Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 1 - Evidence - November 20, 2007

OTTAWA, Tuesday, November 20, 2007

The Standing Senate Committee on Transport and Communications met this day at 9:33 a.m. to examine and report upon 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 (Chair) in the chair.


The Chair: Honourable senators, we are again today discussing transport. We must 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.

Our witnesses this morning are, from Prairie-to-Ports Gateway & Inland Port, Mr. Doug Campbell, CEO; the mayor of the City of Moose Jaw, Mr. Dale McBain; from Saskatchewan AgriVision Corp., Mr. C.M. (Red) Williams, President, and President of Prairie-to-Ports Gateway & Inland Port; and from the City of Saskatoon, the mayor, Mr. Donald Atchison, and Randy Grauer, city planner.

Welcome all. You have asked to meet with the committee while you are here in Ottawa. This is our first meeting following prorogation of the last session. We are pleased to have you with us. We have met with some of you in Vancouver.

Senators, since our guests will be leaving around 10:15, we will allow for 15 minutes of information from them followed by a half-hour question period, if you agree.

Welcome, Mr. Campbell. The floor is yours.

Doug Campbell, CEO, Prairie-to-Ports Gateway & Inland Port: Thank you, Madam Chair and honourable senators. It is a pleasure to be back with you. We met with some of you exactly eight months ago in Vancouver, and I understood that your trip to Prince Rupert was what you might call a wild goose chase. We have had discussions with your clerk. We hope to be of assistance to you in that matter and in others.

I am a former vice-president of Canadian National Railway, and I know that railway would be delighted to give you a train ride to Prince Rupert, whether you get on at Saskatoon or Moose Jaw, let alone Edmonton, Prince George or Kitimat.

Senator Tkachuk: Even senators do not have that much time.

Mr. Campbell: Thank you, Senator Tkachuk.

At our last presentation, I was joined by Mayor McBain from the City of Moose Jaw, and by Dr. Williams, who has added another title to his illustrious career, that of president of the organization called Prairie-to-Ports Gateway & Inland Port. Since we met with you, we have changed the name and the scope — all to the better — probably three or four times. In addition, we are delighted to have with us the Mayor of Saskatoon, Donald Atchison.

With your permission, we will have Dr. Williams give you a quick overview of where we have been and where we are. Mayor McBain will then give an update from Moose Jaw, Mayor Atchison will give an update from Saskatoon and, time permitting, I shall give a PowerPoint presentation, to give you more detail as to what we are doing on the trade and transport fronts.

C.M. (Red) Williams, President, Saskatchewan AgriVision Corp., and President of Prairie-to-Ports Gateway & Inland Port: Good morning, honourable senators. I represent Saskatchewan AgriVision. For those who were not at our previous meeting, we are the lead organization, joined by the REDAs from Regina, Saskatoon and other cities. Since last we met, we have had a great deal more activity, and have come up with a better focus on what we are doing in the organization.

Since we last met you, we have studied the SmartPort in Kansas City, which has been suggested to us as a model, and with which we agree, so we are more or less using that as a pattern. We have had meetings with the group in Halifax as well as in Vancouver. We have had several meetings in Denver, because of the new truck corridor that comes up from Texas, through Denver, to Regina. That is developing. Of course, we were in Prince Rupert for the opening there, which was of considerable interest.

We have been very busy contacting our stakeholders. The key stakeholders, as you know, are the shipping lines and the railways. We have been working closely with CNR and the truckers and are beginning to develop quite a good relationship. CNR is beginning to provide us with required data to set up the models and develop a business plan, which is what the private sector is really interested in. They want to see a business plan that will demonstrate that, not only is it logistically sound to bring boxes into Saskatchewan for restuffing, but it is also economically sound. They are waiting for a model that shows that. Mr. Campbell is taking the lead on that. He has become the CEO on this project because of his tremendous experience in the transportation system.

This is a national issue. Even though we are based in Saskatchewan, it is clearly a national issue as well as a key provincial issue. I suggest that if we are not able to create a nimble transportation system that can take on containers in a modern way, we might as well forget about all our value-added industries — and the future of the Prairies is value- added industries. Therefore, we must do it. It is not a wish or a hope; we must have a nimble transportation system to handle containers in the Prairies. That is our objective.

This has to happen quickly, not only for a particular advantage, but because almost every city of any size on the Prairies and in the northern tier states is looking at what it might do to position itself, given the congestion on the West Coast and better transportation. A city makes a decision and makes a relationship with trucking and rail lines and so forth, and suddenly the system begins to freeze into different positions. We would be remiss if we do not start moving ahead, to get our plans into place before the system begins to freeze up on us. That is where we are.

We are working hard on this issue, and I am beginning to see the daylight. As you know, the issue is a complex one; on first addressing the issue, it looks simple, but it becomes more complex. That is more or less the background.

