is not considered to be available if they are suspended or on long-term leave, such as disability leave, parental leave or leave without pay, at the time of the snapshot.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Transportation Modernization Act (TMA) introduced temporary requirements for class 1 rail carriers to report service and performance information (which is reported publicly) and waybill data (which is confidential). These requirements will remain in place until they are replaced by regulations. While these temporary reporting requirements served the purpose of ensuring that data would be available soon after the TMA received Royal Assent, they also left significant room for improvement.

Description: The amendments will replace the temporary requirements in the TMA with regulatory requirements in the Transportation Information Regulations (TIR). The amendments will significantly improve the service and performance indicators, while also reducing the amount of data that must be reported by smaller class 1 rail carriers. Minor adjustments to the waybill-reporting requirement for the largest class 1 rail carriers were made, while the requirement will be eliminated for smaller class 1 rail carriers. Smaller class 1 rail carriers will instead be required to report a new smaller suite of traffic data.

Rationale: The expansion of the service and performance indicators represents a significant improvement, which will make the data more relevant, understandable, and useful to data users, while reducing the reporting burden for smaller carriers (CSX & BNSF). The adjustments to the waybill reporting requirements will help ensure that the data continues to meet its primary purpose of supporting the Long-Haul Interswitching (LHI) measure, while eliminating unnecessary burden by removing this requirement from carriers that are not likely to be subject to LHI orders. New traffic reporting requirements for smaller class 1 rail carriers will ensure that Transport Canada (TC) continues to have access to important information about their Canadian operations.

The estimated total cost of the amendments is $518,886 between 2023 and 2032 (present value in 2021 Canadian dollars, discounted to the year of 2023 at a 7% discount rate). Railway companies will incur these costs from updating internal information technology (IT) systems to query additional data, the maintenance and verification of new data, and the purchase of additional IT resources (e.g. software, equipment). During the same period, railway companies would incur cost savings of $45,704 in total from the elimination of Service and Performance reporting requirements under the TMA. As a result, the estimated net monetized cost of the proposal is $473,182 over the 10-year analytical period.

The amendments will also benefit supply chain partners and the Government of Canada by providing more timely and detailed reporting that will provide a more precise picture of the performance of Canada’s freight rail sector. Although these benefits are non-monetizable, it is reasonably expected that, overall, the amendments will result in more benefits than costs to Canadians.

Analysis under the small business lens concluded that the amendments will not impact small businesses. The one-for-one rule applies, as there is incremental change in administrative burden on businesses. As a result, the net annualized administrative cost was estimated to be $11,310 (present value in 2012 Canadian dollars, discounted to the base year of 2012 at a 7% discount rate) between 2023 and 2032.

Issues

In 2018, the Transportation Modernization Act (TMA) introduced new data reporting requirements for six major rail carriers identified as class 1 rail carriers:

These requirements were incorporated on a transitional (temporary) basis and include the collection of detailed waybill data (which is kept confidential), and service and performance information (which is published on a weekly basis).

While the transitional reporting requirements significantly enhanced transparency into the operation of the freight rail network, further enhancements are necessary. As a result, TC has been working to develop a regulatory proposal that will replace the transitional provisions with regulatory amendments to the TIR. The transitional provisions in the TMA will expire upon the coming into force of the regulatory amendments to the TIR.

Transitional service and performance information

The transitional requirements for the collection of the service and performance information were incorporated by reference from requirements that are in place in the United States (U.S.). Incorporating these requirements by reference enabled the data to be available quickly but meant that the requirements were not fully tailored to the Canadian context. They were also not subject to the kind of extensive stakeholder consultation that is part of the regulatory process. As such, the transitional requirements need to be refined and expanded upon to provide a more robust and transparent picture of rail service and performance in Canada to better meet the needs of data users (for example rail shippers, terminal operators, port authorities, and trade associations), while balancing the benefits and burdens of reporting.

The regulatory amendments will address many of the shortcomings of the transitional reporting requirements. For example, the transitional indicators do not measure activity with an end-to-end perspective and lack information on performance at destination. Additionally, in some cases, the transitional indicators lack details that would make the information relevant to data users. For example, many of the indicators lack specific geographic or commodity details that would provide data users with a view of rail performance in the regions and sectors that are relevant to them, as opposed to a more general, national level view. Further, many of the indicators provide information only on select unit train types (trains comprised entirely of one commodity). This information is of limited value to shippers whose traffic moves in manifest trains (trains carrying multiple commodities).

The transitional indicators enable railways to set their own methodologies, which creates challenges for data users in understanding the reported data and limits the comparability of the information between railways. For example, when reporting “terminal dwell” for each of the railway’s top 10 terminals, there is no consistent methodology for defining the terminal, nor on the method of calculating the dwell time, such as what traffic is or is not to be included.

The transitional reporting requirements also apply equally to all six class 1 rail carriers, in spite of the differences in geographic scope of their networks and volumes carried in Canada. This has raised concerns about imbalances between the benefits and burdens of reporting, particularly for carriers with a smaller Canadian presence. Adjustments are therefore required to better align the requirements with the scope of carriers’ Canadian operations.

Transitional waybill (rate) data

Under the transitional requirements, railways are required to collect and submit waybill data, which supports the Canadian Transportation Agency (the Agency) in calculating LHI rates. LHI is a competitive access measure introduced in the TMA to enable shippers with access to only one rail carrier to access a connecting carrier, at the nearest interchange, at a rate set by the Agency. The Agency requires detailed waybill data in order to set those rates, which must be based on rates charged for comparable traffic.

The transitional waybill data includes fields such as the shipper’s name, rate, railcar owner, identifying marks, Standard Transportation Commodity Code, as well as origin and destination. While the data collected is largely adequate to support the Agency in establishing LHI rates, minor adjustments are necessary to ensure that all the required data is available to support the LHI mechanism.

Moreover, given the scope of the smaller class 1 rail carriers’ operations in Canada, the full suite of waybill data currently required under section 76 of the TMA is not necessary, as it may have limited value for LHI purposes. Therefore, adjustments are required to improve the alignment of the reporting requirements with the purpose and utility of the information, while still ensuring that TC has the information it needs to support its own analysis, including in support of network monitoring and policy development.

