Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 14 - Evidence - May 14, 2007
MONTREAL, Monday, May 14, 2007
The Standing Senate Committee on Transport and communications met this day, at 2:34 p.m., to examine and report on current and potential future containerized freight traffic handled at, and major inbound and outbound markets served by, Canada's Pacific Gateway container ports, East Coast container ports and central container ports and current and appropriate future policies relating thereto.
Senator Lise Bacon (Chairman) in the Chair.
[Translation]
The Chairman: Today, the Standing Senate Committee on Transport and Communications is meeting to examine and report on current and potential future containerized freight traffic handled at, and major inbound and outbound markets served by, Canada's Pacific Gateway container ports, east coast container ports and central container ports and current and appropriate future policies relating thereto.
Appearing before our committee today is Dominic Taddeo, President and Chief Executive Officer of the Port of Montreal. Our committee is pleased to hear from you a second time. Mr. Taddeo, we will leave the floor to you, and I am sure that my colleagues will have a number of questions to ask you.
Dominic J. Taddeo, President and Chief Executive Officer, Port of Montreal: Thank you, Madam Chairman. I am pleased to be here today.
On behalf of the board of directors of the Montreal Port Authority, I would like to thank you for this second opportunity to appear before you to discuss the containerized freight transport system in Canada.
With me today, as was the case in Ottawa, is Jean-Luc Bédard, Vice-President, Operations and Harbour Master, and Robert Masson, Vice-President, Marketing and Development. I am also pleased to introduce to you Ms. Sylvie Vachon, Vice-President, Administration and Human Resources, and Jean Mongeau, Vice-President, Legal Affairs and Corporate Secretary, as well as France Poulin, Director of Communications.
As you know, the Port of Montreal is a multifunctional port and is the only container port on the St. Lawrence River. It also plays a key role in the St. Lawrence/Great Lakes trade corridor.
[English]
I hope that our participation as a witness will give you a better appreciation of our port's competitiveness in Canada and on the North American and foreign markets. By the end of the day, and during tomorrow's session, the committee will hear various representatives of the shipping and port industry in Montreal. I am convinced that their comments will give you a better understanding of the concerted effort under way in Montreal to continue to make our port an efficient and highly competitive intermodal platform and the gateway to North America's heartland — a fully integrated intermodal, seamless, safe and secure system.
[Translation]
Our partners in industry are not the only ones to have grasped the competitive advantage that Montreal affords them. The business community understands the key role of the Port of Montreal in the competitiveness of their business model.
[English]
Indeed, only last week, Henri-Paul Rousseau, president and C.E.O. of the Caisse de dépôt et placement du Québec, addressing the members of the Board of Trade of Metropolitan Montreal, emphasized the importance of some of Quebec's competitive advantages. I quote:
[Translation]
Quebec has a number of competitive advantages because of its location. These include operating costs, hydro-electricity and our strategic location in North America, with the port's facilities, and its intermodal capability, situated on the shortest shipping lane between Europe and America.
[English]
The work currently carried out by the Senate committee thus represents an excellent opportunity for the shipping industry and the Port of Montreal to explain our importance in Canada's industrial competitiveness, while highlighting what we will need to continue our growth and take on the challenges of globalization in an increasingly competitive environment. In this, the Port of Montreal continues to be a leader in its sector in North America and a model of efficiency. Its economic importance proves this.
[Translation]
The Montreal Port Authority is a profitable, independent federal agency that manages Montreal's port facilities, without funding from the various levels of government, and no financial impact on taxpayers. In 2006, the port generated a net profit for the 27th consecutive year. With annual economic spin-offs of $2 billion and some 18,000 direct and indirect jobs created, the Port of Montreal is an economic development engine for Montreal, Quebec and Canada.
In the next few minutes, I would like to talk to you about the Port of Montreal's activities since last February, when I appeared before your committee in Ottawa.
[English]
Please feel free to ask me questions as we go along during this presentation.
We have copies of this presentation for you, and I understand they will be here shortly. They are on their way — it is called technology.
[Translation]
Our history dates back over 175 years in Montreal. We are a profitable arm's length federal agency established by legislation in 1999 and reporting to a seven-member board representing the three orders of government. Our mission is to provide our clients with effective port services and facilities with the greatest of respect for the environment, and to enhance and promote the Port of Montreal's competitive advantages. Our purpose is to foster business development, increase system competitiveness, ensure financial self-sufficiency, make the most effective use of human resources and maintain a good relationship with the community.
With respect to our financial information, between 1980 and 2006, we managed net profits of $302 million and spent $420 million in capital projects. We dispersed shareholder dividends or charges on gross revenues of $148 million, and we paid the City of Montreal $97 million in lieu of property taxes. The Port of Montreal, eastern Canada's number one container port, is the gateway to the North American continent. As a container market leader in the North Atlantic, our port is closest to markets in central Canada and in the Midwest and Northeastern United States. It is the only container port on the St. Lawrence River linking Montreal to over 80 countries. Please see the comparative table showing the situation for the Port of Montreal versus that of our competition.
[English]
Halifax, Boston, New York, New Jersey, Philadelphia, Wilmington, Baltimore and Norfolk — and those are 2005 figures. This shows you — a picture is worth a thousand words — exactly where we are in the hinterland and who our competition is.
[Translation]
We are strategically located 1,600 kilometres inside the continent on the St. Lawrence River, between the Northern European, Mediterranean and American markets, operating 12 months a year since 1964, even in the winter time.
[English]
I have a graphic here that illustrates our major clients in Europe, the major ports we go to, and the markets we have, the Montreal, Toronto, Detroit, Chicago access, the new one from Freeport, and then into the Mediterranean. As you can see, with respect to our container business, 96 per cent is in the North Atlantic, 2 per cent is south of here and 2 per cent is domestic. By "domestic," I mean the traffic that we interchange with the Port of St. John's, Newfoundland, for Canadian cargo destined to Newfoundland.
[Translation]
With respect to our performance model, we are serviced by two national rail carriers operating 45 intermodal container trains per week en route to Toronto, Chicago and Detroit. We are linked to major road networks allowing for over 25 truck-transport companies to have quick access to Quebec, Ontario and Northeastern US markets. Two thousand trucks a day enter the Port of Montreal. We have an intermodal platform where 55 per cent of shipping is done by rail and 45 per cent by truck.
Our integrated hub, by rail, represents 43 per cent for Canadian markets, and 57 per cent for American markets; by truck, 86 per cent Canadian and 14 per cent American. We have unitary container trains serving markets mainly in Ontario, the American Midwest and points west. We are 10 hours away from Toronto by rail, 23 hours away from Detroit, 33 hours away from Chicago. We are aiming for 24 hours to Chicago.
Through our infrastructure we offer some of the most competitive port rates and shortest handling times. Our shipping services are effective: regular dedicated service, weekly or biweekly is offered between Montreal and Northern Europe, the Mediterranean and the Bahamas.
We are now at page 12, on balanced services. Ships are entirely loaded and unloaded. We are a terminal harbour. And for those who, like myself, have been living in Montreal for a long time, you will recall the famous Craig Terminal where everyone would get off the train to get back on with a transfer.
We are a multipurpose port; we handle both liquids and solids.
[English]
Let us look at the container lines that use the Port of Montreal — and they are nine of the world's top 12 container carriers. They include the following: Maersk, number 1, MSC, number 2, CMA CGM, number 3, Hapag-Lloyd, number 5, APL, number 7, Senator/Hanjin, number 9, OOCL, 11, NYK and MOL. As I said, nine of the top 12.
The major bulk carriers are Fednav International Ltd., a well-known Canadian company; CSL, also well known, Canfornav Inc., Algoma; Seaway Marine Transport, Upper Lakes Group Inc. and Petro-Nav.
In terms of domestic carriers, for the short sea shipping in the St. Lawrence, we have Oceanex, Transport Nanuk Inc., CTMA Group. Short sea shipping, of course, stops in Montreal because of the fact that we are open 12 months a year and also because these ships cannot go into the seaway, for the most part.
[Translation]
With respect to total traffic since 2001, the graph shows continued growth. Our record is 25.1 million total tons in 2006, the port's best year in history; it should increase to 25.3 million in 2007. The table shows our growth since 1960, going from 16 million total tons to 25.1 million. I would like to point out that what you see in yellow are goods, containerized and not. The other graph shows growth in the bulk sector; oil and dry goods remain level, even throughout this lengthy period. The next table illustrates growth, if you look at the small squares, the average growth for five to ten-year periods and 15 to 20-year periods, relative to total traffic and to the number of containers handled.
[English]
It has been steady, progressive and reliable. That is a slide from 1985 to 2006, and as you can see, it keeps increasing.
Recently, we did two studies in the Port of Montreal, asking specialists in the field to examine what our growth would be, in addition to our internal studies and the Drewry Shipping Consultants Limited studies as well as the forecast we have received from the shipping lines using Montreal. We thought it would be wise and proper to obtain as well forecasts from the specialists in the field, based on economic factors, on growth factors, and we asked them to establish three scenarios, low, high and base.
The high scenario is an average annual growth rate of 4.5 per cent to 2015. That scenario represents fairly what we have experienced and attained in the last 25 years.
[Translation]
Containers are at the heart of our growth.
[English]
This one represents a comparison with Port of Montreal traffic.
[Translation]
Table 19 comes later in the presentation. You can go to table 20.
[English]
This slide is a comparison of what has happened in the last six years vis-à-vis the East Coast ports and the Port of Montreal. It compares number of containers handled, total equivalent units, the average annual growth of those ports — Boston, New York, Delaware, Baltimore and Hampton Roads in Virginia. They have seen a 4.4 per cent increase; ours has been 5 per cent. The total TEUs in the whole system is 4.6.
Hence, we are backing up what we say with facts and figures. We do not say something because we feel like saying it; what we are saying is factual.
On this slide, you see the Port of Montreal's position in total containers handled, because New York handles containers coming from Asia, also, as well as from South America, as does Hampton Roads. Montreal is too far from those markets, and the markets in Montreal are not that big for those areas, anyway. Hence, we rank third in all of the East Coast ports.
[Translation]
All traffic combined, our domestic markets in Canada.
[English]
Domestic markets represent 60 per cent of our business, the United States, 40 per cent. In the States, the northeast by truck is 15 per cent, the Midwest, 75 per cent, and the rest, which is also west and south, is 10 per cent, to give you a 100 per cent, and all of that is rail.
Security is of major concern to us. This morning, the committee had the opportunity to visit live our state-of-the-art control centre, which is the envy of all ports in North America, not to mention some of the European ports. Since 1998, we have invested $8 million in security, and we intend to invest another $10 million, to continue to be a state-of-the-art port. Last Monday, we introduced at the Port of Montreal a radiation detection portal system, to scan containers for dirty bombs, or radiation, or equipment that could be of danger to our population and our economy.
The environment is a priority for us also, and we take care of it. We have invested $3 million over the past two years in environmental projects. We have surveyed our infrastructure at the Port of Montreal, and we have covered 99 per cent of what has to be done. Of that 99 per cent, 3 per cent requires continuing projects, to contain the leakages that we noticed, mainly in the petroleum sector.
This slide represents the traffic for the first four months of this year, and there again you see our growth at 4.1 per cent in containers and 4.2 per cent in TEUs, which follow each other. There has been a total increase in the other commodities, being a multi-functional port, of 4.2 per cent. Therefore, we are well on our way to establishing another record in 2007 in total traffic.
[Translation]
In conclusion, the Port of Montreal is an invaluable asset for exporters from Montreal, Quebec and all of Canada.
The shipping lines are committed to Montreal and will be introducing over 4,200 TEU ships by 2010. As I mentioned, these ships will be approximately the same in length, but wider and more profitable for ship owners. They will make more use of our 37 metres in the St. Lawrence River. Currently, as you know, we are at 12.2 metres, and we guarantee 11.3 metres, or 37 feet. So it is very important to us. We are working closely with Coast Guard, who will probably allow the wider ships to come through the St. Lawrence where there is 250 metres breadth. I do not think that we will create any problems, far from it. It is very important for the whole economy of Quebec and all of Canada.