Dale McBain, Mayor, City of Moose Jaw: Honourable senators, I appreciate the opportunity to attend before the committee and to support the Prairie-to-Ports Gateway initiative.

Moose Jaw is a thriving community of about 34,000 people, serving a trading area of 56,000. We are the home of the Snowbirds, Canada's flight aerobatic demonstration squadron, the NATO flying training in Canada, and the Saskatchewan headquarters for Canadian Pacific Railway, CPR.

As the mayor of the City of Moose Jaw, I believe Moose Jaw is uniquely positioned to contribute to the Saskatchewan solution that we call the Prairie gateway. The Prairie gateway is the best way to maximize the existing transportation assets across the province. This initiative will bring a series of value-added services to the movement of freight between Canada and Asia and, more important, between Canada, the U.S. and Asia.

The development of the Prairie gateway will improve shipping as well as improve efficiency of goods passing through Canada on the way to the U.S. and goods coming into Canada destined for major Eastern Canadian cities, as well as goods being shipped via containers to locations outside of Canada.

Moose Jaw is centrally located in the southern part of the province. We are at the intersection of three major highways, Highway 1, Highway 2, and Highway 39, which is the direct link to the United States. The portal on Highway 39 is one of the 10 top border crossings in the Prairies. It is a top border crossing for us on the Prairies.

As I said, we are on the CPR main line; however, we are also the northern terminus of the Soo Line that connects directly to Chicago. Probably better than 100 car trains, a mile long, double stacked with containers head down to Chicago, many of them every day. A large number of trains pass through on their way to Chicago every day.

We also have a CNR link in Moose Jaw, which links to their transcontinental line in Melville and provides access to all parts of North America. We have some short lines that terminate in Moose Jaw also.

There are 29 trucking companies that provide bulk and specialized freight service in Moose Jaw. We have trailer leasing, trailer repair, we have CPR intermodal services, warehousing freight logistics and trans-loading facilities. We also have Doepker Industries Ltd. One of Doepker's five plants is in Moose Jaw; the company manufactures trailers for a large number of applications, including their Prairie grain applications and their applications in the forest industry.

Two new distribution centres recently opened in Moose Jaw, specifically, a John Deere after-market part distribution centre and a fresh vegetable warehouse and distribution centre serving Western Canada. We believe we are ideally located to become a major warehousing and distribution centre. Air transportation is a short 70 kilometres away at the Regina International Airport.

We have a very diverse economy. We are best known as a tourist destination, based on our heritage and culture — the Moose Jaw Temple Gardens Mineral Spa, the tunnels of Moose Jaw, which is a great tourist draw.

We are also a major agricultural production sales and service centre. We are a major staging area for crops grown in southern Saskatchewan for export, including high-quality milling wheats, malt barley and pulse crops. The vast majority of pulse crops that are exported from Saskatchewan are grown within a 50-mile radius of Moose Jaw. These crops are destined for the Middle East and for India.

We have the only federally inspected beef processing facility in the province, XL Foods, and Moose Jaw Pork Packers Ltd., a pork processing facility that has had some difficulties but is scheduled to reopen in the next 90 days.

We have a number of heavy industries located around Moose Jaw, including Canadian Salt Limited, which produces table salt, Saskatchewan Minerals, which produces sodium sulphate, Saskferco, which is in the Regina- Moose Jaw corridor and produces fertilizer, as well as the newest ethanol plant, a 150-million litre terra grain ethanol plant that is being built and will start production in January 2008.

All of these developments in and around Moose Jaw, right from our tourism through to the ethanol plant that will open next year, are dependent on transportation. Therefore, we see transportation as being integral to Moose Jaw, as well as Saskatchewan. Saskatchewan — Moose Jaw, in particular — provides a very cost-effective competitive environment in which to do business.

I am very excited about the prospect of the Prairie gateway and the role Moose Jaw can play in expanding opportunities, not only in our community but throughout the province and Western Canada. As Mr. Williams has indicated, borrowing from the successful experience in Kansas City — and unfortunately I was not able to be part of the delegation, but from what I understand from the feedback, the enterprise is very successful — I think Saskatchewan could have an inland-based smart port as an integrated economic development zone or a branded region. It would stimulate and add trade flow and investment within a larger continental and global trade network. This could be a virtual port, based on integrating and coordinating the physical infrastructure within the region. It is not a single location; it is not a single project. As I think I mentioned when I met with you in Vancouver, it is a Saskatchewan project that we see as a win-win-win — it will be good for transportation, it will be good for the province and it will be good for the nation.

I am excited and enthusiastic about this project. The City of Moose Jaw was pretty well in on the ground floor and we continue to support this project and believe it is a very worthwhile project.

I thank you very much for the opportunity to be here today.

Mr. Campbell: Thank you, Madam Chair. I shall show 17 slides, 10 seconds a slide, and then we will turn to the Mayor of Saskatoon.