Background

Canadian freight rail sector

Canada’s freight rail transportation sector specializes in moving heavy, bulk commodities and containerized cargo over long distances, mainly to and from the U.S., and to coastal ports for shipping to international markets. Canada has two dominant freight railways, CN and CP, which account for more than 95% of Canada’s annual revenue tonne-kilometres and 80% of its tracks. Some U.S.-based carriers also operate in Canada, such as BNSF and CSX. BNSF’s service to Canada’s Pacific Gateway gives Vancouver the unique advantage of being the only port on the North American West Coast served by three of North America’s largest railroads.

Many Canadian shippers are heavily reliant on rail, with limited cost-effective alternative modes of transportation, and many shippers have direct access to only one rail carrier. Strong concentration in the rail sector does not always create the kind of competitive market pressure that would typically drive efficient outcomes in terms of service volume, quality, pricing, and information sharing. A shortage of competitive market pressures also limits the amount of data shared by carriers on a voluntary basis. To address situations where competition and market forces alone are not sufficient to drive these outcomes, the Canada Transportation Act (CTA) contains a range of rate, service, and competitive access remedies, administered by the Agency, which provide recourse to shippers.

Despite the voluntary reporting of some weekly service information for carriers’ North American networks, and the transitional suite of service and performance indicators, significant gaps still exist for the public reporting on the performance of Canadian freight rail networks. While railways do provide information to shippers to track their own shipments, shippers have limited information about the network as a whole, and for their commodities or regions of interest. Being confidential in nature, much of the data shippers receive regarding their own shipments cannot be discussed or shared publicly, limiting its potential uses. While some private-sector-led collaborations to share information among supply chain partners are helping to bridge these gaps, such initiatives are often confidential to the participants, limited in geographic or sector/commodity scope, and do not provide a broader view of overall rail service and performance across the country.

Transportation Modernization Act

The TMA became law on May 23, 2018, and introduced several measures to enhance transparency, competitiveness, and investment in the freight rail system, for the benefit of all rail users. Amongst those measures, the TMA introduced a set of new regulatory authorities and temporary transitional reporting provisions.

New regulatory authorities

The TMA introduced new regulatory authorities in the CTA to provide for the collection of two types of data from class 1 rail carriers:

Temporary transitional reporting provisions

In addition to new regulatory authorities, the TMA introduced transitional reporting requirements to collect both service and performance information and waybill data from the six class 1 rail carriers. The introduction of the temporary transitional reporting provisions ensured that the data would be reported as soon as possible.

Transport Canada began receiving waybill data on June 30, 2018. This data includes information on every revenue-generating car moved by the six carriers on their Canadian networks. The first weekly report of the service and performance metrics was published on the Canadian Centre on Transportation Data’s Transportation Data and Information Hub (the Hub) on December 10, 2018. Shortly after the TMA entered into force, TC began a process to explore options for further refining the information being collected, via amendments to the TIR.

Incorporated by reference from the U.S. Code of Federal Regulations, including details regarding equipment type, commodity, and geography, the eight transitional service and performance metrics are

Objective

Service and performance information

The objective of the regulatory amendments is to allow data users, particularly supply chain partners and government, to better understand the performance of Canada’s freight rail sector, and to inform conversations about opportunities for growth and improvement. As described above, limited competition in Canada’s rail sector may impact the efficiency and effectiveness of rail service and performance. The suite of indicators and accompanying details will increase transparency into rail service and performance, enabling discussions on identifying and addressing challenges facing rail-based supply chains, encouraging greater accountability, and providing valuable information for assessing whether the system is meeting the needs of the Canadian economy.

Waybill data reporting in support of LHI

The primary purpose of the waybill data is to ensure that the Agency has the information necessary to administer the LHI measure in a timely manner. Additionally, because it will provide car-level, shipper, revenue, and train information, the waybill information will assist TC to better understand rail traffic flows, network activity and rate trends, all of which will support policy development, help inform assessments of the effectiveness of existing policies and legislative provisions and help to assess risks and gaps.

Description

The TMA’s transitional reporting requirements apply to the six named class 1 rail carriers and require these carriers to submit this information to the Minister of Transport.

The reporting requirements include service and performance indicators, waybill data, and traffic data. After careful consideration and examination, including experience with the information reported pursuant to the transitional requirements, the amendments to the TIR will differentiate the reporting requirements based on the scope and nature of a carrier’s Canadian operations. This approach will better account for both the value of the data and the burden of reporting it.

Service and performance indicators

In order to provide a more meaningful and complete picture of rail performance to data users, the indicators focus on performance through an end-to-end view of the rail system, with relevant geographic, commodity, and car-type details. The data will need to be reported on a weekly basis (as is the case for the existing transitional requirements). Overall, the indicators will result in over 20 times more data points than the existing transitional provisions. The indicators are organized into four categories, focusing on different aspects of a rail movement.

With the exception of the number of train operating employees, all of the indicators will be measured per car (or per locomotive), ensuring a comprehensive view of the rail network. Most indicators will be broken down by province with accompanying commodity or car type details, to provide information that is more specific. Under the current transitional requirements, the data is reported on a weekly basis and is submitted five days following the end of the reporting week. The amendments maintain the weekly reporting frequency, but submission of the data will be required no later than 5:00 p.m. Eastern Time on the Wednesday following the week to which the information relates (i.e. three days following the end of the reporting week). This will enable the publication of the data only five days after the end of the reporting week, instead of seven (under the current framework), which will increase its relevance to data users. Better data and early identification of changes to rail performance will help network users, particularly shippers, to make more informed decisions in a timelier manner.

The amendments will tailor the reporting requirements according to the size, scope, and nature of each reporting carrier’s operations in Canada, to enable an appropriate balance between the burden and benefit of reporting. Class 1 rail carriers that also meet the revenue threshold for their Canadian operations to be considered a class I rail carrier under the TIR will be required to report on the full suite of indicators and their granularity details (including geography, commodity, and car type). Given that class I rail carriers account for the vast majority of Canada’s rail infrastructure and rail movements, understanding their performance is integral to understanding the performance of the Canadian transportation system and its impacts on the broader economy. This proposal therefore seeks to optimize visibility into these carriers’ service and performance, with due consideration to minimizing reporting burden and protecting commercially sensitive information. In order to limit the reporting burden for these carriers, they have been consulted on the development of the indicators, which rely, to the extent possible, on the use of automatically generated car location message data and attempt to mimic the approaches these carriers use to report similar metrics elsewhere (including for their U.S. operations).