In terms of the long term commitments of dockworkers, ship owners and railway systems, I am proud to tell you that we have signed 40-year leases with our dockworkers.
[English]
Leases expire in 2041 with our terminal operators. The equipment is committed there and the tonnage guarantees are there. These people have also signed long-term agreements with the railways. I know the term of those agreements, but I will leave it to them to disclose that information, if they so wish. As you can see, then, we have a positive and constructive sign of commitment.
[Translation]
And the plan is to invest $175 million between 2007 and 2011, without taking the study into account.
[English]
Moffatt and Nichol — a consulting firm helping us with our strategic planning exercise — is telling us that to respond to the anticipated increased traffic over the next 10 years, it will be necessary for us and the terminal operators to spend another $200 million.
Based on that information, what are the industry needs, from our perspective in Montreal? For ports specifically, we would like very much — and I know you have heard the same message previously, in Vancouver with respect to the Vancouver Port Authority and from Allan Domaas with respect to the Fraser River Port Authority, and you will hear it from other people. We would like access to the federal funding program for port infrastructure, security and technology. We have received funding for port security, but we are still hoping to receive federal funding for port infrastructure, for expansion of our piers and docks as well as our roadways and railways inside port territory.
At the Port of Montreal, we would like the federal government to replace the gross revenue charge stipend introduced in 1999 by reintroducing the payment to shareholders of a dividend based on net profit. Take it one step further, we do not think it is necessary, as part of the federal infrastructure, to pay a dividend to our shareholders. Rather, we believe we should pay a dividend by issuing instructions or directives to order the ports to reinvest those monies, or the dividend that they would pay, to capital projects, like we do for all the rest. However, it seems that we have to pay.
We want to replace it because private corporations, on which our commercial is based, pay dividends based on net profit but we do not. Hence, the gross revenue charge is costing us an extra $600,000 to $700,000 a year. We even have to pay a revenue charge on monies that we reinvest in stocks to generate profits from the cash that we do not need for our capital projects.
We want the federal government to establish a level playing field to support Canada's railways, Canadian National and Canadian Pacific, vis-à-vis the U.S. counterparts by introducing tax credits for the expansion of track networks, intermodal facilities and rail yards, and locomotive fleets, to say nothing of —
[Translation]
— a request they have made for a number of years.
[English]
— to get a break on fuel charges.
As well, we would like the federal government — I know the City of Montreal has made this request, as has Transports Quebec, I believe, the provincial government ministry — to make funds available to speed up the modernization process of Notre Dame Street, which will be called an urban boulevard, as well as Highway 30, which we have been hearing about, as well as the east end. We also believe we need one or two other bridges to connect to the Island of Montreal.
[Translation]
Madam Chairman, I am ready to answer your questions. That was an update on our presentation in Ottawa in February. It is a pleasure to be here again. Thank you for your time and, for the second time, for your patience.
The Chairman: It does not take patience, it takes interest.
Mr. Taddeo: Thank you very much, Madam Chairman.
The Chairman: I am going to start with the first questions; I will then give my colleagues the floor. At your first appearance, you spoke quite proudly about the 30.3-per-cent increase in container traffic at the Port of Montreal over the past five years. You also mentioned that a study on the capacity of the port had been commissioned in response to the lack of space on the Island of Montreal, and that that would have to be taken into consideration. You also talked about a study by IBI Group, if I am not mistaken, confirming that the Port of Montreal would experience sustained commercial traffic growth. That study also confirmed that your infrastructure improvement plans include the added capacity the Port of Montreal will need in the near future.
Could you give us an overview of the findings of the IBI Group's study? Could you also provide us with a copy of that study, or is it strictly the property of the Port of Montreal?
Mr. Taddeo: First of all, IBI Group did that study on the competitiveness of the Port of Montreal, on our continued ability to compete for traffic, i.e., our main market, Toronto, the U.S. Midwest and the U.S. North East. Completed in 2005, that study confirms that in strict dollar terms, our rates are indeed attractive. For example, sending a container from Stuttgart, Germany, to Chicago, including all costs associated with the transfer and transportation of the container: in Europe, by ship, truck or rail; handling in Europe and the sea crossing; costs in Montreal, pilots, Coast Guard, all that shows that we still have a monetary advantage. As you can see, that is quite an important factor, combined, of course, with efficient service. We can certainly provide that information, after checking the Access to Information Act. I do not know that act off by heart, but since it is information that has been shared with the industry, we would be happy to send it to you. If not the entire report, at least an executive summary with the highlights.
As for the second study, it is a study that we commissioned.
[English]
We gave it to the Moffatt Group, which is well known internationally. They have done major studies in Western Canada, in Vancouver and Prince Rupert, as well as in Long Beach, Los Angeles, just to mention a few ports on the West Coast. I presented the executive summary of the Moffatt study — it is not finalized — to the board last week. What the Moffatt Group is telling us is that we will have to enhance our modus operandi of the way our terminals are operating right now. You will be hearing testimony tomorrow from Mr. Carré, who is with us, and from Mr. Doherty. We have to share that data with them.
We have already discussed some of the changes that will be required on their terminals, to maximize utilization of the property, because of the fact that in the City of Montreal —
[Translation]
— we are tucked away on Notre-Dame. We have a relatively high productivity rate. The study shows that among ports in the Americas, we come first in terms of productivity. The study also forecasts an increase in traffic to 1.9 million containers handled. If we do not do something, first of all, about the modus operandi of ship owners and dockworkers, and then about the investments that need to be made in the rail network, the port roadway and our infrastructures, as well as the investments that need to be made by the dockworkers, we will not be able to cope with the growth, be it on the Island of Montreal or elsewhere.
The next step — and the board dealt with this last week — will be to meet with the dockworkers, who are already fairly up to speed, to get them to agree, because this is going to require their involvement. They have already indicated to us that they were willing to invest in the necessary portal cranes.
Truck access to the Port of Montreal has to be improved. There has to be a central directory that can be used throughout. Trucking companies will be able to go to any terminal they wish. And, of course, there will have to be discussions with ship owners about schedules and the services they provide. They are already anticipating the growth by doing a study on enlarging their ships.
So, we are confident, and as they say, they will jump on board and follow through.
Then, we looked beyond 2015. Will traffic keep increasing? It looks like it. Can that be handled on the Island of Montreal? The answer is yes. On the Island of Montreal, sites have already been identified. But at this stage, it is premature, because we have other things to work out with other people, before discussing that. There are docks we can fill, but it will be very expensive. So it is a huge decision.
The study shows that by 2015, over and above the $170 million that we want to invest in other infrastructure, the Port, ship owners and dockworkers will have to spend almost $200 million on the Island of Montreal in order to remain the major player that we are. So we are very confident and will remain so. My successors will make sure it stays that way.
The Chairman: Some port authorities have told the committee they had concerns about the delivery of containers by rail. Right now, there is a looming labour dispute between Canadian Pacific and maintenance personnel. What is your assessment of the rail service at the Port of Montreal? And do you have any suggestions on how to improve rail service in Montreal?
Mr. Taddeo: In Montreal, I have to say that the complaints are minor. As I mentioned earlier, Canadian Pacific has just introduced service to the Chicago market in 33 hours. In Montreal, we have two railway companies and there is genuine competition between CN and CP. Of the almost 60 per cent of container traffic handled — entering or leaving the port by rail — CP accounts for almost 80 per cent and CN, for 20 per cent. So CP is the major player. It is in their interest to have efficient service.
As for the looming strike, I have been informed that CP has made arrangements with the port authority to continue providing service. They have had this problem before, three years ago, and they got through it, so much so that the unions asked them to come back to the table to resume talks.
But as for the Port of Montreal, CN also already has its new yard on Highway 13, which is called Taschereau yard. CP has bought some land in Rigaud, which they are preparing, in order to move their marshalling yard from Outremont in downtown Montreal for use that includes truck access; that will mainly benefit containers leaving Montreal for New York, Boston, Toronto, Albany, or Burlington by truck. They will no longer have to go downtown. They are going to have bridges there.
That is why we feel Highway 30 is crucial. Once they are set up there, they will be able to take Highway 40 to Valleyfield and backtrack, if necessary. From the standpoint of the Port of Montreal, the competition between CN and CP is due to service. We do not have the same problems as in Vancouver and Halifax.
[English]
There are problems, but not at the same level.
[Translation]
The Chairman: Financially speaking, the Port of Montreal is profitable and you have shown that in a number of ways. However, there are two financial irritants to the port. You are required to pay part of your gross revenue to the federal government, but you would prefer to pay a percentage of your net revenue, if I understood correctly. In addition, the port pays property tax on behalf of the federal government to the City of Montreal, despite the fact that the port is responsible for its own roads and sewers. Have you entered into any discussions with the federal government and the City of Montreal regarding these two issues?
Mr. Taddeo: I am the Chairman of the Board of Directors of the Association of Canadian Port Authorities, and the topic that is very popular these days is "bills, payments and newest taxes." We tell the representatives of the central agencies in Ottawa that we should not have to pay them. The main reason is that in Montreal, we pay for our own snow removal, we repair our own roads, we pay for our own waste removal, and so on. But the City of Montreal is more interested in getting the money from the federal government. It is under discussion. We do not object to contributing, but we would only like to pay for the services we actually get. We feel that the amounts we are paying are greater than the services we are getting from the City of Montreal.
[English]
Senator Tkachuk: I have a few questions. I will focus on your industry needs and follow up Senator Bacon's questions.
In terms of the federal funding programs for port infrastructure, security and technology initiatives — and you have told us, both here and before, of the investments that the ports need to make in capital improvements and infrastructure on the ports. At the same time, you are asking for federal funding programs from port infrastructure.
Is there a policy vis-à-vis what gets paid for internally and what you expect the federal government to pay? Why is security funded by federal funding, while other infrastructure funding would be from your revenue and your profits within the port?
Mr. Taddeo: The reason for that, Senator Thachuk, is that the section 25 of the Canada Marine Act prohibits us from receiving subsidies from federal government funding.
Following 9/11, the Port of Montreal along with the other ports in Canada, in discussions with Transport Canada, said that this is a matter of national interest, that security concerns all Canadians. Your question is very valid. So, we said, "If that is the case for security, ports are crucial to the success of the economy of this country, so why not pass a special law to allow us to have access to this funding for highways, for bridges, what have you, for ports?" That suggestion is being looked at, and it is our hope that we will be allowed to do that.
When the Canada Marine Act came into force in 1998, among others, the criteria for us were, "You wanted autonomy full autonomy, you wanted your local boards of directors, you have them, and as such you will be responsible for your own funding." They gave us credit limits to go to the bank to borrow money against anticipated revenues from future traffic, but not against the port property.
In the case of the Port of Montreal, we had a good financial situation. Some ports, however — the federal government has now increased the limits for Vancouver and for Montreal. However, we still feel that if security is of national importance, so are the ports of Canada of national importance. Hence, if monies are going to be put aside, and if the Canadian economy is going to continue to grow, give us access to some of your funding; at least allow us to apply for funding for port infrastructures, extension of berths, extension of railway lines in the port, et cetera.
Senator Tkachuk: This you would normally do internally.
Mr. Taddeo: Yes. If we do not have the money, we have to go to the bank. That is the current law.
In terms of security, we would have done the same thing. We did not wait in the Port of Montreal for the tragedy of September 11th to take place. We started improving our security system back in 1998. We planned to spend the money in any event, from a competitive point of view. We made security a priority in Montreal, like we did our railway, our road service and our berth extensions.
The federal government, as a result of what they saw our competitors doing in the United States — where much money is being appropriated — decided to implement a special program. Hence, we decided to apply for federal funding for port security, rather than use our own funds. However, even if funds were not forthcoming from Ottawa, we have a responsibility in Montreal, and we assumed that responsibility, which is why we were going to invest in security.
