The CTA spawns more shortlines

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Canada's two big railways, Canadian National and Canadian Pacific, want to sell a quarter of their lines, and a change in the law makes that a lot easier than before.

The new Canada Transportation Act requires railways to make public plans to discontinue lines and give shortline companies the opportunity to take over. If there are no takers, the line must be offered to federal, provincial and local governments; only then may the line be torn up. The Railway Association of Canada believes the process may take at least seven months.

Interested companies include RailTex from Texas, Quebec Railway Company, and Central Western Railway Corporation. "Our policy is to buy lines," says Pierre Martin at Quebec Railway Company. In total, CN and CP want to rid themselves of 14 000 kilometres of line in the next few years, so he has quite a lot of line to buy.

The reform also gives the railways more freedom to set prices. A customer may still complain about prices to the Canadian Transport Agency, but any rulings take months to execute. This reform has been likened to the USA's Stagger’s Act from 1980 but does not go as far.

The railways are happy with the reform, but the Western Canadian Shipping Association says it is unfair. Customers must be able to appeal prices quickly, the WCSA says, as high prices may hurt the competitivness of Canadian products. Many members of the WCSA send goods from isolated communities where there is no alternative to the railway, says Bob Renwick, the WCSA's president. The railways counter by pointing out that prices have gone down 30% since another reform 1987, contrary to trends in manufacturing.

Canadian National was privatized in November 1995. Almost half of CN's debt was written off, against the government taking over CN's commercial properties, including the 553 metre CN Tower in Toronto.

Canadian Pacific is trying to restructure the eastern part of the network. A special company has been formed, the St Lawrence and Hudson Railway. It comprises the former Delaware & Hudson Railway Co. The western part of CP is doing better, transporting bulk goods such as coal and grain.

This article has been adapted from one in the Swedish magazine TÅG, September 1996 issue.