This simply reinforces what Mayor McBain has just spoken about. I am sure most of you know that — Moose Jaw is in the centre — northwest and straight north go to Saskatoon, east, less than an hour, to Regina. Twenty minutes east are those three world-class plants, potash, fertilizer and salt, and the new ethanol plant. You can see southeast of Moose Jaw is the Soo Line, where a chap by the name of Al Capone was the first paying passenger.

Senator Zimmer: They say that is where his grave is, too.

Mr. Campbell: There are those 20-odd trucking firms that Mayor McBain mentioned. There is tourism, agriculture, manufacturing, heavy industry, the air base, the Snowbirds. What you see in blue is the Moose Jaw Economic Development Authority; if you go north from that, you see Saskatoon, which allows us to introduce the Mayor of Saskatoon.

Donald Atchison, Mayor, City of Saskatoon: Thank you very much, Madam Chair and senators. It is a pleasure to be with you this morning. The City of Saskatoon is really interested in this program. The reason we are so excited about it is because it makes good sense not only for Saskatoon and Saskatchewan, but for all of Canada. Saskatoon's population is approximately 210,000 people; however, we have the University of Saskatchewan, Kelsey and SIIT, so we really run in about 230,000 people during the winter season.

Saskatoon is the economic engine for the province of Saskatchewan. We are centrally located, the hub of the province. When we talk about being the economic engine, it is not the mayor of Saskatoon saying it. The Conference Board of Canada will tell you that Saskatoon is one of the nine cities in Canada that has to be successful in order for Canada to be successful.

Saskatoon has always called itself the Hub City. If you look at the map, you will see that all roads lead to Saskatoon. In Saskatoon, there is the CNR's main line, which goes directly to Prince Rupert. We also have the secondary CP main line that comes to Saskatoon that does connect to Moose Jaw and then on to the Soo Line into Chicago.

We have the Potash Corporation of Saskatchewan — commonly referred to as PotashCorp — which is the largest producer of potash in the world. We have Cameco and AREVA, the uranium industry. Studies indicate that containers that pull through Saskatoon and head into Toronto for distribution and then head back empty to Toronto and Prince Rupert cost one company alone approximately $3 million a year. A distribution centre or container port in Saskatoon could save this one particular company alone approximately $2 million a year. That is not only a savings for them but for the environment as well.

Saskatoon is one of the most cost-competitive cities in the entire world. Saskatoon is number eight in the Midwest area in North America for cost competitiveness as well. We just have so many good things going for us. The international corporations that are located in Saskatoon send teams into Saskatoon to find out why they are so efficient, why they have so many volunteers. They want to know what makes the City of Saskatoon tick. It is really the people: They have a private-sector energy and enthusiasm about them, and that is what makes Saskatoon so well received by companies once they get there.

After companies come, they complain we did not twist their arms hard enough to get them to come to Saskatoon in the first place.

The Conference Board of Canada has put Saskatoon at number one this year for GDP growth at 4.7 per cent. Just two years ago, we tied with Kitchener-Waterloo as well. The Conference Board of Canada said it is not possible to be number one in the country and then stay within the top ten after that. Last year, Saskatoon was sixth, after being first the previous year, and only missed being in third place by 0.2 per cent.

We have the most balanced economy in all of Canada — that comes from the Conference Board of Canada as well — as well as a number of advantages because of our geographic location. We are truly centrally located for North America, for distribution into the North as well, down into the United States, and off to the east.

There are so many things we could talk about, but I think I should leave it at that and leave time for questions. I want to thank you again for giving us this opportunity to meet with you this morning. Hopefully, we can have more meetings of this sort in the future.

The Chair: Since we last met in Vancouver, you have been working hard. I do appreciate what you have presented us with this morning. I must admit that the committee members have also been working very hard to find some suitable solution to the various problems that we are facing.

Kansas City SmartPort Inc. is still a non-profit, investor-based organization that is supported by both the public and private sectors. Will your project be based on the same kind of non-profit organization or have you found some good investors?

Mr. Williams: I will start off, Madam Chair. The answer to your question is yes. We hope, if things progress as they should, that by this time next year we will have established a working board that will administer the smart port or the inland port arrangement. That is our intention. Saskatchewan Agrivision and REDAs and so forth can back out of that responsibility. That is a board made up of stakeholders — people with skin in the game, so to speak. It is not intended to be a profit-making organization in itself. It sets up the parameters for the activity to take place and private investors will come in with their money and build their facilities or the railways will build spurs if necessary. The investment is private sector; the organization will be not-for-profit.

The Chair: The low regional demand for containerized imports can be a cause also for the empty international containers available to inland producers for exports and domestic shipments. Does your region suffer an imbalance between exports and imports and, if so, how do you plan to make the repositioning of empty international containers into your region economic for the shipping lines and the railways?