Based on the scale of its Canadian operations, BNSF will only be required to report on a subset of the indicators, with details related to geography, total car counts, and terminal dwell times only. Understanding BNSF’s performance remains important for data users, particularly as BNSF offers Canadian shippers access to markets in the U.S. through the busy Vancouver area, as well as through Manitoba. Recognizing BNSF’s smaller Canadian footprint, the amendments will limit BNSF’s reporting to indicators that provide helpful information about its service and performance, but that do not expose information which could be used to identify individual shippers.

As such, BNSF will be required to report the following reduced suite of indicators:

Class 1 rail carriers that are neither class I rail carriers under the TIR nor BNSF, will not be required to report any service and performance indicators. These carriers’ operations in Canada are limited in scope and volume, and they do not operate in areas where congestion has historically challenged the performance of Canada’s rail network. As a result, it is less likely that weekly public service and performance metrics would significantly serve the public’s interests.

Waybill information

The amendments will put in place different reporting requirements for different class 1 rail carriers, based on their revenues in Canada.

Detailed waybill data is required from carriers that are class 1 rail carriers under the CTA and class I rail carriers under the TIR, in order to support the LHI remedy.

The amendments will maintain the requirement to report waybill fields, on a monthly basis, to maintain support for LHI and internal TC analysis, but will add six new reporting fields (four of which are already being reported voluntarily):

Traffic information

The amendments include a new reporting requirement that will apply to class 1 rail carriers under the CTA that are considered to be class II rail carriers under the TIR and have positive revenues in Canada.

These carriers are not likely to have LHI orders applied against them, due to the limited scope of their Canadian operations, and so collecting the full suite of waybill information is not required. However, it is important that TC continue to have access to some information on these carriers’ Canadian operations, in order to continue to inform policy development and analysis.

So, instead of reporting the full suite of detailed waybill data, these carriers will be required to report a smaller set of traffic data, aggregated to a monthly basis, that is similar to the current reporting requirements for class I railways under subsection 10(2) of the TIR. This will include significantly less detail than the waybill data. For example, while the traffic data will include information about mileage, tonnage, commodity, origin, destination, etc., it will not include information like revenues, rebates and incentives, shipper name, car ownership, car and train ID, the time the movement begins and ends etc., which are all included in the waybill reporting. In addition, instead of being reported on a per car basis, the traffic information will be aggregated for all movements sharing the same characteristics occurring in a given month. It will therefore provide a high-level overview of a carrier’s traffic, whereas the waybill data includes extensive details on the movement of each individual car.

This approach will better align reporting requirements with the expected use of the data. It will represent a significant reduction in the level of detail that will be reported by the impacted carriers as compared to requiring the full car-level waybill data, which is appropriate given that data is not required from these carriers in support of LHI, but still provides important information about their Canadian operations.

Regulatory development

Consultation

In the spring of 2019, TC launched public consultations. A detailed discussion paper and questionnaire were shared with stakeholders, including railways, shippers, shipper associations, provincial governments, and other supply chain members. Transport Canada held meetings with interested parties and published consultation information on the Let’s Talk Transportation website, inviting public feedback. In all, TC received 38 responses to the questionnaire.

Transport Canada subsequently conducted technical consultations with over 30 organizations in the winter and spring of 2020, to better understand their needs and discuss a range of technical issues relating to reporting on railway service and performance.

Much of the feedback received during these first phases of consultations focused on the public facing service and performance information.

From a railway perspective, the need to protect any potentially commercially sensitive information was a common theme, especially for questions that raised the potential of adding greater commodity or geographic granularity. In addition, railways raised the concern that the transitional requirements were already adequate for their purposes, and so the burden of amending the reporting requirements would be greater than the benefits.

For most other stakeholders, the feedback varied significantly based on supply chain role, industry, etc. However, while it was clear that different sectors have different needs and preoccupations, which reflect differences in their operations and their methods of interaction with the railways, some key similarities emerged:

With respect to the waybill data, feedback has generally been more limited. Some railways argued that, due to their limited operations in Canada, they should not be required to submit this data, as it would not be needed for LHI rate purposes and would be of limited utility. They suggested that due to their limited Canadian footprint, the administrative burden of reporting would outweigh the value of the data.

Other respondents stressed that every class 1 rail carrier operating in Canada should be required to provide waybill information regardless of the extent of their business operations in Canada. Transport Canada received a number of comments from non-railway stakeholders about the importance of using the data to further public transparency.

Consultations on preliminary proposal

In the fall of 2020, TC consulted again with railways, with a specific view to ensuring the feasibility of the reporting requirements.

In December of 2020, TC launched a further round of broad public consultations, sharing its detailed proposal with stakeholders, soliciting written feedback and offering in-person meetings to discuss the proposal. This consultation period closed on February 26, 2021. The feedback received followed similar themes to the consultations on the discussion paper in 2019.

Most non-railway respondents found the proposal to be a significant improvement on the transitional indicators and were supportive of the objectives. At the same time, they noted room for improvement in several areas, which include increasing the geographic and commodity details, including additional indicators, and clarifying the methodologies. In response to some of these requests, TC added a service and performance indicator requiring railways to report on the number of conductors and locomotive engineers, given the key role that crew availability can play in the quality of service provided by railways.

While some respondents stated comfort with their own data possibly being exposed by very detailed reporting, others raised concerns that some indicators could expose traffic volumes of individual shippers and proposed some solutions for addressing those concerns. Transport Canada has gone to significant lengths to address these concerns. Transport Canada has used the waybill data already being reported to assess whether there are certain combinations of geography and commodity that could reveal information that pertains to only one or two shippers. Various adjustments to the service and performance indicators were made to address these concerns, including eliminating the counts of cars included in some indicators.

