Economy

Barry Prentice: The high costs of railroad blockades to Canada’s economy and reputation – Financial Post

Published

5 years ago

February 19, 2020

The First Nations (FN) blockades of CN Rail have many dimensions but also provide a teachable moment on the importance and operations of Canada’s freight railways, which carry about half the total tonnage of freight moved in Canada and are critical to the export of most Canadian commodities. Manufacturing and retail supply chains also depend on the railways to reach container ports and overseas links. In recent years, the railways have been carrying more crude oil but they have always been responsible for the transport of most dangerous and/or flammable chemicals and liquefied gases. Blockades that halt all this movement have significant costs to the economy that can quickly reach into the billions of dollars.

The FN blockades could not come at a worse time. So far CN Rail has cancelled 400 to 500 trains but operations were already slowing. February is a cold month, with lots of days below -25 C. At these low temperatures, air brakes work much less well, so trains have to be shortened by up to 30 per cent and their speeds often have to be reduced because rails are susceptible to fracture. Snow doesn’t help, either, often blocking tracks and freezing up switches. It all causes a substantial reduction of railway throughput capacity — just when the fall grain harvest is supposed to be moving to market.

A return to full operating capacity will take longer than most people realize — months probably rather than weeks

Adding to the woes of railway traffic managers, the minister of transport had placed a temporary speed limit on all trains carrying dangerous goods, cutting normal speeds in half (though the limits have since been raised somewhat). This followed derailments of CP crude oil trains near Guernsey, Sask., in December and early this month. The cause of the derailments, only six kilometres apart, is still under investigation, but it is the middle of winter and hardly a nationwide phenomenon. Whether this was or wasn’t an overreaction, slowing train speeds will continue adding to the backing-up of inventories caused by the FN blockades until speeds return to normal on April 1.

Everyone is familiar with the time slots of a television schedule. This is a good way to envision the capacity limitations of a railway network. The railway schedule defines preset blocks of time for trains to move along a section of track. If crude-oil trains are forced to travel at half speed, they have to use twice as many time blocks. And trains in adjacent time blocks get slowed down, too. What’s more, if cold temperatures reduce the length of trains from 100 to, say, 70 cars, the railways need to use another 30 per cent more time slots to carry the same cargo.

Transportation is a service. It can’t be stockpiled. Some blocks of time are more valuable than others. Meeting container ship schedules is particularly important because of the high value of the cargo and the costs of delaying a ship. Any time lost when the trains are not moving is lost forever. Even when the FN blockades are finally removed, the pain of this event will take a long time to go away. Delayed shipments will have to be feathered-in with newly arriving traffic. It might seem simple. It’s anything but.

A return to full operating capacity will take longer than most people realize — months probably rather than weeks. The startup of operations of any complicated network, including railways, has to be finessed with the utmost skill. Yards, crews and trains need to be synchronized across the whole Canadian network to avoid bottlenecks and throughput-robbing congestion.

Lost opportunities have real costs both to railways and to the Canadian economy. The economic pain is magnified by the intangible costs to Canada’s reputation as a reliable supplier to world markets. If the flow of products can be interrupted, especially without a healthy lead time, then foreign buyers will protect their interests by buying elsewhere. These are the harsh realities. Let’s wish the government well in pursuing a speedy, peaceful and lasting end to the rail blockades.

Barry Prentice is a professor of supply chain management at the University of Manitoba and a member of the research advisory board at the Northern Policy Institute.

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

2 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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