However, now that the monies have become available, we have applied for funding — responded to the questionnaires and completed forms — and that has accelerated some of our projects. We had to prioritize our projects — there is only so much that you can spend out of your cash flow; you have to keep reserves. In the case of security, we have sped up some of the projects.
For example, right now access to our terminals is controlled manually, but we are currently in the process of doing it electronically. That will be in place, we hope, by the end of this year, next spring at the latest.
The Port of Montreal had projected that work for 2008, late 2008, but when the federal funds become available we decided to speed up that process.
On the infrastructure side, however, the monies are not available to us. Your question is very appropriate. If money is available for national interest on the security side, funding should be available also for the national interest on port expansion, port growth, development of this country.
Senator Tkachuk: On the gross revenue charge stipend — I find "stipend" to be an interesting word — how does that work? Is it a percentage of gross revenue?
Mr. Taddeo: Exactly.
Senator Tkachuk: For every dollar you take in, how much do you have to pay?
Mr. Taddeo: There is a formula. Up to $500,000, it is 1 per cent; from $500,000 to $3 million, it is X per cent; from $3 million — actually, the figures are higher than that, because last year our total revenue was $78 million.
There is a scale, and it is the opposite of the scale for net profits, dividends. In the process of doing this, they are "taxing" us, if I can use that word, an extra $1 million — $600,000 to $700,000 to $800,000 a year more, and for very little service, no service, being rendered. It is just a way for them to generate revenue and to keep us honest.
The reasoning behind this is that some people felt that, by using net profits, we would pad our expenses. That did not make sense to me. We have auditors. Why would I make all kinds of reserves? Auditors will not allow you to do that; my audit committee will not allow me to do that; the board will not allow me to do that. Why would I be interested in doing that? However, that was too logical for the people who made the decision. They decided that we had to pay on gross revenue — which is what we are doing.
Senator Tkachuk: With respect to access to funds for road infrastructure — which is another one of the needs that you have listed — specifically, Notre Dame Street and Highway 30, is that not something the province and the city, out of their infrastructure budgets, should be playing for?
Mr. Taddeo: The province has made allocations.
Senator Tkachuk: The city should, as well?
Mr. Taddeo: They are asking for this from the federal government. Hence, in terms of the infrastructure of Montreal, the economy of Montreal, I am just putting in my two cents' worth, if I can use that term, to say that what the city and the province are asking for is important. It is important because it is important for the economy of Montreal, the Port of Montreal being an important part of the Canadian economy and the Montreal economy.
Senator Tkachuk: You raised the point about railways getting a tax credit for expansion, to give them a level playing field. What do they get in the U.S. that gives them an economic advantage that we would have to counter?
Mr. Taddeo: They do have tax breaks in the United States on their roadbeds.
Senator Tkachuk: Over and above the fact that they can depreciate them?
Mr. Taddeo: Oh, yes. Yes, they have advantages. I am sure the railways will tell you that in much more detail. Burlington Northern Santa Fe and Norfolk Southern all have advantages.
These studies have been around for a while. As we say in Quebec, "des revendications" have been brought forward and brought forward, but never really to the satisfaction of the railways. The railways are part of our infrastructure, part of our success.
Senator Tkachuk: Thank you very much. I will come back in the second round with more questions.
Senator Mercer: Mr. Taddeo, thank you very much for being here and for your continued hospitality to the committee and to me, personally.
You mentioned the environmental assessment. We have heard from other ports and terminal stake holders about the federal environmental assessment process, and that it is overly complex and lengthy, not to mention redundant, given the provincial process. What has been your experience with the federal environmental assessment process?
Mr. Taddeo: It is too long, very frustrating and very costly. Is that not right, Mr. Bédard?
Senator Tkachuk: Do you have to double it up here, too, just as they do in B.C., provincially.
Mr. Taddeo: Yes, we need approval from both.
Senator Tkachuk: You do not get it parallel, you have to do one, and then do the other.
Mr. Taddeo: No, we have arranged to do it parallel here.
Senator Mercer: That is a good point. That is an improvement over what is happening in British Columbia.
Mr. Taddeo: Yes, we make sure, in all our discussions, that Quebec is there at the table. That is very important.
Senator Mercer: It was mentioned this morning that terminal operators have been prohibited from dumping snow directly into the river in the winter. However, it does end up in the river eventually, after you pick it up, put it on trucks and truck it off somewhere. Is this a federal, provincial or municipal regulation that is causing this problem and costing you all this money?
Mr. Taddeo: It is a provincial regulation, and the terminal operators are not pleased with that, because they have to pay to remove the snow off their terminals. At one point, they wanted to dump on some of our properties. We allowed that when we did not have the traffic. They used to do that; the snow would melt and go into the sewer system and end up in the river anyway. However, now we do not have any space, so they have to pick it up and bring it to a site. As Mr. Doherty said this morning, it ends up in the river anyway.
Senator Mercer: How much would it cost the operators to do that?
Mr. Taddeo: I do not have that answer, but I am sure Mr. Doherty will be able to provide it, and Mr. Carré too, when he testifies tomorrow.
Senator Mercer: All right. Recently, we have had a couple of disruptions in service from CN, and we have an anticipated disruption in service from CP When we were in British Columbia, we heard that after the labour disputes and after a particularly bad winter through the mountains, which closed the lines due to rock slides, et cetera, CN did nothing to help clear the backlog.
Have you had this similar experience here when there has been a backlog, that your two railroads have not been willing to put on extra trains, make the trains longer or put on an extra shift, if need be?
Mr. Taddeo: No, we lost maybe one day in Montreal when CN had their problems. It was only a delay. As I said earlier in my testimony, from my perspective, from the port's perspective it is important, because the shippers, importers and exporters have choices; they could go to New York, Baltimore or Hampton Roads. However, in Montreal's case, CN provided the service they had to provide.
As a matter of fact, in CN's case, in our interchange yard, which you saw this morning, they were leaving some of their containers there a bit too long, and we just made a phone call. Is that not right, Mr. Bédard?
Mr. Bédard: Yes.
Mr. Taddeo: We said, "If you do not remove those containers, that is it; we will stop your service." They did not want that, they want to be competitive in Montreal, and I am sure they are doing their best to try to attract business from the other shipping lines to go on their rail link.
Senator Mercer: Senator Tkachuk asked earlier a question about section 25 of the Canada Marine Act, which prohibits federal appropriation. There is the issue, which is not directly related to our study of containerization but is related to management of ports, of the cruise industry. Is there any assistance coming to help prepare ports, such as Montreal, for the new resurgence in the cruise industry?
Mr. Taddeo: Not right now. I appreciate that you raise that issue. In Montreal, we do need a new passenger terminal. The season is very short; we are looking at 40,000 passengers. We put into place quite a system with the Port of Quebec, the St. Lawrence River gateway, the ports of Halifax, Saint John and New York, and we are working closely with the Old Port of Montreal Corporation. We have already signed a memorandum of agreement with them that we will have a joint project. It is a combination of solidifying, if not rebuilding, the infrastructure — the dock, because it has been there since 1908. In that agreement, we are saying to the Old Port of Montreal Corporation — they have access to federal money — that we are ready to use the passenger terminal; it will be a joint project; we will operate it for five months of the year and the other seven months of the year they can use it for leasing, receptions and other things of that nature. By doing that, I believe they will be able to provide the funding.
For the Port of Montreal to invest $20 million to $25 million for a passenger terminal for 40,000 passengers that generate $1 million of revenue — I know it is a contribution to the economy, city and hotels — that a substantial amount of money, and the payback is very long term. Therefore, that is why we are working closely with the Old Port. Hopefully, the joint venture project that we have in mind will allow us to have access to some of those funds through the Old Port.
Senator Mercer: You are being creative.
Mr. Taddeo: Thank you.
Senator Merchant: You are very enthusiastic, and that is a great asset to the port. While the port is obviously a great success story, one problem that does seem to be on the horizon is that of encroachment. Given condo development, the expansion of Notre Dame Street, the potential raising of the Bonaventure viaduct and the transfer of federal land from the port authority to the Canada Lands Company Limited, it seems clear that the Port will have less land for expansion in the future and even more sensitive neighbours with which to deal.
Which of these projects poses the greatest threat to the anticipated growth in containerized freight traffic at the Port of Montreal?
Mr. Taddeo: Notre Dame Street is a priority. We need to have that, because the number of trucks keeps increasing. Even though the trucks using the Port of Montreal only represent 17 per cent of the trucks that need to use Notre Dame Street, it is a very serious issue. The second issue is Highway 30.
As far as the inner harbour is concerned, I believe people in Montreal, the boards of trade and the City of Montreal have understood that the domestic traffic to Newfoundland and the 90,000 containers that come in are all handled by truck, 45,000 in and 45,000 out. They are right at the access of the Bonaventure Autoroute, and we have served them caution. We have been working with them; we told them we understand that they want to create an urban boulevard and embellish arrival into Montreal but to do it with the understanding that there could be a negative impact on the truck traffic into Bickerdyke Basin, because those people have a 20 year lease there. That is a concern.
Bridge Street will create a problem for CN, and they are aware of that; we made them aware of it. As far as Notre Dame Street, we have told them we are collaborating with them, but they must not to encroach on port activity. They have been told, and they have been collaborating with us.
We back onto Notre Dame Street, you are absolutely right. Our big concern is that the local people, business community and political community will continue to realize the importance, and understand that, yes, we will live with them, but they have to learn to live with us. It comes all back to the interrelationship between the railways, truckers and shipping lines.
It is very nice to believe that we will expand off the island one day, 20, 30 years down the road, but there is very little space on the Island of Montreal, and to continue to stay there with the commitment that the shipping lines have with CP Rail especially, monies will have to be spent to fill basins.
It brings us back to the environmental question that you asked about the time and the delays to fill basins to be able to have the space to handle the traffic that we want.
Therefore, it is a combination of all those factors. The priority is Notre Dame Street; the second priority is Highway 30. In addition, I know there is a big issue about the bridge in the east end — Highway 25 — and that is very controversial. However, as a businessman, as a Montreal citizen, we cannot have everything; and we are headed in the direction where that bridge will be built, and has to be built. There should be consideration of another bridge, but that is down the road. There is already major congestion on Champlain and Victoria bridges and studies have been done in our region that have said we need more bridges. However, that is for the citizens to decide with the politicians and people that they put into power to manage this city, this island.
However, the Port of Montreal is there; we are appreciated. Sometimes we are in the way, but, as I said in my presentation at the annual press conference, we know we have to cohabitate. We do not want all the space, but we have certain space, and we have a mandate — the government, the people of Montreal. We want to make sure that that mandate continues to be respected.
People would like, perhaps, to not see the railway go through the Old Port for CN; but if we tamper with that, we are looking at $155 million to $160 million of extra costs for the citizens to allow CN to bypass, which would make them even less competitive out of Montreal, because now we are talking about an eight, to 10, to 12 hour additional delay to go around the island.
These are issues that we are working on with all parties involved and making sure that they continue to understand the importance that their role plays, but also they realize that we do what we have to do. I was pleased to see, for example, that Henri-Paul Rousseau, who is highly respected in Montreal, at the luncheon. It was the first time I have heard a businessman of that stature come out with that comment — and there was no prodding on my part, believe me. As a matter of fact, Ms. Poulin was at that luncheon, and to get that extract of his, we had to pull teeth.
The proof is in the pudding: Morgan Stanley invested in our terminal; the Japanese invested in the Termont Terminal, the Logistic family; Mediterranean Shipping Company, MSC, the second biggest shipping company in the world, have invested. When they came to have a look they said, "Oh, boy, this is a major gateway. We are will invest in this gateway; we believe in its future." We cannot have better than Morgan Stanley; that created the new terminal and bought it out of Touristik Union International, TUI, and Hapag-Lloyd.