Non-railways also consistently raised concerns over the lack of an audit and verification regime. While TC understands the desire of some stakeholders to have a mechanism for the audit and verification of the reported data, no such regime is under development at this time. The service and performance indicators include detailed methodologies for calculating the indicators, which carriers will be required by law to follow. Transport Canada will continue to work proactively with railways to clarify and correct any discrepancies or uncertainties that may be observed in the data before it is posted publicly, similar to the internal validation process that is done for the transitional metrics. Moreover, it remains an offence to knowingly provide false or misleading information to the Minister or to any person acting on behalf of the Minister in connection with any matter under the CTA.

Some stakeholders continued to suggest that the indicators also include key benchmarks or performance standards, which could be used to trigger government intervention. While TC understands this perspective, it is not TC’s role to establish these kinds of benchmarks or performance standards. Given the variability of commercial contracts between shippers and railways, setting such standards in a regulatory environment in the absence of information about the commitments contained in those contracts would be inappropriate. Moreover, only the Agency may determine whether a railway is meeting its service obligations, and it does so based on a range of factors, in the context of a formal investigation.

Carriers raised concerns over what they perceive to be an unnecessary level of burden associated with the proposal, the overall trend of increasing reporting requirements, the inconsistency with information they report elsewhere, lack of information on performance of other members of the supply chain, concerns relating to confidentiality (revealing information about individual shippers), and the fairness of having different reporting requirements for different class 1 rail carriers.

Transport Canada has taken such concerns seriously and made several adjustments to the proposal following the winter 2020–2021 consultations. This includes efforts to better align the methodologies for the service and performance indicators with existing operations and reporting, to reduce reporting burden. Another significant reduction to the reporting burden has been achieved by eliminating a requirement for class 1 rail carriers that are also class I rail carriers under the TIR to report confidential details about the composition of every train moving on its mainline from the proposal. The removal of this requirement has been made possible because of ongoing efforts by TC to acquire similar non-regulatory data from third parties that would meet the requirements. The amendments will also further reduce the number of service and performance indicators that would apply to BNSF. With respect to confidentiality, the reporting requirements have been adjusted to eliminate the reporting of sensitive information about individual shipper volumes. It should also be noted that the regulatory authority is specifically designed to enable the publication of the data by individual railway, in order to improve transparency and better assess the service being provided by railways.

Transport Canada has also consulted with the Agency in the development of this proposal. They were generally supportive of efforts to collect more detailed service and performance information, and also requested that the waybill reporting include information to help identify the origin and destination facility in cases where multiple facilities share station codes.

Prepublication in the Canada Gazette, Part I

The amendments were prepublished in the Canada Gazette, Part I, on May 7, 2022, followed by a 60-day public comment period. Nineteen responses were received from a range of stakeholders.

Overall, non-railway stakeholders were pleased with the proposed amendments, while still looking for refinements to the service and performance indicators themselves. They also provided further feedback on the potential uses of the data — for example to conduct annual performance reviews or to establish service standards — and continued calls for third-party verification of the data. Some stakeholders also requested that the railways provide historical data covering the 12 to 18 months preceding entry into force along with their first reports. Finally, some stakeholders suggested that TC review the adequacy of the indicators on an annual basis.

Transport Canada will continue to work with all supply chain partners to discuss potential uses for the data going forward, but remains of the view that the establishment of performance standards is not well suited to this regulatory context, for the reasons noted above. Likewise, for the reasons noted above, no additional audit and verification regime is proposed at this time.

With respect to asking railways to calculate and submit historical data based on the new service and performance indicators, for the 12–18 month period preceding entry into force of these new requirements, TC does not believe stakeholders have made a compelling case for the necessity of historical data. The transitional service and performance indicators, which provide helpful data to stakeholders for understanding the performance of the system, will continue to be published until these new requirements enter into force. After that, the new indicators will represent the start of a new dataset. Transport Canada does not anticipate an annual review of the adequacy of the service and performance reporting requirements. These indicators were developed based on a series of technical consultations with stakeholders over a three-year period. An annual review would not support the necessary level of technical consultations that would be required to determine the adequacy of the service and performance reporting requirements. While TC can appreciate that some stakeholders will continue to seek the inclusion of additional indicators, TC believes it is important to take the necessary time to allow a time series to develop, and to understand how the new indicators are being used, before undertaking a review of their adequacy. Stakeholders remain welcome to provide feedback for TC’s consideration at any time, which the department will consider; however, TC does not intend to undertake formal annual reviews of the adequacy of the requirements.

After the prepublication, TC made some minor modifications to certain indicators to provide additional clarity and/or to address outstanding concerns relating to confidentiality. For example, in their first report, railways will be asked to list the Standard Transportation Commodity Codes (STCC codes) that fall into each commodity category. Certain commodity sub-groupings have also been identified for distinct national level reporting under some indicators (e.g. propane, along with distinct reporting for canola oil and canola meal). So, for example, propane will be reported as part of the petroleum products commodity group provincially, but will be reported on its own as a distinct sub-group at the national level. Some modifications have also been made to the destination dwell time indicator, to protect against disclosure of sensitive information. These minor modifications are not expected to result in additional costs to railway companies.

Carriers continued to raise concerns over what they perceive to be an unnecessary level of burden associated with the proposal. Carriers have also noted the overall trend of increasing reporting requirements; the lack of consistency between the proposed reporting requirements and the information they are already required to report under other programs; the lack of information on the performance of other members of the supply chain; concerns relating to confidentiality (revealing information about individual shippers); and the fairness of having different reporting requirements for different class 1 rail carriers. Additionally, carriers expressed concern over the utility of the new “crews” indicator, and over the feasibility of the 90-day timeline for implementation. Concerns were also raised that some indicators could inadvertently result in the disclosure of security-sensitive information. In response to these last concerns, minor modifications have been made to the methodologies of two indicators (terminal dwell time, cars not moving by major destination area) to reduce the details being reported, while still retaining the value of the indicators.

With respect to the value of the data as a whole, Transport Canada remains of the view that the proposed indicators are a necessary improvement over the transitional requirements, which lack the kind of geographic and commodity-specific information that is needed to provide a meaningful view of rail performance. With respect to confidentiality, the reporting requirements have been designed in consultation with shippers and shipper associations to protect against the reporting of sensitive information about individual shipper volumes. With respect to the “crews” indicator, transparency into the availability of crews to operate trains is a key factor in understanding overall rail performance throughout the year, and across different seasons. This indicator was designed to provide sufficient flexibility to railways to report in a manner that is consistent with how they currently collect and manage data relating to crews, and limits additional burden, while still providing meaningful and reliable information to rail users about the availability of railway operating employees. To this end, the final regulations clarify that for this indicator, if carriers HR reporting systems do not already provide updated employee counts on a weekly basis, they may use the same information for consecutive weeks.

