CN Rail warns Ottawa not to impose or extend regulations on railways

Canadian National Railway is calling on Ottawa to refrain from imposing or extending service regulations on the country's railways that it fears will stifle innovation and discourage investment.

MONTREAL — Canadian National Railway is calling on Ottawa to refrain from imposing or extending service regulations on the country’s railways that it fears will stifle innovation and discourage investment.

Chief executive Claude Mongeau says railway managers, not government agencies, are the best ones to decide on the trade-offs needed to ensure an efficient service.

Mongeau says all customers would like to have the system designed for their particular benefit, but only railways can make the decisions about what’s needed for the entire network.

Mongeau, who spoke on the issue both at the company’s annual meeting and an interview later, also rejected those who claim railways are monopolies that dictate service levels.

He says CN Rail (TSX:CNR) faces growing competition from its Calgary-based rival Canadian Pacific, along with U.S. carriers, trucks and ships.

Meanwhile, Mongeau said he was confident the new Liberal government would take the next year or so to consult about changes to the Canada Transportation Act proposed in a report by former cabinet minister David Emerson that was tabled in February.

And he said he was willing to partner with CP Rail (TSX:CP) or other industry participants to press for changes that would help Canada’s transportation infrastructure.

In particular, he criticized the previous government’s intervention a couple of years ago that forced Canadian railways to move a bumper grain crop by imposing minimum volume requirements.

Mongeau says he’s disappointed that the Trudeau government had postponed for one year the repeal of those provisions while it reviews the Emerson report.

Failure to rescind the regulations will discourage railway investment, the Montreal-based railway says.

Canada’s largest railway transported record volumes of Western Canadian grain in the 2014-2015 crop year, some five per cent more than during the record 100-year crop a year earlier.

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