When I was in Houston last week, Drewry Shipping Consultants were there. They did a study of the terminals that are being bought by the pension funds, and our terminal in Montreal came out first as far as the earnings before interest, taxes, depreciation and amortization, EBITDA, with a 22.4 earnings ratio. The people from Morgan Stanley have personally told me, "We are interested in some of your other infrastructures, maybe even on the bulk. We are looking at it, because we know it is there; we know it is important; and we know there is growth. Canada will continue to grow and play a major role in world economies."
Senator Merchant: Do you see a role for the federal government to play in order to mitigate the impact?
Mr. Taddeo: Very much so, and I was very pleased that in the discussions we had with Mr. Cannon's people, and Mr. Fortier's people, on the issue, for example, of the inner harbour — le Nouveau Havre de Montréal — Montreal's New Harbourfront, that after they came, looked and analyzed, they saw what we were doing and said that some of these lands are not really used for port or maritime purposes, so they want to transfer that to people that are specialists in land management. We said that would be fine, but when it comes Bickerdyke Basin, the railway and the passenger terminal, that is a maritime activity, and, therefore, in their mandate, their mission; it is important for Montreal, notwithstanding the wishes of some people in Montreal who thought that those lands should be transferred for habitation or commercialization. They said "No, that has to stay as port activity." Port activity, the way Montreal is built, is spread out, and it cannot be concentrated in one area like it can in some ports in the world.
Therefore, the federal government fully understands our role, and very appreciatively. If I may, we were lauded as an administration by Mr. Cannon when he made his speech, which was very nice; he was sincere.
[Translation]
Senator Dawson: Perhaps we will take the opportunity to ask Mr. Cannon to help you out with cruise ships, particularly in Eastern Canada. We do not want to have a week link in the cruise industry, i.e., to have excellent facilities in Quebec City and not so great facilities in Montreal. It is completely beyond our terms of reference, but I think you can count our cooperation.
Mr. Taddeo: Thank you very much.
Senator Dawson: You are supportive of the City of Montreal, with its infrastructure projects, and of the Governments of Quebec and Canada, with Highway 30. You want tax changes for railway companies. I find you generous toward others, but in your case, it seems clear to me that we have to modernize or simplify the way the Government of Canada helps you out. In the upcoming weeks or months, we are going to have to make recommendations on how Canadian ports can be competitive, because you do not compete with Halifax or Vancouver, you ultimately compete with the world. If we do not give you the tools to modernize as a port, given your limitations, you are going to have problems.
Here is my question: you mentioned with your figures that your traffic would double in the next ten years. You only have a little bit of land available for this development, and even if you do it in cooperation with the Department of Transport by transferring land to them, how can you reach that level of growth with so little land available?
My second question is much more technical and more straightforward. You said it now takes 33 hours to get to Chicago, and you hope to bring that down to 24 hours. When you say you are going to try to do that, is that in cooperation with the railway companies?
Mr. Taddeo: Yes, and with the shipowners.
Senator Dawson: And without getting too technical, how are you going to manage that?
Mr. Taddeo: It is quite a complex process. We are talking about arrival and departure times for ships. If there is a container in Chicago, and the exporter wants to send the goods, that means accelerating the process, improving it and using technology more. And reducing waiting times and transfer times. All of that has been done over the years.
Senator Dawson: Okay.
Mr. Taddeo: In the beginning, in 1986-1987, our system took 72 hours. Today, we have brought that down to 33 hours by trimming off an hour here and an hour there. Things like that. Twenty-four hours may be a bit of a dream, but why not go for it?!
To answer your question about the amount of land we have and the level of growth, we are talking about the modus operandi and the information we currently have. I will give you an example that is not unfamiliar to terminal operators about the amount of time spent by empty containers at our terminals; we did a full analysis and review, and according to the terminal operator, an empty container stays at the terminal for eight days. The modus operandi of the terminal is not our concern per se, it is their responsibility. They too are there to generate revenue and do business. But we tell them: look, you are here, you have long-term contracts with us and you have tonnage guarantees. You have to face the fact that something has to be done with the empty containers. And then they say: "Yeah, but we want them close to our terminals. Do you have room?" They will be stored for just two days at our terminals. That will make room, increase the flow.
As for export containers, Kevin spoke to us today about import containers, there too, the waiting times on our wharves are significant. Maybe they will stay in Montreal's remote marshalling yards and arrive just in time. They will not have to be brought by train, unloaded, put on the ground and then transferred. Perhaps they will go straight from train to ship, as is done for export. Things like that.
Operators will be asked to buy or install portal cranes. They are already aware of this, but they are going to be asked to install more equipment for even faster turnover. We will invest in the railway network by adding another 25,000 feet. Before, trains waited in our interchange yard. But we told the railway companies they could no longer wait. We have no choice, we are in very cramped quarters. That is the bottleneck. Between the ships arriving, trucks coming to the port, containers having to wait, it is a whole process. And with technology, we are proud to report that it is running smoothly.
But beyond 2015 and 2020, on the Island of Montreal, there will be other choices to be made. It depends on the partnership between the railway companies and the shipowner, the companies that bring the ships. It depends on them a lot. CP is just on the Island of Montreal, they have no access to the south shore. They could have access on the CN line, but that would be too expensive and would make it uncompetitive. So those are methods we are going to use initially to double traffic. And we are confident that we will reach our goal.
Back when we had 630,000 containers on the Island of Montreal, we were told: That is it, you cannot take anymore. We are up to 1.3 million and we are still in business. So we are going to continue to move forward with the involvement of our people and the cooperation of the dock workers, inspectors, pilots and the Coast Guard. Full cooperation is needed. When we talk about partnership, we have a real one here, not to say that the other ports do not have one. We have to have one. We meet twice a year, minimum, and discuss. Just last Friday, in fact, the Competitiveness Committee met. Next week, there is an Access Committee meeting.
The various stakeholders know what is going on and what the impact on the port of inaction will be. Whether we are talking about bigger ships or the environment, it is very important for us to have an agreement as quickly as possible with Coast Guard. That agreement is important to determine possible risks. Because, at any time, someone could disagree and block the process. That is inappropriate. There are ways of doing things. If, say, two ships are coming at the same time, well, one could maybe wait and the other proceed. These are all things that can be done.
The same thing goes for water levels. Twenty years ago, there was no way of predicting water levels; today, with the Internet, that can be done.
The question is quite appropriate. Because it truly is a challenge for my successors. Full cooperation from dock workers, shipowners, railway companies, truckers and longshoremen is crucial. If not all of these people are involved, you have a serious problem.
[English]
Senator Tkachuk: Sir, you have let it be known that you are retiring. People are obviously looking for your replacement. I feel it will be difficult. I thought I would ask you, since you are retiring, what you see in the future for Canadian ports. If you were setting policy for Canada, what would your priorities be, and what would you like to see take place?
Mr. Taddeo: Thank you very much for your comments with regard to my career and my retirement. I would streamline the port system, reduce regulations, really commercialize the people running the ports and have an overview. A classic example is the system you have right now in Vancouver, where there are three ports that all play specific roles and all have their local boards, local CEOs. There is now talk of having one structure, and that should be the case. It took so long in Vancouver — why, I do not know; but they all have a role to perform.
Senator Tkachuk: Everything takes long in Vancouver.
Mr. Taddeo: In the rest of Canada, it is discussions; for example, now we talk about the Atlantica Project. I am sure you read about Al Soppit of Saint John, New Brunswick saying that it is all very nice that Halifax is getting such attention. However, what about Saint John, New Brunswick as a gateway? He has a point. It is the same in our corridor, St. Lawrence-Atlantic.
I would like to see, and would strongly encourage, a study. Everybody wants to be important, and economies are important. However, there are certain myths that are out there that will not fly. The government should have somebody there to say, "Speak to the shipping lines, to the people making the investments; ask them what their gateways are and why they are using those gateways." Do they believe, for example, that we can bring in a big ship with traffic from India, and then put it on a small ship and go, with all due respect, from Halifax to Montreal to Toronto, and then in the winter, rail it? It just will not fly. It has been tried, and it did not work. People will say, "Well, we hope it will happen now." However, it will not happen. The shipping lines themselves, they do not wait for government; they look at those options, because they are looking for fast, efficient, effective ways.
We do compete with Halifax. We do not like to admit it in Canada, but we do compete with Halifax. The shipping lines on the North Atlantic have moved some of their business to the Port of Montreal to reach the markets faster and cheaper. It is not out of disrespect for Halifax that I say that, rather it is a reality. They have moved traffic out of the Port of New York; that is why we see growth, and we see increased market share — MSC, Hapag-Lloyd. That is why we continue to invest. We went to see those people, and we said, "You say you are committed to Montreal; you say you want better incentives out of Montreal, and you want better productivity. We are ready to give it to you. What will you give us in return?" They gave it to us.
With Mr. Masson's predecessor, in the fall of 2005, I went to see MSC, and they told us that they wanted to penetrate more into the Midwest U.S. with the railway, but that our incentive plan should be embellished. I said that we would embellish it provided they generate that much more tonnage. They exceeded the tonnage that they said they would bring through Montreal by 50 per cent, and they did it at the expense of the Port of New York. It is faster to reach the Midwest U.S. out of Montreal than it is out of New York, because they do not have good rail systems.
I sent Mr. Fratianni a note congratulating him, last August, on maintaining his commitment and noticing that the traffic had more than doubled from what he said it would. He answered right back and said, "Fine, now give me more embellishment on your incentives."
That is what I would like to see. I would see where, in all of Canada, we would deregulate and have more appreciation for what is happening; and more understanding, and less concern. Regulations have to be there, but given the Canada Marine Act and the tools to the people running the ports, the responsibility is there; but there is still an overview. Again, maybe it is a picayune example, but we have a Canada Marine Act with a board of directors, auditors, me, corporate governance rules and all that, but we have to send reports to Ottawa, to somebody in Transport Canada, stating that our financial statements were audited. These people come and check to see that our minutes are properly kept.
Therefore, I think to myself, as a normal human being, what the hell are these people doing? I am here, and I have a board of directors made up of intelligent, responsible business people; I have auditors that say these statements are okay. However, the act says that I must say at the annual meeting that the financial statements have been audited by the auditors, because somebody, somewhere, maybe was insecure and said, "You have to say it." Somebody, somewhere, was insecure, and they sent people — you have people in Montreal, in Quebec, and you have them in B.C. also — to attend meetings to make sure that we are respecting the act. Why are they doing this? We do not need that. That is where streamlining comes in, and in doing that, cost are reduced and ports are helped in moving forward.
They should look at the whole structure and the reality. The seaway is important. We talk about the business corridor, and I am honoured it is important. However, it is important mainly for bulk.
I am still asked questions. People say that there are studies being done and that they will send container ships through the seaway. I tell them, no, they cannot send them through the seaway because it is closed three months of the year, not deep enough, not wide enough and it is too costly. These are facts. However certain people believe it is all the fault of Montreal. It is not Montreal. This is reality, and these are facts, yet for some reason people want or seem to ignore them.
The regulations are one aspect I see, and also making sure — as they did in Vancouver — that in various parts of Canada you use your infrastructures, instead of allowing them to compete. Halifax has a role to play with India, for example, bigger than the role of Montreal. Montreal is already receiving some business that is going through the European ports. However, the bigger ships that can go through the Suez Canal are looking at Halifax, which is fine. Let us look at that and see how that can be beneficial to that region for the rest of Canada. Let us not put them in competition, because we do not need to be competing; we are all trying to serve a country called Canada.
Senator Tkachuk: We are trying to not only to look at the containerization phenomena but also to develop recommendations. What other people in this country, or people outside of this country, do you feel we should — in the time we have remaining in our Committee study — consult with and ask to testify, who may not have testified before us, as you have so ably done today?
Mr. Taddeo: I have seen the people that I have suggested for Montreal. I have seen the people you have interviewed in Vancouver, and I really do not feel that there is anybody else to whom you should speak. If you were to speak to an American port, they do not like the fact that Montreal, for example, is competing with them, but in the Port of New York they receive money from their citizens to build their infrastructures. They can borrow money. They can go and float bonds, as you know. As far as the people in Montreal are concerned, we have sent a list that we feel are the major players that will testify — and I hope, for example, Holger Oetjen will testify. I was told that CP and CN will be testifying in Ottawa. I am sure that Mr. Bilodeau will say what he has to say. I do not know who will be testifying for CN.
