Region 5 | Opinion

Omnitrax not solely to blame for derailing Port of Churchill

For over 100 years, the Port of Churchill on Hudson Bay was the gateway to northern Manitoba and communities in Nunavut Territory. Served by 820 kilometres of railway line from La Pas, Manitoba, it shipped western grain to European markets until the Port was stranded, then closed and the hundreds of remote northern communities along the railway line were left isolated as the Port and railway’s private owner, Omnitrax, failed to repair the tracks after flooding in early 2017.

Despite the strategic importance of Churchill, North America’s only Arctic deep water port, the rail line from La Pas was never easy to operate. However, the severe problems of today are predictable results stemming from two catastrophic blunders made by the Canadian government. While opinions vary on railway privatization, it is unforgivable that Liberal Prime Minister Jean Chretien’s government allowed CN, a Class 1 Railway, to sell the Churchill line to Omnitrax in 1997 without requiring the new owner to uphold the statutory common carrier obligation to move duly loaded cars to their destination in a timely fashion. At the same time, the federal government upgraded Churchill’s port facilities, and then gave them to Omnitrax.

The second catastrophic blow to Churchill occurred when Conservative Prime Minister Stephen Harper dismantled the farmer-elected board of Canadian Wheat Board (CWB) in 2011, ended its single desk selling authority and later gave its assets to G3, a partnership of US-based Bunge and the Saudi Agricultural and Livestock Investment Company.

Under the CWB‘s single desk selling and aggregation advantage, all four western ports – Churchill, Vancouver, Prince Rupert and Thunder Bay — were utilized strategically. Grain grown in the Hudson Bay route catch basin was predominantly marketed at vessel volumes through the Port of Churchill by the CWB. This lowered handling and transportation costs to farmers and in years of bumper crops it alleviated congestion to the west coast. Anticipating Churchill would be in trouble without the CWB’s orderly marketing powers, the Harper government threw private grain companies up to $25 million dollars with a five-year, $9.20 per tonne freight subsidy to help Omnitrax and camouflage the fall-out from destroying the CWB. It isn’t surprising that once the subsidy ended, the grain companies quit using Churchill, as private companies cannot be expected to act beyond their own self-interest.

The single desk CWB served farmers with transparent higher net prices and lower transportation costs. At the same time, the CWB served all of Canada by strategically utilizing our geographical resources, which was possible as a result of being the marketing agency for the whole western wheat crop and having strong relationships with international buyers. The dominos have fallen: the tracks need two decades worth of proper maintenance, farmers are paying higher freight rates, other routes are more congested, there are more greenhouse gas emissions, Churchill is suffering economic losses, and northern communities are cut off from essential services. Dominos will continue to fall as private grain companies avoid Thunder Bay, the next-most-expensive shipping route, further congesting the over-utilized West Coast corridor. One can only guess at the nightmare scenario if an earthquake hits Vancouver.

Canada has lost a third of its railway track miles in the last three decades. Abandonment has definitely increased profitability for CN and CP, but their gains should not be seen as an increase in overall efficiency of the transportation system. Farmers pick up the cost of trucking further to main line terminals, with triple the greenhouse gas emissions per mile compared with rail transport.

In the 1880s, the public gave private railway companies millions of acres of land — including the mineral rights — in return for agreeing to move freight at regulated rates. CN and CP have become very profitable businesses as a result. Thus abandonment of railway lines cannot be simply a rail company’s decision without the public being compensated somehow. Governments have been far too lax in upholding the public interest in this matter. It is time they sharpened the pencil!

As for Churchill, the solution lies not in suing Omnitrax for its very predictable failures, but in working with northern Manitoba First Nations and nationalizing both the line and the port facilities to restore the Port of Churchill as an essential fourth western grain shipping route. Climate change will likely make it an even more strategic and commercially attractive port and an active port will revitalize the town as a base for government services to support new tasks that will be needed in the north.