Mr. Campbell: Thank you for the question, Madam Chair. The Prairies are blessed with many things. The harsh winters do have some advantages, in that the quality of the crops that are grown is superb from a food point of view. Our wheats, durums, barleys, malting barleys, canola, chickpeas and lentils are the top in the world. In some of those commodities, such as durum wheat, we have a 70 per cent market share in the world. We have a fabulous base. We have very strong farmer entrepreneurship supported by universities and by federal and provincial research stations. That gives us a very strong base.

We have 50 million acres, which is over half of Canada's arable soils, all located in the Prairies. As you know, we do not have people. We export almost 70 per cent of what we produce. The world — being India, Pakistan, China, Brazil — can now all out-produce us. They took the Canadian and American know-how through the green revolution. They have a lot more irrigation. India, for example, has four growing seasons. Their productive capability has gone from 50 million tonnes to 210 million tonnes in the last 30 years. Our total production is 50 million tonnes. Ideally, we would like 40 million of that to go into these premium export markets. To do that through bulk, the way we have done it for the last 100 years, we are very good at. Probably the best example today might be the potash industry, where 100 per cent of their product moves by bulk, unit trains to the ports. They are fiercely competitive with the Russians, the Germans, the Israelis and others to get potash competitively into markets.

We are landlocked. We have a major difficulty compared to Americans, Australians and Europeans, who are very close to tidewater. We have to be the very best when it comes to transport and logistics.

What an empty container represents is the ability, the potential, to take our raw products, which we are very good at, and to package them in a premium way so that a flourmill in the U.K. or a malting barley brewery in Vietnam gets exactly what they ordered. The theory is that we take it from Red's farm off his combine, cleaned, graded and packaged right there into a container. It does not get rehandled 20 times. That is the great thing about containers.

Something fragile such as malting barley or chickpeas gets handled in India seven times, and each time there is loss, breakage, product degradation. This gives us the chance to originate a top-quality product and have the end user receive a top-quality product. That gives us a tremendous advantage and would allow us to expand our market share.

What we are seeing from China coming mainly through to Chicago is in the range of enough containers to take the entire Canadian crop back out with it. That is the potential we want to attract.

To your question as to whether there is an imbalance — the answer is yes. Forty to 70 per cent of those containers that are dumped in North America go back empty. Hence, the challenge: How to capture that in a way that makes the railways and the owners of those marine containers happy and obviously increase the potential for Prairie agriculture, Prairie farm machinery, potash, pork, pulp and paper, all of whom are members of our group.

The Chair: Do you feel the transportation infrastructure in Saskatchewan is suitable to deal with the substantial increase of traffic? If not, will you be either needing or expecting any help from the federal government?

Mr. Campbell: We are meeting regularly with four key departments: Transport Canada, International Trade Canada, Western Economic Diversification Canada and Agriculture and Agri-Food Canada. We are in constant dialogue in that area. As you know, we have a history of excellent infrastructure, which now is in need of being rehabilitated. The question is how you do it and where you do it.

One of our concepts is directly aimed at minimizing the costs of disruption at our ports. I am sure you are all aware of that. If you are not, I respectfully suggest that the committee look at the ports of Los Angeles and Long Beach. They handle between 10 and 15 times what we handle on the West Coast. The negatives of that are immense. They have spent a tremendous amount of money on the logistics, on overpasses and underpasses, on a tunnel underneath LA called the Alameda Expressway and on trying to green the environment. The emissions from the vessels, the railways and the trucks are all major problems.

Our concept, which is similar to that of Kansas City, is that you take all the negatives and push them inland as quickly as you can. What you have in Saskatoon and Moose Jaw is abundant land, cheap land, affordable labour, good R&D and a good workforce. You can do it there rather than on the waterfront, on $5 million land, where the railways, the truckers and the automobiles are stacked against each other throughout each and every day. You cannot build enough underpasses and overpasses in a city like Vancouver and the Lower Mainland.

Senator Oliver: My main question will be about repositioning of empty containers. I want to ask Mr. Williams two things. First, you said you looked at the Kansas City model and you accepted it as your model. You then went on to meet with people in Halifax and groups there. I want to know what groups you met with, because this committee will be going there. With whom should we meet there?

Second, what is it about Kansas City that is your model and what parts of the model do you want this committee to pay special attention to?

Mr. Williams: To answer your last question first, I accepted the model of Kansas City because it is the conjunction of four railways and three interstate highways. That is essentially what we have in the area between Moose Jaw and Saskatoon. It was that model, where there is no specific point where you could say that that is the smart port — because it is an area of 180 miles across, including several cities. It is administered by a board that puts in place things like ensuring that the customs people are there and that the logistics of moving in and out, and so on, are such that companies that want to come to the port, will be welcomed and directed to where they can best locate, and so on. It is an administrative group. As I said earlier, the private sector comes in and does the actual building, and so on. As I understand it, in the last four years there has been $5-billion worth of investment in the Kansas City area to accommodate this.