I hope Mr. Oetjen from the shipping industry in Montreal speaks. I know Kevin Doherty and Roger Carré are effective, efficient, reliable spokespeople for the terminals and for the shipping lines that they represent, and I am confident that they will say the same type of thing that you heard here this morning from Montreal. They have committed to this city, port and gateway, and they are doing their darndest to continue to make it grow.
Senator Tkachuk: That should be good, unless you can tell us the name of the person who told you that you have to haul all the snow away, rather than have it melt into the river. I would like to hear from him.
Mr. Taddeo: I will make sure that we send an email to Kevin Doherty, so he can give you the answer tomorrow.
[Translation]
The Chairman: Thank you very much, Mr. Taddeo, for being here today. We may have overdone it, because we went beyond the allotted time. But it was a very important question and answer period for us in preparing our report. If we do not get the chance to see you again, we would like to wish you a happy retirement. It will surely be an active retirement. Knowing you, I am sure you will not be twiddling your thumbs. We wish you all the best and good health.
Mr. Taddeo: Thank you very much, Madam Chairman, it is a pleasure to see you again and to appear before your committee for the second time.
The Chairman: We are going to take a five-minute break and then continue with the other witnesses.
(The meeting is adjourned.)
(The meeting resumed.)
The Chairman: We are going to continue with two new witnesses, from Robert Transport Inc., Mr. Claude Robert, President and Chief Executive Officer; and from the Association du camionnage du Québec, Ms. Sophie Tremblay, Coordinator, Technical and Operational Matters. We have made you wait for a bit, but do not worry, we will take all the time we need to hear you out and ask you the questions we need to ask. I think you have seen how interested senators are in this. Welcome to our committee. Ms. Tremblay, you have the floor.
Sophie Tremblay, Coordinator, Technical and Operational Matters, Association du camionnage du Québec: Thank you, Madam Chairman, and members of the Senate Committee, for inviting the Association du camionnage du Québec, and Robert Transport Inc., to talk to you about trucking and the interaction with ports, primarily the Port of Montreal.
I will just quickly tell you a bit about the Association du camionnage. Founded in 1951, the Association has around 700 carrier members. Our members have 5 vehicles or more, they are transportation company fleets. We have around 100 members who transport containers, either exclusively or occasionally. The members of the Association du camionnage carry out nearly 80 per cent of paid transportation in Quebec. That is quite a lot. The mandate of the Association is primarily to defend the interests of carriers in Quebec, to ensure regulatory harmonization, both interprovincially and between Canada and the U.S., and to inform our members on topics of interest or concern to them, such as taxation, regulation and infrastructure. We work to maintain the highest possible level of management skill through the provision of training according to company needs. We also provide well-priced compliance assistance tools, which are accurate and tailor-made, thanks to purchase volumes. There is also an online help service on regulations, procedures, advice on road safety compliance and other regulations that govern us. Finally, the Association du camionnage du Québec is one of seven other provincial associations, providing coast-to-coast coverage, from Newfoundland to Vancouver. These associations are grouped together under the Canadian Trucking Alliance. Mr. Robert, President of the Canadian Alliance, will talk to you about the Alliance.
Mr. Claude Robert, President and Chief Executive Officer, Robert Transport Inc., and President, Canadian Trucking Alliance: Madam Chairman, thank you for asking us to appear before the committee. I could talk to you about Robert Transport Inc., but I would rather speak in my capacity as a representative of the Canadian Trucking Alliance. My mandate, and my primary mission, is to move towards harmonization in Canada so that we can compete in today's globalized context. I will begin by addressing the lack of harmonization in the Canadian trucking sector before moving on to discuss intermodality concerns, which essentially refers to concerns relating to the transportation of containers.
[English]
For the benefit of all, and to make sure everybody well understands, our industry is never named first, as you have seen, during any presentation. You are talking airlines, maritime, railway and at last you are talking trucking.
We are always the bad people, the people that use the road and the highway, the people that are supposed to be the worst for environment, the people that are always on the first page of the newspaper if there is an incident. However, the reality is that, for all those who think that way, they do not know what trucking is about. Intermodality would be nothing if there were no trucks to deliver the goods.
Airlines would take people, but they need cabs or buses to take people home, if not cars. We need infrastructures to get airlines moving; but they are always talking about airports. If we talk about shipping, it is exactly the same situation. When goods coming across the ocean from Asia — or from anywhere else — arrive, if they are not put on a truck to deliver to you or to the store where you could go shopping, where you could pick them up with your cars, you would have anything in your house.
However, we are always fourth on the list, whenever you talk about transportation. That is a little concerning. You will talk about everything today, or in your report, and you will listen to many experts dealing with shipping and railways and asking for subsidies and so on. We are the only industry that is absolutely not subsidized. We get nothing. We have to fight. We accept the rules that you fix in terms of environment, and we live with them.
In 2010, our trucks will be in such a situation that the air coming out of the tailpipe will be cleaner than the air coming inside the air intake. We are just a finger away with the 2007 regulation. We are still buying trucks and still giving service, even though our costs are growing, and nobody does anything to help us. They do not even consider giving support or acceleration tax credit or depreciation, or nothing whatsoever. I am greatly concerned.
Today, talking about containerization, some of your questions deal with efficiencies, others talk about environment. Other questions talk about how to have better coordination between all the modes of transportation. I am glad we are here, but I am very concerned about how much of your report — maybe a paragraph or two — will deal with trucking. I am curious to see the report, because I am certain that this will happen.
I have seen it before, and I will still see it tomorrow. I am certain, because it is easy to show all the big infrastructures, the billions of dollars that the railways are investing and their level of revenue; whereas, in the trucking industry, it is always small companies. There is one company in Canada that is doing $1 billion in sales. Two companies in railways are doing over a $100 million in sales.
How fragmented is our industry? How small are we, and how little have we to say? How little are people concerned about our drivers, about the people that are moving goods during the night, et cetera? The first thing they say about us is that they are stuck in traffic in the morning because of the trucks that block all the circulation.
In reality, our guys have been on the road all night long, while you guys were all sleeping. In the morning, if we do not deliver the goods that used to move by rail, the goods will not get to you. That is why our people are on the bridge at 7 a.m., in order to make the deliveries, because otherwise the goods do not get to the customers.
Therefore, once we talk about the container business, I do not know how long you want to listen to it, but one thing I could tell you is that even though everybody will claim that we are in 2007, in my opinion, we are still probably in the 1980s. You should go to Europe, particularly Rotterdam, if you want to see technology. You should go into the large ports, and then you will see how it works.
In Montreal, we work from 8:00 to 4:00. It takes 30 minutes to get ready and then we get the first containers at 8:30. The carriers have to get up at 6:00 in the morning to get through the bridges, to get in line, to wait for their turn, to pick up containers. Once they have got the containers, it is probably 9:00 or 9:30, and then they have to make a delivery — either drop off a container or pick one up. Sometimes the driver will make a turn in his day, some others will be luckier, they make two turns. The ones who are very well organized do three turns in a day. After 4:00, forget it, you cannot even get a box.
We are still in the Stone Age. We are certainly not up to par. Today, we have two railways. They decided — at least one company — that they will not hold empty containers in their yards, because they use the yard to put loaded containers.
Do you understand how containers work? You take a truck, and you pick up an empty container. However, when you pick up an empty container, you have to travel 20 miles or 15 miles east to pick up that container. Then you go to the customer, who could be located in South Shore or North Shore, or whatever, and then the loaded containers are taken to their yards. You have to take appointments two days ahead of time, and the appointment time is 11 at night.
That would be interesting to do your shopping that way, do you not agree? You would go to Wal-Mart at the end of the city to buy the bags, go to the shopping mall, which is open at midnight at the other end of the city, and then go home. That is how we are treated. If you do not believe this is true, we could write a book or go to the National Film Board to make a movie on this — throw this on a big screen.
Senator Tkachuk: Then you can get a subsidy, though.
Mr. Robert: Yes, and get a subsidy to make the film.
Senator Tkachuk: It will just make you angrier.
Mr. Robert: Yes. At least, we can show the pictures of what is happening. This is absolutely a terrible situation. Our company has a facility in Toronto that is not much better than the one in Montreal even though over there we deal with railways only; there is no port or such a limited amount of containers going through the port.
Everybody is talking about and has in mind, and I do agree, that the Port of Montreal is probably a fundamental key to development of the city, but I am sure we can do much more. Infrastructures have to be improved at the port. The Port of Montreal bought facilities in Contrecœur through the influence of the federal government, and I am of the opinion that this facility should really have been looked after properly.
First, they would be able to get bigger boats, because there is more water; second, there would be no more congestion having to deal with the City of Montreal, Notre Dame Street and all the infrastructures of Bonaventure. Keep in mind there are tunnels and no dangerous goods are allowed, so the trucks have to go to Jacques-Cartier Bridge — they have no choice — or to Champlain Bridge, but that is at the other end. Put yourself in a truck driver's seat for a minute and just try to figure out how you would manage to pick up and deliver the containers. You will realize the degree of frustration that these people must endure. It is terrible.
Certainly, there should have been a vision, but Transport Canada, a long time ago, decided that trucking was not important. They decided to throw the responsibility, after deregulation in 1988, to the provinces.
Now you are talking to us about having a vision for intermodality, and one of the most important elements at the end, to finish the curve, is the trucking, yet Transport Canada does not even deal with it. Therefore, what are we doing here? We will discuss issues that, in the long term, will be discussed again and again. In life, if you want to accomplish something, you have to have a vision. You have to make a plan; you have to look into the long term to know exactly what needs to be done.
Therefore, if you want to put all the parties to work together, there is one element of the puzzle that you are not part of anymore, because you have thrown this away in 1988. Trucking is the responsibility of the provinces. Infrastructures are the responsibility of the provinces.
You have the provincial government and the municipal government. Mr. Taddeo is right about his concerns. There is another element in the equation, which is the trucking industry, and that trucking industry makes the relationship and completes the supply chain with the customer and with the shippers. This is what is going to make our economy stay strong, or become very weak. Right now, we are stuck in the middle. That is exactly where we are, and there is nothing we can say.
As a provincial organization, Ms. Tremblay and all the members are doing whatever they can. As a federal organization, at the level of the Canadian Trucking Alliance I am talking to each province, to the association, to the minister, or to the deputy minister, to try to say that we need harmonization across the country.
Do you know that we are not allowed to go to Ontario or the Maritimes with the new technology that we have in Quebec? We have other technology, for example, the LCVs, two trailers that are allowed in Quebec, Alberta, and in B.C. We talk about free trade but we are not able to harmonize the situation within our own country. We are talking about free trade, about going to the U. S. about doing this, and doing that, and we cannot even harmonize the situation within the country.
You take, for example, environmental devices such as single tires that could reduce fuel consumption by as much as 10 per cent on the trucks. Right now, we have different regulations for Quebec and Ontario. It is not permitted in the rest of the country. Are we in a country? Do we live in the same country? We have people that want to put all of this together and have harmonization between the different modes of transportation. There is something wrong.
We are probably the largest single employer in Canada in one single industry. We employ over 250,000 people across Canada. Please name another industry that employs as many people. I do not think there is such an employer. We claim there is not. On the other hand, whenever we listen to government, in the name of environment, of taking the trucks off the road, of not having to invest into infrastructures, they are telling us that we should move the freight on rail, or we should move it by boat, it is better. At the end, you still need the trucks, and the highways, and the infrastructures to deliver the goods.
I was laughing the other day because somebody was saying Toronto would not be so bad if there would not be as many trucks, and we would use the rail the most. I was laughing. Have you ever seen a train on Highway 401? It would be funny. If there were no trucks to take the goods from the rail, to take it to the customers, or the shippers, what would happen?
