Why Canada’s Two Big Railways Are Livid Over Trudeau’s Competition Move

Recommendation: Ottawa should publish a narrow regulatory package within 30 days that enforces binding service-level agreements for CN and CP, creates expedited arbitration for disputed shipments, and makes any future mergers conditional on demonstrable capacity gains and enforceable penalties.

Start implementation with three concrete actions: 1) mandate minimum grain and intermodal train counts through Saskatchewan during harvest windows and require public weekly performance reports; 2) open a fast-track complaints portal managed by the Competition association and staffed by independent auditors; 3) authorize temporary access rights for shippers at selected sites to prevent service gaps during transitions. These moves protect shippers, preserve cross-border trade flows with the United States under current Biden administration coordination, and reduce the need for blanket prohibition of transactions.

Data-driven thresholds will calm the market: require carriers to maintain at least the average of the prior five years’ seasonal volumes for critical commodities, publish on-time metrics for flights-equivalent frequency (daily train departures per corridor), and apply fines calibrated to lost shipper revenue. When carriers fail to meet service commitments, the regulator should trigger interim remedies that prioritize grain and time-sensitive intermodal traffic.

Address industry tensions directly: invite a roundtable that includes provincial ministers from Saskatchewan, major exporters, shortlines, and rail labor; appoint an independent chair such as Barbara Dorgan to synthesize articles and evidence and to produce a public report by March. That process will reduce the current fighting rhetoric between the two big canadian railways and deliver transparent, competitive outcomes for shippers and communities.

Operationalize enforcement with clear metrics, public dashboards, and a 12-month sunset review. If carriers propose mergers, require a first-stage economic impact study, a second-stage operational plan with enforceable milestones, and a third-party monitor for at least five years. These recommendations keep trade moving, protect smaller sites and shortlines, and give regulators practical tools to resolve disputes without broad, permanent prohibitions.

Trudeau’s competition directive: immediate obligations for CN and CP

Require CN and CP to publish a detailed, time-bound compliance plan within 48 hours that names a single agent for regulator contact and a public account manager for customer escalation.

• 48-hour deliverables:
  • Post a one-page routing map (labelled “crossword” for easy reference) showing northern corridors, key terminals and the same interchange points for international and domestic traffic.
  • Provide daily volumes by commodity class, average dwell times, switching time per terminal, and a device-based GPS snapshot for each unit moving through priority yards.
  • Sign and publish a digital acknowledgement that the carrier received the directive and the named agent has authority to make operational commitments.
• 7-day operational fixes:
  • Cap temporary surcharge increases at no more than 5% for 90 days and publish the formula that determines any further increase; show historical prices for the same lanes for the last 12 months.
  • Implement an immediate switch protocol that improves interchange windows by at least 20% and assigns a live coordinator to resolve cross-border delays.
  • Provide a centralized account dashboard for shippers, where contract terms, billing breakdowns and real-time status are available among approved users.
• 30-day performance targets:
  • Reduce average terminal dwell to 48 hours on nominated corridors and commit penalties or service credits if carriers miss targets; publish weekly scorecards.
  • Deploy a device-based tracking requirement for all unit trains carrying coal, grain and containers, and allow shippers read-only access to movement data.
  • Start third-party auditing of interchange transactions and post audits publicly; appoint an independent monitor if disputes escalate.
• Enforcement and transparency:
  • Require daily public updates while the directive is active and immediate notice of any attempt to change routing practices or prices against the published plan.
  • Establish a coalition of shippers, provincial regulators and a federal liaison (Minister Gabriel or a delegated official) to review progress each march and every 30 days thereafter.
  • If carriers remain non-compliant, apply graduated sanctions: fines, mandated access terms, and temporary reassignment of traffic rights to competitive third parties.
• Cross-border and policy alignment:
  • Coordinate with international partners and US states (including Kansas) to align access practices and avoid regulatory arbitrage; sign mutual data-sharing agreements within 14 days.
  • Ensure policies do not advantage one carrier against another; require the same commercial terms for equivalent services to keep markets competitive.
• 監視と次のステップ:
  • Regulators will watch compliance metrics continuously; publish a public dashboard currently updated every 24 hours and a monthly compliance report then circulated to stakeholders.
  • Shippers should file specific complaints with timestamps and agent names to create a verifiable account trail; the regulator will prioritize cases with clear operational harm.