With respect to the 90-day timeline to implementation, TC understands that this shorter implementation window may create some challenges for railways, as there is significant effort required to program, test, and develop the new indicators in the manner prescribed by the regulations. However, as the effective performance of the railways and rail-based supply chains is critical to Canada’s economic recovery from COVID-19, it is TC’s position that timely access to the best possible data needs to happen as soon as possible, and that the benefit of the abbreviated timeline outweighs the additional challenges it may create for reporting carriers. Ensuring timely access to data is also consistent with the Government of Canada’s broader focus on supply chains. The Government of Canada is taking a number of steps to address supply chain challenges, including through the establishment of the National Supply Chain Task Force, which provided a series of recommendations aimed at addressing how the Government can tackle the emerging pressures on Canada’s transportation system. The Government will also be developing a National Supply Chain Strategy.

At prepublication, it was proposed to have BNSF report a limited number of service and performance indicators, particularly given the importance of their operations in Vancouver. However, BNSF argued that, given their limited operations in Canada, even this much more targeted approach risked revealing commercially sensitive information regarding individual shippers. As a result, the details that BNSF will be required to report have been further reduced to enable the continued collection of data, while limiting the potential for the exposure of individual shippers, given BNSF’s limited traffic base in Canada.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an analysis was undertaken to determine whether the Regulations are likely to give rise to modern treaty obligations. This assessment examined the geographic scope and subject matter of the Regulations in relation to modern treaties in effect and no modern treaty obligations were identified.

Instrument choice

The transitional requirements under the TMA borrowed the U.S. Surface Transportation Board’s (STB) approach. This was practical in the short term and enabled the implementation of reporting more quickly, but it also left room for improvement. In order to strengthen the service and performance information, there is a need to adjust these requirements to provide more detailed information that is more meaningful for Canadian data users. The level of detailed public reporting necessary to support meaningful conversations on railway service and performance could not be achieved through voluntary reporting.

The transitional provisions in the TMA were developed in such a way that they would expire upon the coming into force of the amendments. A regulatory approach to updating the reporting requirements thereby ensures that the transitional reporting requirements will cease to exist when the regulatory requirements enter into force, avoiding duplicative reporting requirements.

Regulatory analysis

The amendments will enable TC to collect service and performance information, waybill data, and/or traffic data from four of the six class 1 rail carriers named in the Canada Transportation Act (depending on the scope of their operations and their annual revenues in Canada), namely CN, CP, BNSF, and CSX. While all of these railway companies were already reporting certain data to TC because of the transitional reporting requirements prescribed in the TMA, the amendments will require them to report modified information.

Railways will incur costs related to updating internal IT systems to query additional data, the maintenance, and verification of new data and the purchase of additional IT resources (e.g. software equipment). The amendments would result in total incremental costs of $518,886 (present value in 2021 Canadian dollars, discounted to the base year of 2023 at a 7% discount rate) between 2023 and 2032. Railways will also incur cost savings related to the elimination of the Service and Performance reporting requirements under the TMA. Total monetizable benefits were estimated to be $45,704 between 2023 and 2032 (present value in 2021 Canadian dollars, discounted to the year of 2023 at a 7% discount rate). As a result, the net monetized cost of the proposal is $473,182 over the 10-year analytical period.

In addition, supply chain partners and the Government of Canada will benefit from more timely and comprehensive reporting to help better understand the performance of Canada’s freight rail sector.

Changes to the cost-benefit analysis since the prepublication in the Canada Gazette, Part I

As previously discussed under Regulatory Development, a few reporting requirements have been further adjusted in the amendments to address stakeholders’ comments on the prepublication. Therefore, the cost-benefit analysis was revised accordingly based on information provided by stakeholders during the prepublication consultations and TC’s internal estimates, along with a few other updates. As a result, the total estimated cost was revised from $452,408 to $518,886. More specifically,

In addition, CSX, BNSF, CP and CN would incur cost savings of $45,704 in total due to the removal of requirements to report transitional service and performance indicators contained in the TMA.footnote 2 Although these cost savings affect the overall impact assessment, they are not driven by changes in the prepublished amendments or the CBA methodology; rather they were not reported at prepublication.

Analytical framework

The costs and benefits associated with the amendments were assessed based on comparing the baseline scenario against the regulatory scenario, in accordance with the Treasury Board Secretariat’s Policy on Cost-Benefit Analysis. The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the regulatory amendments to the TIR. The regulatory scenario provides information on the expected outcomes of the regulatory amendments. Where possible, impacts are quantified and monetized, with only the direct costs and benefits for stakeholders being considered in the analysis.

The average hourly wage rate for a computer and information systems professional, $51.35 (including associated overhead rate of 25%), was used to calculate costs associated with updating internal IT systems in 2023.footnote 3 The average hourly wage rate for a Canadian employee, $38.13 (including associated overhead rate of 25%), was used to calculate costs associated with maintaining and verifying reported data on an ongoing basis between 2023 and 2032.footnote 4 The estimated number of incremental hours required to update internal IT systems and maintain and verify data were provided by railway stakeholders during consultation sessions.

This analysis estimates the impact of the amendments over a 10-year analytical period from 2023 to 2032. Unless otherwise stated, all values are expressed in 2021 Canadian dollars, discounted to the year 2023 at a 7% discount rate for the 10-year analytical period.

Affected stakeholders

The amendments will impact four class 1 rail carriers (CN, CP, BNSF and CSX)footnote 5 to varying degrees based on their annual revenues and their scope of operations in Canada, as well as supply chain users and the Government of Canada.