Well, it is not our fault if Mr. X, Y, Z, works from 8 a.m. to 5 p.m. The carriers, the truckers, have to deliver the goods between 8 a.m. and 5 p.m. It just happens that we are mixed together with the persons going to work, and we are going to deliver or pick up the goods. That is the reality we have to deal with.
If you go at night, it is funny, you could go across Highway 401, or Highway 40, and there is nobody on the road except trucks. Why? Because we use the highway at night, and it is a good thing we are there to pay the tax on the road, during the night, while people are sleeping; otherwise, the amount you would pay in tax in terms of fuel for your cars would be twice if not three times as much.
So, we do not like when people tell us "We are pulling freight away from you," or "business away from you."
Every time a truck driver takes a container to New York, what does he do? We export work. Everybody is subsidized because they build a new plant, and they created 240 jobs, 50 jobs, or 75 jobs. What about the stupid carrier or trucker that has 200 drivers, that leaves every day to go to the United States. Do you call that exporting jobs? People in general say, "Oh, I forgot about that part." If two locomotives go to Chicago you export two jobs, and then the work is being done within United States. When a Canadian driver leaves with the goods, a Canadian operator is performing the work in the United States, and you create jobs. Our industry exports many jobs, and, yes, the Port of Montreal contributes with us to take loads to the United States, and deliver, and reload. Mr. Taddeo mentioned that he exports to three markets: the Midwest, the East Coast, and Toronto, and in the case of Montreal, very little going west. How do you think the East Coast is being served? Trucks serve the East Coast because there is not a railroad. There is, but it would take so much time to deliver containers to the East Coast, that they will lose the business to the American ports. They need the trucks badly. We need good infrastructures. We need good roads. We need flexibility at the ports.
Four or five months ago, the Canadian government came up with new hours of service for our drivers. We need to be able to get the containers on our trucks early in the morning to meet the hours of service, so that our drivers can go to the destination, take eight hours sleep, and be ready the next morning to unload. That is the law. However, the trucker sometimes has to wait up to six hours to be served. He has to wait to receive the containers in the container yard — without naming it — whether it is the port or the railway. That is a big issue. If, at the end of the trip he has to return the empty container to a fourth or a fifth location, before he picks up the next one, it slows down his productivity. How can we compete?
As the President of the Canadian Trucking Association, I am very concerned with some of those elements, and I need to let you know that in Canada, the word "harmonization," does not mean a thing.
I had a meeting with Mr. Cannon, we got his attention, I guarantee you that, but he could not believe some of the things he heard. We had some of the technical people working for Transport Canada that came to visit our facility, where we showed them the new technology. The people from Transport Canada could not believe that we could not use the technology elsewhere. We are talking about environment. We are talking about doing things to protect the future, but people are not listening to the real problem, the real concerns.
These are the topics I wanted to discuss. I will let Ms. Tremblay discuss the other issues like safety, and after that, we will be available for you to answer any questions.
[Translation]
Ms. Tremblay: Madam Chairman, I prepared my presentation around your list of questions. I will therefore address each subject in turn.
With regard to security, it is important to understand that the trucking industry is highly regulated, particularly with regard to border security. As you know, this is a touchy subject for our neighbours to the south and we have to follow the stringent security regulations that they have implemented or we are not allowed to cross the border. Companies have huge security installations. A legal framework governs hiring and personnel monitoring practices. We have, of course, road safety standards in order to protect those who use our roads. We have, as you are undoubtedly aware, uniform regulations for ports. Security measures are obviously needed. However, their application is not standardized in the various ports around the country. This problem is particularly acute with regard to port access cards and procedures and makes it difficult for our truckers who want to pick up or drop off containers, fuel ships, or deliver food supplies and other services. The rules vary from one federal port to the next. As a result, truckers end up with a plethora of cards in their pockets and have to endure long, complicated and redundant security checks. If you give one message to the port authorities, for pity's sake, let it be that they implement uniform security systems. If a given individual has security clearance for one port, he or she should also have security clearance for the neighbouring ports. The ever-increasing number of procedures is an absolute aberration. So far, our plea has fallen on deaf ears; our ports are the masters of their own ships and do not necessarily want to cede any control. Both managers and truckers are currently experiencing problems and frustrations with regard to safety helmet regulations. In Western Canada, everybody, regardless of ethnic or religious background, has to wear a safety helmet. It is a strictly enforced regulation. In Eastern Canada, however, this is not the case: those who wear head coverings for religious or cultural reasons are exempt from the requirement to wear a safety helmet. This has generated a lot of frustration amongst truckers and within businesses.
Security regulations should be applied across the board. CN, for example, used the Canadian Charter of Rights and Freedoms to get an exemption. Allowing CN Montreal to do one thing and CN Winnipeg to do another suggests that compliance with the regulations is negotiable.
Your questions on supply chain transparency were very relevant. Truckers are stuck between a rock and a hard place: they have to follow the procedures chosen by the big companies, either port or rail companies. We readily adapt to the various changes, because we are flexible and versatile. The United States has what is called the Uniform United Interchange Agreement. Perhaps Mr. Robert would like to comment on this. It is a one-stop shop for intermodal transports, and all the information is standardized. It is clear and covers all modes of transport. This means that when a container goes from a boat, to a train, to a truck or from a truck, to a boat, to a train, and so forth, everything is standardized. We propose that the system be implemented in Canadian ports, as it would greatly facilitate intermodal and cross-border transport.
As I said earlier, the big intermodal organizations we deal with, be it ports or railways, make great use of information technologies. They are extremely useful, but each organization has its own system and we generally have to consult them on line. However, there is only minimal, if any, client support or services for truckers. As a result, our transporters find it extremely difficult to obtain information on the status of containers, on the content of goods and their availability. This creates delays, errors and frustration for everyone.
As Mr. Taddeo said earlier, the railways, such as CN and CP in Western Canada, are stuck with a huge problem, namely container congestion, especially for containers coming from Asia, and this has repercussions in Eastern Canada as well. In Montreal, there are not enough cars, which leads to problems, and to delays during the high season in particular, which goes from the end of summer to the beginning of fall, and it makes for an extremely difficult situation. So the problems out West affect us as well. As a result, the rail networks have become increasingly inefficient and a parallel market has sprung up. The clients or the owners of the goods in the containers, especially when perishable goods are involved, cannot use the railways to transport goods anymore, for example, from Vancouver to Ontario or Quebec, or vice versa, from East to West. There is a growing demand for containers to be trucked from Montreal to Vancouver; this might not be the most effective way of doing things, but this market is growing. We are not unhappy about the situation, but it did not exist even a few years ago and it is directly attributable to the inefficiency of the rail networks.
Mr. Robert: I would like to talk about information technologies. Clearly, much more money should be invested in ports or in the systems. However, it is mostly private companies who have invested in the railway sector.
The reality is that when trucks arrive in the container yard, it is not unusual for a driver to wait anywhere from two to three hours, and sometimes four hours, to get a container. It is horrible. Under the law, our drivers are not allowed to exceed a certain number of service hours per day, and after that their day is over. They have to sleep, and rightly so, because they have been up for many hours. But on the other hand, this is not at all efficient or economically productive. Everyone knows that Canada is experiencing economic problems, and that its economic growth is not as high as it has been in the past. Consumers buy cheap Asian products, which explains the increase in traffic at the Port of Vancouver.
But apart from that, given the low level of exports and the fact that other goods must transit through the ports or by way of rail, you have all kinds of operational problems which are due to the existing systems. If the economic situation was similar to the one in 2000 or 2004, you would find the same old problems today, such as striking truckers, horrible wait times and line-ups everywhere. It would be absolutely indescribable.
It is very likely that volumes will double over the next ten years, and I believe it is best to get out of this business because we will never be up to the task. Why? Because we did not invest at the right time. Today, everything is happening at the expense of an industry which cannot defend itself. The sector is so fragmented that another trucker will step up to the plate and will work under the table with all kinds of other people in the business, people who will not respect regulations, but who will nevertheless find a way to get the job done.
It is tough being a trucking operator who respects the regulations, standards and employees, and dealing with these situations, because as it now stands it is impossible to earn a living by playing by the rules. A good part of the problem is, first, the regulations; second, the lack of investment in infrastructure; and third, the lack of investment in state-of-the-art technologies. On top of all that, there is also a bit of bad faith.
Ms. Tremblay: As far as the environment is concerned, you asked about the applicable standard for each transportation mode. There are different types of regulations for road transportation, of which I will only mention four.
First, regarding engines, there have been different generation of diesel engine; the 2002 engine, 2004 and now 2007. These engines have become less polluting, to the degree that the exhaust will be cleaner than the air intake. As you stated so eloquently a few moments ago, we are also subject to very strict fuel regulations. Over time, the sulphur level in fuel has been eliminated, or is on the way to being eliminated, and these changes are only happening in the road transportation sector because diesel fuels for locomotives and ships are exempted. As a result, they can buy less refined fuel, containing more sulphur, and obviously pay lower taxes than we do. They pollute more on a per litre of fuel basis, they produce far higher greenhouse gas emissions and emit a lot of soot particles. There is a federal plan to reduce the sulphur levels in fuel used by off-road vehicles, but it will not be implemented before 2014.
So the will is there to get all transportation modes to use cleaner fuel. We have been operating on that basis for many years, but the way we operate is different from our colleagues in the other modes and that is deplorable. Under the regulations in effect in Quebec and a handful of other provinces, including British Columbia, we must submit to roadside air emissions tests. So a smoke-emitting vehicle can be tested, and if the exhaust exceeds a certain level of opacity or soot density, the driver must pay a fine and is ordered to fix the problem or simply decommission the vehicle. There are also federal regulations, which you are probably familiar with, governing the transportation of dangerous goods. These regulations apply to all transportation modes, and they are very strict and very extensive.
One type of equipment we would like to operate, and which has been in use in Quebec since 1985, but which is unfortunately not being used in all the provinces, is what we call "longer combination vehicles." They are only operated in Quebec and the Prairie provinces. So, apart from these two regions, they are not driven in the Maritimes or in Ontario, as Mr. Robert pointed out earlier. To briefly explain these vehicles to you, a longer combination vehicle leaving Quebec city for Toronto would use 50 per cent less energy than is currently the case for two tractor-trailers. That is good for the environment, and Ontario and the Maritimes should quickly follow suit. Longer combination vehicles have been proven to be efficient, safe and good for the environment. These vehicles are limited to certain roads only, namely highways, and they are operated by experienced drivers. It is a system that works. We do not see why longer combination vehicles could not be operated in the other provinces as well.
Lastly, there is no doubt that waiting times in intermodal terminals affect the environment. Whether it is in winter, or a summer heat wave, the trucks must keep moving; if they are stuck in a line-up where they advance six feet every five minutes, the drivers cannot continually stop and start their engines. That is a waste of gas and an increase in greenhouse gas emissions which could be easily avoided if the intermodal terminals were able to promptly deliver or make available containers when the truckers arrived as scheduled.
As respect to the federal policies and programs to improve intermodal transport, the trucking industry's vision is quite simple, both with respect to the federal and the provincial governments: take as much truck cargo as you can and put it on trains and boats. Except that, at the end of the day, it is unrealistic and impossible because a truck is always required at either end of the transportation chain. Intermodality implies that trucks should be taken off the roads. But someone, somewhere, will have to pay the price for that. The current railway system is not efficient enough to allow that in the short term. They are not efficient enough, and they do not have enough cars available. So, trucks remain essential. And millions of dollars in subsidies are flowing into the rail and marine industries, ostensibly to streamline the process, but the results have not been forthcoming. There is growth, but it comes from the market, and not from the improvement in rail or maritime transportation systems. That is how we see it.
Mr. Robert: That completes our presentation, and we hope that we will be entitled to more than one paragraph in your report.
The Chairman: I do not understand why you have so little faith in us, Mr. Robert.
Mr. Robert: Well, it is perhaps because of my 40 years of experience in the field.
The Chairman: Well, you might be dealing with people who are new and interested in your industry.