Many activities must go on there. The main one that comes in is the freight forwarders, and so on, who unstuff and re-stuff the boxes for further transportation or location in the immediate area. There are the companies like Home Depot, and the like, who develop their centres for their own distribution systems, as well as the reassembly plants that are there for Asian products, particularly mechanical stuff that must be put together again. There are a lot of these activities.

Senator Oliver: That is when you envisage for the West?

Mr. Williams: That is exactly it. That is what Kansas does because they are on the pathway of product and we are on the pathway coming in. We have Prince Rupert coming south and the two railways coming through Kicking Horse and the Yellowhead Pass. We just happen to be at that conjunction. That is it.

The other question you asked was about Halifax and why I was there. You will remember, perhaps, that the premier held a conference there. It was a most interesting meeting because the premier stayed for two and half days at that meeting, which is very unusual for a political leader to do. There is great enthusiasm in Halifax.

Senator Oliver: He is a great premier, I think.

Mr. Williams: Well, he is a nice gentleman. The interesting thing about Halifax is that as of yet it has only utilized about 50 per cent of its capacity. That will change, I believe. I believe that a lot of our product will start moving out through the East Coast as opposed to the West Coast because of the closeness or availability through the Suez and through to India. For Southeast Asia, that seems a logical way to do it.

Senator Oliver: Our committee will be going there and already our researchers have given us a list of people to see. Is there anyone that you can recommend for this committee to see in relation to these issues?

Mr. Williams: I am perhaps not the best one to answer that question, but I can tell you who runs the world in Halifax. What is that lady's name?

Mr. Campbell: We will submit to you a list of names of officials from both Halifax and Kansas City.

Mr. Williams: I have forgotten the lady's name, but she runs Halifax as far as I can make out.

Mr. Campbell: I wish to add that I just came back from a global conference in Panama City. We are going to Amsterdam in two weeks to speak to a multi-model conference there. The Panama Canal is being expanded, as you are probably aware. The vessels are now much larger. When they complete the canal in 2014, it will not be large enough to handle the vessels on the drawing books right now. In the world of containers, we are talking growth of 2,000 cans per vessel, from four to six to eight. The ones on order now are 14,000. The new Panama Canal will be able to handle 10,000 to 12,000.

I refer to the Panama Canal because we have not talked to you about one of our many concepts — and I would direct you to the map on the wall behind you — namely, to create a free trade zone in the southern Prairies. Colón, which is the eastern part in Panama, is the free trade zone. Hong Kong is number one in the world; Panama is number two. We are asking this question: Why not the southern Prairies as number three? A number of activities are involved, including packaging, repackaging, assembly and security clearance, and we are all worried about the thickening of the border between Canada and the U.S. We have one trucking firm in the Prairies whose extra costs this year of crossing the U.S. border have risen by $2.5 million. These are major concerns to us.

On that map, you can see that we are near the intersection of three corridors: east-west, which is known as CISCOR, the Canadian Intelligence Super Corridor; North-South, which we call NAFTA corridors — and ours is the one in orange, which goes from Mexico, through Texas, through Denver, to Moose Jaw to Saskatoon, to Prince Rupert or Vancouver; and then there is the Asia-Pacific one. The one that you will see is the one from Prince Rupert that slices down to Chicago and then goes through to Saskatoon. It is location, location, location. We are in the best place. We have export strengths. If we can capture the empty containers going back, that is great. If we can also capture the inbound traffic and have the equivalence of a free trade zone or an economic zone, we can get all the spinoffs that occur in Hong Kong and Panama. That is a key part of our focus as well.

Senator Oliver: I wish to ask a final question about location. You have all mentioned Kansas; and Los Angeles and Long Beach were also mentioned. What country in the world has established the best practices for using container systems to export agricultural products? Is it the United States, because of Kansas and Los Angeles?

Mr. Campbell: As a matter of fact, the United States is quite weak with respect to exports. I do not want to be premature, but I will tell you Antwerp and Rotterdam, on the coast, and Duesberg, in Germany, just across the border, and the Rhine Valley. There is a long history of barging traffic, and containers fit well there. I will be pleased to provide you a report. I will be there from December 3 to 10. In terms of best practices, I think that is it.

Mr. Williams: Those cities are relatively close together, so if there is an imbalance of incoming and outgoing containers, they can be transported readily from one city to another. It is a very efficient system.

Senator Zimmer: Welcome, gentlemen. It is good to see you again. The committee this morning is pretty stacked with Saskatchewan representatives. Senator Tkachuk, Senator Merchant and I were all born and raised in Saskatchewan. I take this opportunity to wish you the very best on Sunday. Of course, you will be cheering for Saskatchewan. I have mixed feelings, because I live in Winnipeg, but I will put on the record that I will support you on Sunday.

My question was asked by Senator Oliver, regarding what you observed in Kansas City and what you learned there in order to revise your plan. You have answered that, but I will ask you another question.

In this whole equation, when you look at your map, there is sort of a Prairie triangle including Saskatoon and Moose Jaw. Do you see Regina worked into this model in any way?