Railway companies

Among the four affected railway companies, CN and CP are the two leading freight rail companies in Canada. Of the total Canadian rail transport industry revenues, CN accounts for over 50% and CP accounts for 35%. CN and CP employ approximately 24 000 and 12 200 people, respectively. Together, CN and CP represent more than 95% of Canada’s annual rail tonne-kilometres, more than 75% of the industry’s tracks, and 75% of overall tonnage carried by the rail sector. BNSF and CSX Canadian operations are more limited. All these railway companies are considered large businesses.

Supply chain users

Supply chain partners, such as shippers, terminal operators, and ports, will benefit from timelier and more detailed reporting on freight rail movements in Canada. For example, high provincial origin dwell times may influence a shipper’s decision regarding the route and timing for future shipments and the data could be used as part of such a discussion with the shipper’s serving rail carrier. As well, terminal dwell information may be used by the port or marine terminal operators to better understand rail activity in the area and to and from their facilities, with information about dwell times per commodity and car type, including intermodal containers, and accompanying car and container counts. Compared to the transitional suite of indicators, the Regulations will provide this type of information to supply chain users with increased detail and clearer methodologies, and in a timelier way.

Government of Canada

Like rail users, TC also uses performance data to better understand the performance of the railways and rail-based supply chains. The new data will provide TC with more useful data to better inform its own policy analysis and development, in support of more effective and efficient supply chains, for the benefit of Canadians.

Baseline and regulatory scenarios

Under the baseline scenario, CN, CP, BNSF, CSX, NS, and UP are required to report several service and performance indicators and waybill data in accordance with the TMA. Relating to waybill reporting, CN and CP were already voluntarily reporting on four of the six new fields outlined in the amendments. Because NS and UP do not move revenue traffic in Canada, they do not report service and performance indicators.

Under the regulatory scenario, CN and CP, as class 1 rail carriers that are also class I rail carriers under the TIR, will continue to report the transitional waybill fields on a monthly basis, along with two additional fields. They will also be required to provide weekly reports on a new set of service and performance indicators outlined in the amendments. BNSF would report a reduced suite of service and performance indicators, reflecting their significantly smaller scope of Canadian operations. Additionally, CSX, BNSF, CP and CN will no longer need to report service and performance data required under the TMA. CSX and BNSF will report aggregated traffic data on a monthly basis. There are no incremental impacts to NS and UP as they indicate they do not have positive revenues in Canada, and therefore will not be required to report new data (however, in the event that they did have revenue traffic in Canada, they would be required to report).

The amendments come into force 90 days (three months) following the publication of the Regulations in the Canada Gazette, Part II. This will allow railways to develop the suite of indicators, test run the new reporting requirements, and ensure quality control of the data.

Benefits and costs

Benefits
Service and performance information

CSX, BNSF, CN and CP will all incur cost savings as they will no longer be required to report the Service and Performance data outlined under the TMA. In the baseline scenario, CSX reported two indicators, while BNSF, CN and CP reported all transitional indicators. Given that their IT systems were already in place to report these data, TC only anticipates cost savings related to time associated with maintaining and verifying the reported data. It was estimated that CSX would save two days per year, BNSF would save four days per year, and CN and CP would each save eight days per year in effort associated with maintaining and verifying these data prior to reporting.footnote 6 The total cost savings were estimated to be $45,704, of which $4,155 would be incurred by CSX, $8,310 by BNSF, and $16,620 each by CN and CP.footnote 7

The amendments will replace the transitional indicators with a more expansive and detailed suite of service and performance indicators. Public reporting — particularly with commodity and geography details, an “end to end” approach based on clear and consistent methodologies — will significantly enhance transparency in Canada’s freight rail sector, enabling informed discussions regarding the performance of the rail network, increasing accountability, and adding pressure for improved outcomes by all supply chain partners. Additionally, the end-to-end approach, supported by contextual details about the fleet of rail equipment and crew, will make the indicators more understandable, useful, and meaningful to stakeholders than the transitional metrics, which lack a coherent structure and clear linkages across indicators to fully understand what is happening in the network.

While the transitional reporting requirements were an important step towards improved transparency, the amendments refine and expand that suite of data to provide a more robust and detailed picture of rail service and performance across Canada and impose clear methodologies. The amendments will supplement the information that supply chain members are able to provide about their specific experiences, and better inform conversations among supply chain partners, such as railways and their shipper customers. For example, enhanced with commodity and geographic details, the indicators could enable shippers to better understand the service they receive compared to their peer groups and even allow individual shippers to assess whether the issues they are facing are more unique to them, thereby informing discussions with railways about how to improve service outcomes. Information about crew availability will provide a new level of insight into railway staffing decisions, and how those decisions are impacting performance. The service and performance data will not only provide valuable information about rail performance, but also the broader health of rail-based supply chains, and help identify the nature of emerging issues, including whether they are regional, sector/car type specific, seasonal, etc. The data will also better inform supply chain performance discussions between shippers, railways, other supply chain partners, and government, including at forums, such as the TC-led Commodity Supply Chain Table, which can in turn help identify solutions to improve the health of rail-based supply chains.

Railways in Canada have an obligation to provide adequate and suitable accommodation for the movement of traffic and the Agency can investigate service issues either by application or on its own motion. The indicators may be used by shippers or the Agency to inform decisions on whether to pursue investigations of the level of service. However, the indicators themselves will not constitute and cannot be considered proof of a service failure, nor can they replace the role of the Agency in assessing, on a case-by-case basis, whether the railway company is fulfilling its service obligations.

Economic literature suggests that the willingness to pay for data within an open market is an indication of its value. In Canada, there are a few third-party stakeholders that provide a range of transportation data on a subscription basis, including Statistics Canada, the Conference Board of Canada and Railinc Corporation. The annual subscription fees vary depending on the data type, availability and granularity.footnote 8 For example, the Conference Board of Canada sells data in the form of annual reports and individual series, one of which is a five-year economic forecast comprising of nine sectors within the national economy. The annual subscription fee for this report, updated quarterly, is approximately $6,555, while each individual series costs approximately $54.90.footnote 9

Another example is the Ag Transport Coalition’s Railway Performance Measurement Program, which is jointly funded by industry and Agriculture and Agri-Food Canada (AAFC), providing publicly reported rail performance information relating to the movement of grain in Western Canada. This grain-exclusive data is of a similar nature to the type of information that will be reported under this proposal, but also includes additional metrics that are not required by the amendments (e.g. order fulfillment). AAFC bears a cost of $1,479,396 for this program, which covers the period from April 1, 2021, to March 31, 2023. This contribution covers up to 50% of the total program costs, which include the acquisition of raw data, the development of service indicators and administrative costs.