Mr. Robert: I am counting on that.
The Chairman: We are interested in the entire file, including the trucking industry. So, have a little faith in us. We began our work a few months ago. As you know, we have travelled to Vancouver, and we will soon travel to Prince Rupert. We will go to Halifax and we are here in Montreal. We are interested in all aspects, including trucking. The entire issue is important to us.
Mr. Robert: I am very happy to hear that.
The Chairman: There is one issue of importance, which was not mentioned earlier, namely, demographics, which does represent a problem for the transportation industry, because of the aging workforce. It can be difficult to recruit new drivers because of the long work hours and the long distances that they must travel. Are you finding it hard to recruit new staff? Among the possible solutions, would a shorter work day represent a solution, since that seems to be something that they are considering in other areas, according to what we have heard?
Mr. Robert: There is a shortage of skilled workers in all sectors, and the trucking industry is no different. We have a shortage of good diesel mechanics, designers and employees.
[English]
I do believe that, yes, we encourage our young people to go to university. We have a difficult time finding good lift-truck operators and plant workers. We have trouble finding machinists. Finding people to work in the industry is a big concern. In particular, in Quebec, with the low level of "natality," we have a big issue to that effect.
At the same time, we are proposing all kinds of solutions to the government that would improve efficiency. For example, and I was mentioning this before, once we are talking about "les grands trains routiers" one driver will be pulling two trailers. You know, in the West, one driver is pulling three 20-foot containers. Those are three examples where we can put our people to better use.
One thing that is terrible is that most of our employees are regulated based on 60 hours a week. In order to work 60 hours a week, the people sometimes are forced to work seven days a week. What does that mean? It means that the people are waiting, or simply cannot do a decent days' work.
We are talking about intermodality, but tomorrow I will be into another forum, and I will be talking to shippers, the shippers league, other people, receivers, the food industry, and people like this, whereas our drivers are spending an enormous amount of time — and we were compiling the amount of waiting time versus the amount of driving time.
When you are talking about the truck drivers, you see the truck on the road, you imagine the drivers driving the truck, but we know by experience that the driver is not driving more than about 60 per cent to 65 per cent of the time. The rest of the time, the trucker is waiting. Every time he waits, in order to make a decent living in our industry, he has to stretch his hours at work, not working, at work.
I will give you an example. If the driver, because of a delay, is taking a load to Quebec City, and he is tied up for five or six hours in Montreal, by the time he arrives in Quebec City, the customer is closed. What does he do? He has to spend the night in Quebec City, wait until the next day, get unloaded, and then get back to Montreal to take the empty containers. I am talking intermodality. The same rule applies in other commodities. People do not have a level of respect for truck drivers.
To answer your question, yes, there is concern about the future of truck drivers. Why? People do not want to come into this industry anymore, because they are not treated with respect. I am still driving trucks. I will give you an example. I had a load to deliver to a very large company. I took my wife with me on the trip. We had a 10 p.m. appointment and we backed up to get unloaded. My wife needed to relieve herself and when I rang the bell, I told the man inside that my wife needed to use the restroom. The man inside told us that we were not allowed inside of the building and that we would have to wait outside. My wife had no choice but to get under the trailer to relieve herself. It may sound stupid to talk like this in front of Senators, but you should talk about this in front of the real people. These people probably live in big houses. I am sure that the president of the company would never let his wife relieve herself under a truck trailer. That is our business; that is life.
I wrote to the vice-president the following day. He was so embarrassed he sent a personal letter to my wife. However, that letter did not solve the problems of all the other truck drivers in the world who take their wives with them; they are treated like a piece of nothing.
You wonder about this industry, well, that is the case, and we are very concerned about it. There is a terrible lack of respect, and worse, people do not consider these people as the key players of the economy today. That is the fact. I feel very sorry, because, personally, I like to drive trucks, I love all my drivers, and I am very proud, you know, to say anything, and I would go and fight for them anytime. This is the reality we with, you know? I hope it answers your question, and the concerns we have.
We could do many things to help attract newcomers to this industry, no question.
[Translation]
The Chairman: There is also long-haul driving, which is a specialized field, but which is not recognized by Citizenship and Immigration Canada. Some provinces have decided to address the issue; Saskatchewan has a program to attract, and you are no doubt aware of this, about 150 truckers from Great Britain, and it seems to be quite successful. What do you think of this initiative and how do you see the current problems with regard to attracting long-haul truckers?
Ms. Tremblay: We applaud Immigration Canada for relaxing some of its restrictions; while a person is awaiting permanent resident status, he can now stay at least 24 months before having to return to his own country. We strongly approve of this initiative. Moreover, the Association du camionnage du Québec is working with our partners at Emploi-Québec and Immigration Québec to set up a program similar to the one in Saskatchewan, in an attempt to recruit foreign workers and invite them to come and drive our trucks. We, of course, are targeting francophone countries, since we have a requirement for French-speaking drivers. So, yes, we are very much concerned about the shortage and we want to build on the Saskatchewan experience to develop a similar program in our province.
The Chairman: As for labour relations, the representatives from the Port of Montreal are enjoying peace with labour right now, and they are happy about that. Within the trucking industry, what are the major problems in terms of labour relations? Do you expect problems in the future, and what must we do to ensure that this sector enjoys peaceful labour relations, in the long term?
Mr. Robert: First of all, the situation varies quite a bit, depending on where you are in Canada. As you know, if you are in the Maritimes, far more drivers are available than in Toronto. The situation is even worse in Calgary. In my opinion, peaceful labour relations depend on attitude. If you treat your employees well, you will enjoy peaceful labour relations. I do not like to use the word, but what is deplorable in the trucking field is the situation in Vancouver last week, for instance, or the strikes in American ports, such as Los Angeles or Seattle. Why was there a problem? Because people were fed up, because the wait lists were so long. For example, here in Montreal, this is really not our way of doing things. Here the container frames belong to the trucking companies; whereas in Vancouver, it is the opposite, the frames belong to the companies, the ship-owners or the people who work at the port. So these people had a devil of a time getting safe vehicles. On the one hand, you have the federal government, or the people from the provinces saying: "You must be driving safe vehicles." And these people were supplying unsafe frames. So the drivers were stuck in the middle. They would drive on to the public scales, get checked by the department, and their vehicle would be non-compliant. Furthermore, there lives were in danger, because their vehicle was not safe; or you would have the opposite problem, some people did not want to maintain their vehicles. Here in Quebec, truckers very rarely do not provide their own frames. So we do not have that problem. However, the length of time truckers have to wait is absolutely deplorable.
Will the situation deteriorate in Vancouver? For the time being, I do not think so. Why? Because the volume is not there. You know the state of Quebec's economy, how the economy is doing in eastern Canada. It is not so hot. However, when you look at the volume going through Vancouver, they currently have more volume than they do capacity. Sometimes the ships have to be redirected to American ports, and people shuttle from American ports to Vancouver or to the Prairie provinces, which clearly shows that the port does not have enough capacity, that the Vancouver port authority does not have the capacity.
Generally speaking, people are certainly unhappy, because when there is extra work, we have the same problem here. When there was a slowdown at CN and they lost a few days of work, or when there were problems with avalanches in western Canada, the direct consequence was that 8, 10, 12, 15 or even 20 trains would arrive at the same time.
The truckers are not getting what they need, and the containers just sit there. They have to be unloaded, and you lose time. We have only 48 hours. After that period of time, we are detained. Just imagine, you have a trucking company with 100 vehicles, and all of a sudden you get 300 containers. If there is the slightest delay anywhere, you have to cover the costs of being detained within your own cost structure. It makes no sense, because you are not the one who was responsible for the delays, or the fact that all of a sudden a large volume arrived at the Port of Vancouver, but you have to pay the price. The customer does not want to pay, because he has been given a door-to-door price. So once again, the truckers find themselves stuck in the middle. They are the victims. Sometimes we have to tell a customer, "No, we will not take your goods, because we cannot pick up the goods within the necessary timeframe." So, they do business with someone else, but they end up paying for the containers being detained. I have seen some customers get stuck paying up to $1,000 worth of detention costs for a local haul that costs $175. It makes no sense!
Those are the facts of life. It is the story of David against Goliath. You cannot dictate rules to others. For instance, I cannot say to the port, "Your people will have to begin working at 6 a.m., because there was ice on the river, and six ships unexpectedly arrived." The number of drivers remains the same as does the number of trucks and the number of containers. These things do not fluctuate and you will not buy any extra back-ups because there is not enough activity to justify it.
This explains why discontent arises from time to time. You should not be astonished, if you look at this on a national scale, that there is discontent in the West at this time for that very reason. If things got worse in the East, severe discontent could ensue, as has happened in the past, with strikes during which highways and harbours were blocked, et cetera.
Those are the risks. In this industry, as a natural fact, there are some people who could not care less about what happens next. With this kind of attitude, sometimes they sow the wind and reap the whirlwind. Therefore, there could well be a whirlwind. However, at present, this is not a problem in the East. Do you understand? On the other hand, this is an imminent problem in the West.
The Chairman: Also because of the volume.
[English]
Senator Tkachuk: Thank you, Ms. Tremblay and Mr. Robert for your informative presentations, because if we were planning to ignore trucks, which I do not think we were, we certainly are not going to plan to ignore them now.
Mr. Robert, at the beginning of your presentation, you spoke about where we were on the world efficiency scale in regards to containers, you talked about Europe, and I am not sure what you meant. I do not know whether you were talking specifically about ports — you were talking about the movement of products from the port, to the truck, to the customer — perhaps you could expand on that a little bit.
Mr. Robert: You would agree with me that the ports are much bigger, but the ports have been developed with a vision. A country like Holland has always lived with trade and naturally, when it was the time to build a port, they built a port that had a vision of a great trading port to be the door to Europe. Germany is similar although France is not the best-equipped country in terms of ports. They do have ports, but they do not have state-of-the-art ports. You can find state-of-the-art ports in Holland, Germany, and Belgium. There are large, efficient ports in Asia and in some cities in the United States.
Today the west coast of United States has been caught by the traffic coming from Asia, so now they are talking about either making the long turn through South America, or having another channel, because as you know, Panama is not big enough to take the big boats that come across. Why? Because the commerce is now moving to Atlanta, North Carolina, South Carolina, Charleston to Virginia, and then to New York. Why? Because New York, even though it is an efficient port, it is not the most efficient port. The unions are very strong, and naturally, you know, they do not get all the results they would like to get.
In United States, the automobile industries are moving to the south now because they are having so many problems with the union in the north. It is no different with the ports. In the old days there was Elizabeth, New Jersey and New York, and that was it. Then other ports started to appear along the coast such as Philly, Trenton, Wilmington, and so on. Now, the large boats will move to the east, and we a lot of big ports will start to appear all along the east coast of United States. It is a matter of time. You know why? As long as the traffic comes from Asia, they must move the product to the east coast, and the rail cannot keep up, so boats will move the containers to the east.
When I referred to Europe and so on, that is the portion I know the best. The work at the port is highly automated. Secondly, the pick-up of the containers by the truck drivers — all the controls and electronics are highly automated. In fact, truck drivers come in, they have a card, they enter their container numbers, contract numbers, personal identification numbers and passwords. Right away the system will say, "Go to aisle 122." The truck driver backs the truck in, receives a card, enters it, the crane picks out the container and puts the container on the truck. Everything is automated. It is state-of-the-art.
Half the port in Rotterdam is labour-intensive, and the other half is totally automated. Nobody drives the trucks and moves the containers away. Robots do it automatically.
I do not suggest we should have robots. I suggest we should be more sophisticated. Today, we have working hours in Montreal, eight hours, from 8 a.m. to 4 p.m. In these countries, they work seven days a week, 24 hours a day. They do not carry the level of staff that we have. We have tolerated being overstaffed all over the place. Now if we bring one person in, we must bring 15 people in, to move maybe ten containers. It does not make sense so they close the port.