Mr. Atchison: Yes, we do. Regina is certainly part of the program as well. We cannot comment on why Regina representatives are not with us today. If you look at the programs that we have outlined to you, Regina is part of that as well. Moose Jaw and Saskatoon are here today representing our communities, but that is not to say that Regina is not part of the program. Regina needs to be part of it.

I do not think people realize the scale of this project. Once we get started on the project, neither Saskatoon nor Moose Jaw nor Regina will be able to handle it alone. This is one of those projects that is, literally, for politicians, a dream come true, one in which everyone can share. The pie actually continues to grow and everyone can continue to have a larger piece of the whole shipping transportation redistribution. Everyone will benefit. Perhaps even Prince Albert could be part of this as well.

This is really a north/south area, but with the railways going east/west, they happen to flow through Moose Jaw, Regina and Saskatoon. I see Regina as part of this as well.

Senator Zimmer: If I could expand on that a little further. Do you also see Winnipeg working into that equation?

Mr. Atchison: Winnipeg is certainly part of that as well. However, if you look at rail yards and the availability of space, Moose Jaw and particularly Saskatoon now have an abundance of space on both the west and east ends of the city — for example, from Floral to Cory — for additional expansions, and for union yards as well. There is a tremendous amount of space available. Planners for the city have made sure that we have left room for this type of expansion in our community.

We are also working on completion of a South River crossing corridor, to take trucking out of the city, so that people will not complain about massive semis rolling through the city. They will be outside the community. There is room for everyone. I do not think people can envision how large this project will be and that there is room for us all. We in Saskatchewan are the best located overall, but there is room for everyone.

Mr. Campbell: If I may a brief response to Senator Zimmer. Despite the fact that this is a heavyweight Rider Pride Saskatchewan contingent, I have moved to Calgary and we have Winnipeg members in this group. This week, as a matter of fact, we are meeting with the Government of Manitoba and the Government of Saskatchewan. You will notice in our name change that it is not just ``Saskatchewan''; it is ``Prairie.'' Without meaning to hurt any feelings, I think you are all aware that people west of Winnipeg and Manitoba sometimes feel that their concerns and aspirations are not looked after with as high a priority as they would like, and the same can be said about east of the Edmonton- Calgary line. It is very much Prairie-based, rural-based and agricultural-based, and we are definitely reaching to Winnipeg.

Winnipeg has many assets that are part of the Team Canada, many of which will be supportive of this initiative. Many of the CN trains, for example, go through Winnipeg on their way to the U.S. At Moose Jaw, from Vancouver, there are about 30 trains a day. Almost 20 trains go through Winnipeg to the east and about 10 to 15 trains go through the Soo Line to Chicago.

Senator Tkachuk: I wish to welcome Mayor Atchison, Mayor McBain, Mr. Williams and Mr. Campbell. We are experiencing, as you know, an economic upsurge in our province. Although the federal and provincial governments all want to take credit for the upsurge, most of the credit is due to the strong leadership of our mayors and our reeves. I do not know what happened in the last 10 years, but they have all become more entrepreneurial and they have really promoted our city. To Mayor Atchison and Mayor McBain, two strong leaders in our province, I would like to say that all the credit is due to them for the tremendous opportunities that we now see before us in our province.

I want to talk a little bit about productivity, which is what everyone is talking about because of our strong dollar. The advantage we had with the low dollar is now causing us productivity problems, and getting our exports out the door is becoming more difficult.

How big a piece of the container pie are we talking about with regard to the Prairies or the Moose Jaw-Saskatoon corridor? Of the millions of containers that will roll in from Vancouver and Prince Rupert, what are we talking about and how will that help us improve the efficiency of our products? It was mentioned that many containers should return empty quickly so they can take on another Chinese load and bring it back to Canada. Surely, if we turn the container around quickly enough, we should be able to fill it, create revenue and send it back quickly as well. How big is the piece of pie and how will that help?

Mr. Campbell: Inbound agriculture to the Prairies is in the range of 0.005 per cent. Outbound containerized from the Prairies now would be in the range of 2 to 3 per cent. That is 5 per cent of agricultural products. The potential is 75 per cent of agricultural products, so it is a 15-fold increase.

Senator Tkachuk: How do you see the future, with Edmonton having a container port and Prince Rupert now wanting to be a player, probably in synergy with Vancouver rather than in competition with, and all the other players? Do you see it as a series of places where drops are being made, goods being loaded and everything going back throughout the Prairies?

Mr. Campbell: Yes, we do. The Edmonton facility is already full. The new CN facility just put in as part of the Prince Rupert package is already in the range of 80 per cent capacity and it is less than two years old. The facility in Prince George is being opened this week, and that will have more of a pulp and paper focus. How it will turn out, I am not sure.