Although TC is unable to monetize some benefits associated with the proposal due to a lack of information, the above-mentioned examples, particularly the similar program jointly funded by AAFC and industry, strongly suggest that the data and indicators that will be reported have considerable value to supply chain users, who would be willing to pay for such information to improve their business performance. Therefore, it is reasonably expected that, overall, the amendments will result in more benefits than costs to Canadian society.

Waybill data

Continuing to collect the LHI data from CN and CP will ensure the ongoing, effective support of the LHI measure, which provides shippers an opportunity to access an alternate rail carrier. The minor adjustments to this requirement will help ensure that the Agency is able to process LHI applications in a timely manner in accordance with the requirements of the Act. This, in turn, helps to ensure that rail shippers have the option to use that competitive access remedy when faced with limited competitive options. The continued collection of this data will also ensure that TC continues to have access to this detailed information to support analysis and ensure that future decision making in relation to the freight rail system is informed by the best possible information. This in turn will help to ensure that policies are well founded, and appropriately designed to address any issues that are identified, in order to further strengthen Canada’s freight rail network for the benefit of rail users and the Canadian economy.

Traffic data

The introduction of new traffic reporting requirements for smaller class 1 rail carriers will ensure TC continues to have access to information about these carriers’ operations, to support analysis and ensure that future decision making in relation to the freight rail system is informed by quality information. This will help to ensure that policies are well founded, and appropriately designed to address any issues that are identified, in order to further strengthen Canada’s freight rail network for the benefit of rail users and the Canadian economy.

Costs

During consultations, carriers were asked to identify specific costs associated with the amendments. Only one carrier provided concrete estimates related to the expected time required to update/develop IT systems and the incremental time required to maintain and verify new data, which assisted in developing assumptions used to estimate costs associated with the amendments.

Service and performance information

The amendments will require CN, CP and BNSF to report new data related to service and performance on a weekly basis. As a result, CN, CP and BNSF will need to update their existing IT systems to report these indicators. These carriers may need to retrofit existing systems while developing a number of new IT systems/templates that correspond to their existing systems in order to comply with the new data reporting requirements. CN and CP will also be subject to possible adjustments to some service and performance indicators in subsequent years (for example should their list of top ten terminals change), which was assumed, on average, to take the same amount of time every year. It was estimated that CN and CP would each require 232 daysfootnote 10 of effort to complete the IT update in 2023 and 53 days of effort per year to maintain and verify reported data starting in 2023, of which 9 days of effort per year was allocated to review and, if needed, adjust certain reported service and performance indicators starting in 2023.

It was estimated that BNSF would require 36 days of effort to complete the IT update in 2023, and 6 days of effort per year to maintain and verify reported data starting in 2023. The railways currently have systems in place to generate and collect the raw data (e.g. recording the movements of cars on their networks) that is necessary to report on these indicators, but significant work will be necessary to develop the programming logic to take that raw data and use it to calculate the indicators in accordance with the prescribed methodologies and details. Once the programming logic is developed, it can then be expected that the week-to-week burden will be relatively low; however, the initial setup is expected to be intensive.

Costs to CN, CP and BNSF were estimated to be $423,077,footnote 11 of which $193,204 would be a one-time cost associated with updating IT systems incurred in 2023; $192,479 would be associated with maintaining and verifying data between 2023 and 2032; and $37,394 would be associated with making certain metric adjustments between 2023 and 2032.

Waybill data

The amendments will require CN and CP to report six new waybill data fields, four of which were voluntarily reported since 2018. It was estimated that CN and CP would each require 15 days of effort to complete the IT update in 2023, and 5 days of effort per year to maintain and verify reported data starting in 2023. Total costs were estimated to be $32,328, of which $11,553 would be a one-time cost associated with updating IT systems to be incurred in 2023, and $20,775 would be associated with maintaining and verifying data between 2023 and 2032.

Traffic data

The amendments will require BNSF and CSX to report traffic data, which are a reduced and more aggregated form of the waybill data that is currently reported under the transitional requirements. Therefore, it is expected that each railway company will only need to make adjustments to their IT system reporting measures, which was estimated to require five days of effort per company in 2023, with an estimated total cost of $3,851. Note that BNSF and CSX will not incur additional costs related to maintaining and verifying data as they were already doing this under the reported waybill data (the baseline scenario).

Additional purchase of IT resources

In addition to above-mentioned labour costs of updating IT systems, railway companies are expected to purchase additional IT resources, such as servers, processors, and other related materials in 2023. During targeted consultations, one carrier specifically identified that additional purchase of IT resources was needed as a result of the amendments. Some proposed definitions and reporting requirements did not match carriers’ reporting methods; therefore, carriers will need to develop new systems/templates operating in parallel with their existing systems. Some of the metrics will require days of programming and testing, while others will take weeks and a team of multiple subject matter experts. It was estimated that the purchase of additional IT resources would cost CN and CP $19,876 each, and BNSF and CSX $9,938 each. As a result, the total estimated costs to be incurred in 2023 are expected to be $59,629.

Cost-benefit statement
Monetized costs (present values in thousands)
Impacted stakeholder Description of cost 2023 2024 Annual average of other years (2025–2031) 2032 Total (present value) Annualized value
Railway companies IT resources $59.63 0 0 0 $59.63 $8.49
Service and performance information $216.28 $29.67 $22.84 $17.26 $423.08 $60.24
Waybill data $13.70 $2.67 $2.06 $1.56 $32.33 $4.60
Traffic data $3.85 0 0 0 $3.85 $0.55
All stakeholders Total costs $293.46 $32.34 $24.90 $18.82 $518.89 $73.88
Monetized benefits (present values in thousands)
Impacted stakeholder Description of benefit 2023 2024 Annual average of other years (2025–2031) 2032 Total (present value) Annualized value
Railway companies Service and performance information $4.72 $5.88 $4.53 $3.42 $45.70 $6.51
All stakeholders Total benefits $4.72 $5.88 $4.53 $3.42 $45.70 $6.51
Summary of monetized costs and benefits (present values in thousands)
  2023 2024 Annual average of other years (2025–2031) 2032 Total (present value) Annualized value
Total costs $293.46 $32.34 $24.90 $18.82 $518.89 $73.88
Total benefits $4.72 $5.88 $4.53 $3.42 $45.70 $6.51
Net Cost $288.74 $26.46 $20.37 $15.40 $473.19 $67.37

Small business lens

An analysis conducted under the small business lens concluded that the amendments will not have any impacts on small businesses. None of the impacted railway companies is considered a small business.