At the same time, this is the time of the day where there is no traffic. This is the time of the day where you can work and deliver to customers. A lot of customers are open for receiving and shipping 24 hours a day. Look at the stores today. People can go shopping on Saturday or Sunday, and we must make deliveries on Saturday and Sunday. Our industry has adapted to the reality of the world but some areas have not.
Imagine if the bus drivers in the city worked only from 8 a.m. to 5 p.m. Why not? Others are working from 8 to 5. Why should these idiots work until midnight? It does not make sense.
It is the same in our industry. We have adapted to the new reality. This new reality is to provide service seven days a week, 24 hours a day. Our drivers are working different shifts but we have facilities where they can only go only from this time to this time. Who is the punching bag in between: the truck drivers and the trucking industry.
The time has arrived. It is not about building. It is like an office. I will give you an example. My people claimed that we were short of space. I said, "No, we are not short of space, because at 4:30 the building is empty. Why does part of the group not work in the afternoon and the other part at night?" They said, "No, we have to work from 8 to 5." I said, "Who has decided that? Why is our industry not working around the clock?"
My point is that people must learn to work that way. We need to have a country that is competitive in terms of costs. We need to use our infrastructure 24 hours a day. People must adapt to this reality. We need to be competitive. We need to think outside the box. Today, everybody works from 8 to 4, everybody goes home in traffic at the same time and everybody is happy. They complain that there are too many trucks on the road and on the bridge. It is a great life.
In the meantime, we need subsidies, we need more infrastructure, we need this and we need that. When we fly to Australia, we do not mind flying at night. If we go to Europe, we do not mind flying at night. But when we are working within the city, we have to be home at 5. There is something wrong. We need to be competitive, or you need to explain why not, because I am not smart enough to understand.
Senator Tkachuk: Ms. Tremblay, you brought up an example of where the railways had failed in moving. I think you said perishables, Montreal to Vancouver, and Vancouver to Montreal. Trucks, therefore, needed to move perishables. Can you give me an example of what you meant? You went through it, but I did not know exactly what you were referring to. If you can expand on that a little: is it lettuce? I do not know what it would be, and why the railways failed. Why are trucks used to move that product a long, long way from Montreal to Vancouver, or return.
[Translation]
Ms. Tremblay: My English is not very good.
[English]
Senator Tkachuk: No problem: The translator is good so I am sure that was not the issue.
[Translation]
Ms. Tremblay: I explained that the railway networks are overloaded with certain kinds of merchandise. They are running at a 105 or a 110 per cent of their capacity on the big East-West networks. This created a demand for truckers to carry certain goods, especially goods that need to be delivered quickly, with a deadline and with a guaranteed service. A parallel container service was offered between Vancouver and Montreal. It was because the railway network was unable to meet the schedules required by the clients. This mainly involves perishable goods like fruits, vegetables, meat and so forth. This is a parallel service. Truckers pick up the goods in the Port of Vancouver as they arrive from Asia or from the American west coast in containers, and then they take them to the Montreal region for distribution. Conversely, local goods from Quebec or from Eastern Canada are brought to the west and shipped through harbours like Vancouver or Seattle.
[English]
Senator Tkachuk: That is when the harmonization issues probably arise, where you have the three trailers, the two trailers, the one tire, the double —
Ms. Tremblay: Exactly.
Senator Tkachuk: We deal with those things, and as senators, we have heard all these issues of harmonization, and the issues from the business world and the trucking world. Although I am in favour of a federal system, it drives me crazy why we cannot bring ten people together to figure this out, because the issue is not complicated. Maybe I am missing the point, but it has not been explained to me sufficiently.
Nonetheless, perhaps if citizens were seen as clients rather than subjects, it would be a lot better.
[Translation]
Senator Dawson: I agree with the chair and with Senator Tkachuk in saying that you have really raised our awareness of your issue. But I can tell you that we also heard about complications and difficulties when we were in Vancouver. I think that one of the drawbacks in Vancouver is the fact that they did not collaborate, as you are doing, both among associations and individuals and governments. You also discussed harmonization, a topic that we regularly hear about. As individual components, marine transport, railways, trucking are very efficient, but we really begin to understand the situation when we try to harmonize them with each other by applying the concept of intermodal transportation in practice. The message is very clear to the committee.
Ms. Tremblay, you mentioned a tool that is used in the United States.
Ms. Tremblay: UUIA.
Senator Dawson: Could you give us some details about this?
Ms. Tremblay: UUIA is a standardized document developed by an intermodal consortium of people from marine, railway and highway transportation. At present, a container that leaves China for Vancouver has an accompanying document; when it is transferred to railway transportation, it needs another document; next, if it is handed over to truckers, a further document has to be prepared that will accompany the container from the railway to its final destination. The UUIA works by regrouping all the relevant information for each mode in a single document. This is a digital document accessible to the entire chain of transportation, with specific information for each mode that is accessible to all the partners. The trucking companies and all the other transportation companies in the chain sign an agreement whereby they use this document for all intermodal movement. This saves a great deal of paper, and it eliminates the need to search for the individual digital information for each client in the transportation chain. Basically, it gives us access to information on line at any time.
Senator Dawson: Madam Chairman, it would be worthwhile to look further into this aspect of the file. I think that this is certainly an interesting point for us to recommend.
To conclude, Mr. Robert, let me tell you that as there are many more trucking companies than railway company presidents or port authorities, it would be good for your group to do some effective lobbying. You have more voices in your group than they have in theirs. I do not doubt that you will do well by continuing to pass the message and showing how important the industry is. As a matter of fact, apart from alphabetical order, we tend to put you in the fourth place, whereas you are probably the one who is the closest to home. Therefore, we should move you up a bit.
Mr. Robert: Senator, you just made an observation, and an idea came to my mind right away. Sometimes, for us, the truckers, it is like a meeting between a deer and a lion. The conversation does not last long. When we try to make our point to some of the big stakeholders, the conversation does not go far. Although we are trying to represent the industry, I can understand why certain truckers resort to blocking highways and doing other similar things. Why is this happening? It is because the players are not equal in strength. When a lion meets a deer, you know very well how the conversation ends, and this is our daily experience. Sometimes it only takes one last straw to break the camel's back. This can lead to situations that might not be catastrophic, but that are nonetheless unpleasant and project a poor image of the industry. However, if consumers were aware of the facts, they would stand behind the truckers. We do not want to condemn them; we want to understand why these things are happening.
I was struck by something that you said earlier. We must raise those issues because they have to do with your concerns.
Senator Dawson: When we invite people, we give equal treatment to the lion and to the deer; probably, the deer gets most of our sympathy.
Mr. Robert: We cannot wait to see that. If that is so, we will have many paragraphs.
[English]
Senator Mercer: Thank you both for being here. I found it interesting that you used terminology that we have not heard from other people in trucking. Particularly in British Columbia, we did not hear them talking about information technology, modernization and harmonization. We did not hear that. We heard they were much more confrontational with the employer.
Early in the presentation, one of you talked about the problems with different access codes — cards for different parts, and that standardization across the board was needed. I take that and marry it with your discussion of harmonization, your increased use of information technology, and modernization, and I gather that uniform intermodal interchange agreement may also have some of that involved.
It comes back to the question of security, because when we ask the question about this issue, we think we will receive a certain answer, and we seldom receive the one we anticipated. Are you saying that truckers would not have a difficulty if we had an identification program like that, and truckers in Canada would also be willing to be subjected to security checks?
We are talking about a post 9/11 situation where people are going onto container piers, or sensitive industries have vehicles that may or may not contain hazardous material. Are you saying that you think this identification program could fly: that people would buy this?
[Translation]
Ms. Tremblay: Of course, I only intended to raise your awareness of what is going on. There are different security zones in a harbour, depending on where the driver picks up a container; the security is different if he can access direct delivery of fuel to the ship. This involves much higher security. If a trucker has security clearance for the port of Montreal, after having gone through the background checks, there is no reason why he should not have the same clearance in Halifax harbour, in Baie Comeau or in Vancouver. Why are there so many procedures to go through? This is what I meant to say. The legislation is federal, security measures are standardized, the security criteria are clear, therefore, why should we repeat the same procedure, increase the costs and the time that it takes? That was my point.
[English]
Senator Mercer: In Vancouver, they told us — I looked for the actual words, but I cannot find them — a huge number of passes were issued to truck drivers for the Port of Vancouver. However, when they measured usage — recognizing that some long-haul truck drivers are not at the port everyday, as a short-haul driver delivering in the greater Montreal area would be — they indicated that a large number of passes were issued, but they were not being used. There was some concern by the port that this situation would allow for some security issues. Do you see that as an issue?
Mr. Robert: Once you understand the way trucking works, it is as if you serve a meal, and everybody is at home tonight and will eat from the same plate. They have 300 drivers, they register the 300 drivers, because they do not know which ones will go to the port today, and where are they will go.
They need to develop a standard around their company so that everybody must qualify. As you know, in Canada, with the rights of persons and so on, it is a real issue. Not every driver can qualify, so sometimes they will qualify more drivers than they should, simply because some drivers cannot go — they will be somewhere else. Once the driver is somewhere else, they need to qualify more drivers. In Vancouver, it is an issue.
The situation is the same with the Free and Secure Trade, FAST, Card to go to the States. They cannot qualify every driver. Some drivers have some little spot on their file, and they cannot qualify for the FAST Card. We could expand the use of the FAST Card to come into the port. However, if we were to do that, we will probably eliminate 50 per cent of the drivers that can go to the port. We need to be careful. It is a big, big problem.
Senator Mercer: However, you say that developing a standard access card with a security check behind it is desirable?
Mr. Robert: It is desirable, and I would put three question marks right behind it. It is desirable in the same way it is desirable for regulation in the trucking industry, and we said a few minutes ago there is too much regulation.
Senator Mercer: Yes.
Mr. Robert: There are all kinds of regulation, but no regulation at the entry. It is as if I was to tell you, you can walk into the university with three guns, but once you are in the university, we will put controls at each classroom.
Senator Mercer: I appreciate that.
Mr. Robert: That is why the entry is the problem. The entry into the industry today is wide open. However, once they are in, they have regulations to keep up with. In our case, we are a CT pad carrier with FAST Card. The large majority of our drivers have their FAST Card and everything. I am the president. I cannot get my Fast Card. Why? Because in 1992, I contested a situation, which is defined as totally legal. It was movement of cabotage within United States. Because I did not want my driver to be caught, and have this on his file, I volunteered to drive the truck across the border to run the test, and they put it in my file. I received a decision from the U.S. District Court of Washington that I received my pardon, but I cannot obtain my FAST Card. I am the president of the company, and we have about 1,100 drivers with their FAST Card, and I cannot obtain mine. I have stolen nothing, I have never used drugs and I have done nothing. You understand? It is stupid.
Things in the bureaucracy today will eliminate so many drivers from qualifying to drive and pick up containers, if we do not pay attention to this. You say there is a shortage of drivers, yes, there is. To put in some kind of strict qualifications, the bureaucracy we already have in Canada and in United States but particularly in Canada with the rights of the person, is absolutely crazy.
Senator Mercer: Mr. Robert, it is not only the bureaucracy of today: It is the bureaucracy that has been around for a long time.
Thank you very much, I appreciate your frankness.
Senator Merchant: I would be remiss if I did not say thank you for coming and speaking so frankly with us. I think we have heard you here. I do not want you to think we do not appreciate your concerns. You are dealing with the absolute monopoly when you deal with ports. You do not have many choices.
You have raised many problems with us. Our best trading partner is nervous, understandably, with the security and delays. I think you have gone through many questions and answered many concerns.
Mr. Robert: It was a pleasure.
[Translation]
The Chairman: Thank you ever so much. I hope that you feel that we heard you and that we understood you.
Mr. Robert: In any case, you certainly did listen to us.
The Chairman: We wish you the best of luck in your future work and we hope that will find ways to make your work easier by making recommendations to the government.
Mr. Robert: Thank you very much. I thank you all.
Ms. Tremblay: I will enjoy reading that report.
The committee adjourned.