If you ask the shipping community, the producers, they would obviously like to have container-loading facilities every 100 miles. That frightens the railways and the marine operators because they feel they need in the range of 100,000 containers a year to meet the high infrastructure investment costs.

The challenge for us, given that they can whistle back empty and collect another $3,000 every time they fill a box or a can is to say, ``Okay, if we are going to stop, where do we stop and how long do we dwell?'' as they call it in the transportation language. When any equipment, let alone the $4-million locomotive tied to it, is sitting idle, they are all losing money. The trick is how to put 25, 50 or 100 car lots together, fill them immediately and have the railway and marine shipping economics still intact, let alone enhanced. We think it can be done, and as Dr. Williams mentioned, we are actively speaking with both rail and marine carriers to see if we can get the numbers to justify the investment.

Senator Merchant: The current Conservative government has spoken about addressing restrictions on trade in Canada. Is this on their agenda for resolution? What specifically must be done, and must the variety of provinces change their regulations?

Mr. Campbell: Are you speaking specifically of the interprovincial barriers and the fact that Alberta and British Columbia already have the TILMA agreement? I guess none of us is in a position to speak for the new Government of Saskatchewan. Both the Alberta and British Columbia governments are actively and aggressively promoting that the concept be expanded to Saskatchewan and Manitoba. I am not privy to say where they are now.

Mr. Atchison: I cannot speak for the Province of Saskatchewan, but, unfortunately, cities have different problems than do provinces. I do not think anybody disagrees that we need to have the free flow of goods between provinces as well, and I see that happening over the next while.

For Saskatchewan, our biggest trader is still Ontario. Many people believe it is Alberta, but, in fact, it is Ontario. We need to break down the trade barriers between provinces.

Senator Merchant: I believe you need the federal government, too. When I said ``the government,'' I meant the federal government more than the provincial government.

Mr. Atchison: They need encouragement.

Senator Merchant: With respect to the CN and CP positions, particularly CN, they might say that it is easier for them to go directly from Chicago to Vancouver and that rushing the containers home quickly, directly and without the dirt of the Saskatchewan grain, sending the containers back is the best financial position for them because all these things cost money.

Who will pay this money that they may think they will lose by stopping in Saskatchewan? Will the farmers pay? What kind of costs are we talking about? I understand the inland terminal might ease the CN and CP administration burden, but the expense remains real for the companies.

Mr. Campbell: It is a complex question; if it were simple, everybody would have the answer and they would have exploited it by now.

We are trying to turn a cost into revenue in their mind. Right now, they do not get paid anything for every delay along the piece. You should be aware that Canadian National promised Wal-Mart that they would get the product from Prince Rupert to Chicago in less than 100 hours. The first train is 91 hours. Wal-Mart has said to Canadian National, ``You do that, and we will give you more business, not just to Chicago but also to Memphis, maybe to Atlanta.'' It is a great Canadian success story, that we can penetrate these American markets so well in that direction.

What Canadian National and COSCO, the main marine company from China to Prince Rupert, would like is to have those volumes back up, but only if they do not jeopardize their opportunity costs of getting back to Shanghai or Pusan or Hong Kong and getting another $3,000 load. If we can do it right and we do not hold that rail equipment too long, they will not only not have an extra cost, they will also have revenue. From our point of view, we would like to call it a ``backhaul revenue,'' because maybe some of these products cannot afford the high prices that Wal-Mart is paying on goods coming in, but it certainly would be revenue traffic for both the rail carriers and the marine carriers. That is the intent.

Senator Merchant: What specifically do you want us to do? Would changing policy help, or must directive laws be brought in? Has any country got it right? I am talking from the point of view of regulation.

Mr. Campbell: That is a good question, and I would ask each of these gentlemen to reply. We have 50 slides on exactly what we think the federal government should be doing, and I know you do not have time for it now, but we would be pleased to deal with legislation, regulation or keeping the U.S. border from thickening.

The Mexicans are doing a lot of work; we are doing a lot of work. A Saskatoon-based firm, IRD, has the leading market share in the U.S. interstate system for weight and motion sensors so that the trucks do not have to stop. We and Homeland Security in the U.S. are putting a tremendous amount of effort into streamlining. In spite of that, it is like all of us going through airports today versus 20 years ago. There is no end of things that we could and should be doing to streamline this, whether it is physical infrastructure, brain power and so forth. The federal government should be doing many things, and part of our discussions today and tomorrow is with Foreign Affairs and International Trade Canada and Transport Canada to try to ensure we all understand the irritants and the sluggishness now in the system, and how we can help streamline that flow.

Mr. Atchison: Speaking of ingenuity, Saskatoon is second to none in the world. You have to look to our engineering students at the University of Saskatchewan where they have invented a space elevator. It is the leading one in the world. They competed against Boeing, McDonnell Douglas, Airbus, and against every major company in the world, and they unfortunately missed by four seconds on the speed of their elevator for collecting $500,000 from NASA. Each year, they have always been one year behind capturing this $500,000 for the fastest space elevator in the world. They have been able to transform energy without wires as well, and they are working on intellectual patents for that right now.