One-for-one rule

The one-for-one rule applies as there is an incremental increase in administrative burden on business, and the amendments are considered burden in under the rule. No regulatory titles are repealed or introduced.

CN and CP will be required to report new or improved data related to service and performance, and waybill data, while BNSF will be required to report new or improved data related to service and performance. Although it is expected that the reported data will be queried automatically through car location message or other existing railway databases, CN, CP and BNSF will need to devote additional time to maintain and verify reported data on a yearly basis. Using data and assumptions presented above, and the methodology prescribed in the Red Tape Reduction Regulations, these railway companies would incur an annualized administrative cost of $13,793 (present value in 2012 Canadian dollars, discounted to the base year of 2012 at a 7% discount rate) for a 10-year period between 2023 and 2032.

In addition, CSX will no longer be required to report any service and performance data, while CN, CP and BNSF will no longer be required to report service and performance data prescribed in transitional provisions of the Transportation Modernization Act. Therefore, it was estimated that these companies would save an annualized administrative cost of $2,483 (present value in 2012 Canadian dollars, discounted to the base year of 2012 at a 7% discount rate) for the same 10-year period.

As a result, the net annualized administrative cost would be $11,310 (present value in 2012 Canadian dollars, discounted to the base year of 2012 at a 7% discount rate) for the 10-year period. Since the annualized administrative cost per business for CN and CP is expected to vary significantly for BNSF and CSX, the annualized administrative cost per business for the four impacted railway companies is not presented in this section.

Regulatory cooperation and alignment

The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum.

Every jurisdiction has different requirements for railway data reporting. In the U.S., rail carriers terminating 4 500 or more revenue carloads annually must provide a stratified sample of carload waybills for all their U.S. rail traffic. However, the sample approach is not appropriate for the Canadian context, where waybill details for all movements are required in order to support the LHI measure.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals and the TC Policy Statement on Strategic Environmental Assessment (2013), a preliminary analysis was completed, which concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The service and performance reporting requirements are intended to help shippers understand how well their goods are moving in relation to other goods moving on the rail network. Women are underrepresented among railways and their main client industries (such as agriculture, forestry, and mining). According to Statistics Canada, the employment characteristics of the transportation industry as a whole skew towards men (77% of employees in that industry in 2020).

The amendments are likely to entail the work of professionals in data management and information technology; male employees comprised 76% of these fields in 2020. It is worth noting that women only make up 24% of these fields, and 23% of the transportation sector as a whole. Although the proposal will not directly address the gender disparity in the industry, the proposal is not expected to have any differential impacts on the basis of gender or other identity factors.

During consultations, stakeholders were asked to identify whether any groups might be disproportionately affected by the proposal. About 30% of respondents indicated that, in rural and remote areas, telecommunications infrastructure is sparse, and therefore, internet access tends to be sporadic. Accessing the data may be difficult for shippers located in those areas. The amendments do not address the internet coverage issues experienced by data users in rural areas as these issues are beyond the scope of the Regulations. Otherwise, the railways, most shippers, and most other supply chain members are expected to have access to the data — at least at their corporate offices, which tend to be located in major census metropolitan areas.

Implementation, compliance and enforcement, and service standards

Implementation

The requirements come into force 90 days after the publication of the Regulations in the Canada Gazette, Part II.

Following a challenging winter for rail service in 2021–2022, where many shippers raised concerns about the need for improved service and performance information, TC is of the view that it is imperative to have the enhanced indicators available to stakeholders as early as is practicable to increase transparency and accountability. Further, the Supply Chain Taskforce recommended that the government develop greater visibility into the end-to-end supply chain, and these amendments are seen as a vital element in responding to this recommendation.

Following prepublication, railways provided feedback that the 90-day time frame would be challenging, as there is significant effort required to program, test, and develop the new indicators in the manner prescribed by the regulations. Despite this feedback, TC believes the 90-day time frame is realistic and achievable. It will strike an appropriate balance between the interests of shippers and the concerns around feasibility for rail carriers. While the work for rail carriers will involve updating existing systems and/or creating new systems to comply with the new requirements, the impacted railways already have systems in place to generate and collect the raw data that is necessary to develop the indicators. They have also been consulted extensively to ensure the feasibility of the new requirements, and to align methodologies with existing practices wherever possible. Moreover, railways have in the past proven they have the capacity and resources to comply with new reporting requirements within a limited implementation time frame.

The reporting time frame is intended to ensure that there is no gap in reporting, so that the Agency continues to have the data it requires in support of LHI. For example, if the requirement enters into force in mid-July, the first reporting period under the Regulations will be July, and the report for all of July will be due at the end of August. In this scenario, the report for June will be submitted in accordance with the transitional requirements in the TMA, at the end of July.

Compliance and enforcement

The requirements include detailed methodologies for calculating the indicators, which carriers will be required by law to follow. Transport Canada will continue to work proactively with railways to clarify and correct any discrepancies or uncertainties that may be observed in the data before it is posted publicly, similar to the internal validation process that is done for the transitional metrics to review for anomalous or missing values, etc. Moreover, it remains an offence under the CTA to knowingly provide false or misleading information to the Minister or to any person acting on behalf of the Minister in connection with any matter under the CTA. A rail company that contravenes the CTA or regulations made under it could be subject to a fine of up to $25,000. Contraventions of the waybill or service and performance reporting requirements could also result in administrative monetary penalties of up to $25,000.

Contact

Joel Dei
Director
Rail Policy Analysis and Legislative Initiatives
Surface Transportation Policy
Transport Canada
Tower C, Place de Ville
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Email: TC.freightrail-fretferroviaire.TC@tc.gc.ca