With respect to what you can do differently, Saskatchewan has ingenuity and the people that have the ability to get things done.

IRD is also working on X-raying the container cars when they roll through. In fact, when they hit the U.S.-Canada border, these trains will not have to stop. The manifests will be sent down with everything there for them, so the trains can continue to roll through without a three- or four-hour delay at the border crossing. That is all happening at IRD right now. They are the world's leaders in that type of technology.

Mr. McBain: The map there reinforces the comment Mr. Campbell made — the issues around the border and streamlining borders. As you know, we are very close with our highway and rail system to the U.S. border.

The other thing that would help this kind of project and the Kansas City model is the ability to establish free trade zones in and around cities. That would be important.

The third piece of the puzzle is a national transportation policy, which we need in this country.

The Chair: Mr. Campbell, could you provide to this committee the slide show on federal policy recommendations?

Mr. Campbell: Certainly.

The Chair: Thank you very much for your presence here today. It was most interesting, and again I have to tell you how much we appreciate the work you have been doing since we last met. We will be closely following your activities. We will do our best to find the proper solutions here at the committee level. Thank you very much.

Honourable senators, I just want to mention that we had a steering committee meeting last week at which we discussed future legislation we are going to get before or possibly after Christmas. We have Bill C-7, to enact the Aeronautics Act and make consequential amendments to the other acts. As of October 29, it was in the report stage; it is still in the House of Commons. There is Bill C-8, to amend the Canada Transportation Act, specifically railway transportation. It is still in the House of Commons; it was referred to their Committee on Transport, Infrastructure and Communities on October 29. Those are the two pieces of legislation that will be coming to the Senate.

We also discussed the committee's Containerized Freight Traffic study. As well, there will be a trip to Prince Rupert, which is something we missed doing last time. We have decided that two members on each side would be accompanied by the clerk and researcher to go to Prince Rupert.

I have talked to both whips and they do not want the members to travel during the week, while we are here working. It was suggested that the group leave on a Thursday evening, work on Friday, Saturday and Sunday, and then come back — that is if the trip takes place before Christmas.

There is also the trip to Halifax, with the public hearings and the fact-finding mission. We might have to wait until we come back after the January break. I know Senator Mercer would want to be us with in Halifax, and it is important for Senator Oliver. Senator Oliver, you will be around in February, will you not?

Senator Oliver: I hope so.

The Chair: He is healthier than Senator Mercer is now. Senator Mercer will be feeling better, I hope, in January. We could do it in February and again leave on a Thursday night. I am speaking about the whole committee. We can visit the port on Friday morning, and also have our public hearings Friday afternoon and Saturday. We can return on Saturday night or Sunday. That is an option when we come back from the January break.

Those are the discussions that took place at the steering committee. As I said, I believe Senator Zimmer mentioned he would like to go to Prince Rupert. Did you change your mind?

Senator Zimmer: Senator Cordy approached me.

The Chair: She will not be here in January. Well, this should be discussed with the other side. Who would attend on your side, Senator Oliver? Senator Tkachuk, we thought you would like to go.

Senator Tkachuk: I would like to go to Prince Rupert. I think it would be really interesting. When was the planned time to go?

The Chair: Could we go in December? There are just a few weeks left.

Senator Tkachuk: If it is Senator Zimmer and I, I propose that we get together and find a time that is good for us and let the clerk know to make arrangements. Then we can make sure it is good for the chair, as well.

The Chair: Maybe just two senators can go, along with the clerk and a researcher.

Senator Tkachuk: That would be good.

The Chair: That is up to you to decide.

Senator Tkachuk: Or if Senator Merchant wants to go.

Senator Merchant: No, you go. I was asking how you would go, if to Vancouver and then Prince Rupert.

Senator Tkachuk: I think that is the only way to get there. I do not know if you can get there from Edmonton.

The Chair: This should be discussed among yourselves, and get back to the clerk and we will arrange for the meeting.

Senator Tkachuk: A little Christmas shopping on Robson Street, and then to Prince Rupert.

The Chair: We will send you a note for next week's meetings. We may not have a meeting on Tuesday morning. We have people on November 28. The Canadian Trucking Alliance can come on Wednesday of next week. Tuesday we do not have anyone available right now, so we are making phone calls to try to get people on the list from the other day.

Senator Oliver: When is the next meeting planned?

The Chair: Next Wednesday — not this week. This Wednesday we would not have a meeting. Is there anything else, honourable senators?

Senator Zimmer: I have to have some minor surgery, so I would have to speak to Senator Tkachuk to work this out.

The Chair: When you are all available we will arrange something.

Senator Tkachuk: Even if we go in January, that is fine. If you need surgery, you can get it done.

The Chair: We have enough time before we need to proceed with the report.

Thank you for your presence here.

The committee adjourned.

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