Follow these steps immediately: name contacts, publish measurable targets, limit price increases, standardize switching and tracking, and allow transparent audits–doing so will produce verifiable improvement within 30 days and restore competitive functioning across key corridors.

Which statutory clauses now require CN and CP to change service priorities?

Answer: The ministerial direction authority in the Canada Transportation Act combined with targeted orders enabled under the Competition Act compel CN and CP to reassign capacity and alter day-to-day service priorities immediately.

The Canada Transportation Act gives the transport minister a significant power to issue direction when national or regional traffic disruptions threaten supply chains. That clause allows the minister to designate certain traffic as high-priority, require railways to allocate crews and track time through specific windows, and demand reporting on capacity usage. Companies that want to preserve operational independence must nonetheless comply; the statute explicitly permits temporary overrides of normal commercial dispatching to ensure continuity of passenger and critical freight service.

The Competition Act provides a separate enforcement path. The Competition Bureau and the Competition Tribunal can seek orders that prevent conduct judged to harm market access or competition – for example, refusing to move certain volumes or charging discriminatory prices for routing. Those provisions can require CN and CP to open capacity to rival shippers or to implement service protocols that limit discrimination by price or routing. The commission said these orders can include performance metrics and timelines, and failure to meet them can trigger fines or quasi-judicial remedies.

Certain sectoral statutes and emergency provisions – including grain-related authorities and provincial interfaces where rail movement links to Ontario ports or Mexico-bound intermodal corridors – add targeted obligations. Regulators can require a minimum amount of equipment be allocated to grain or intermodal lanes moving through the CN-KCS gateway toward Mexico, or to keep passenger corridors like Via Rail moving. Market watchers have watched the latest filings closely and view the combined effect as shifting how both carriers work across key corridors.

Operationally, CN and CP must: (1) re-prioritize scheduled crew assignments into mandated high-priority windows, (2) reserve and release yard slots and locomotives for designated traffic, (3) report throughput and price adjustments to the regulator, and (4) accept certain third-party routing requests that might reduce short-term revenue but preserve system flow. Company presidents and operating VPs should document decisions and consult legal counsel before declining regulatory directives.

Practical recommendations: start by mapping which routes and assets the minister or tribunal identified, quantify the amount of capacity that must shift, and set 48–72 hour operational plans to move traffic into the mandated windows. Track metrics that regulators will want to see – throughput, dwell time, price concessions – and keep a running log showing why any deviations occurred. A coalition of shippers and short-line partners can work with carriers to smooth transitions and limit service disruptions to communities like those feeding Martin Lake terminals or cross-border intermodal lanes tied to CN-KCS links.

The view from inside operations is that this regulatory push will cost much in short-term allocative efficiency but might restore broader network reliability. Companies should treat the directives as binding while preserving legal options; the regulator said compliance obligations will include reporting and can be adjusted as conditions change. Executives who want to protect commercial interests should engage regulators proactively, offer concrete scheduling plans, and demonstrate how compliance will be implemented without undermining long-term independence of operations.

What specific operational changes (scheduling, crew assignments, yard flow) must be implemented within 30 days?

Set a firm 48-hour rolling priority window for loaded grain trains and key intermodal services: publish the daily window by 06:00 and commit to departure slots within that window. Assign someone in each terminal to publish the slot board, update it hourly, and send an email notice to customers and local regulators when a slot changes. That window reduces uncertainty across the network and allows shippers and growers to plan receiving and trucking without added dwell.

Scheduling actions: reserve three daily westbound slots to pacifics and two daily eastbound slots for domestic processing; target a minimum of 28 grain unit trains per week out of prairie gateways, with a hard cap of 24-hour loaded-car dwell and 48-hour empty-car return. Use an intersection-based dispatch model at key nodes (e.g., mainline junctions across the prairies and the dakota border) so trains hold only at signed intersections for <2 hours. Publish a live dispatch feed and price tier for expedited service; update pricing and capacity notices in the same feed so customers know when a premium price will actually apply.

Crew assignments: create a 30-day emergency crew pool by reallocating 15% of scheduled crews to a cross-qualified roster that covers peak departure windows. Limit individual shifts so cumulative on-duty time stays inside regulation; rotate crews on 7-on/7-off cycles where track geometry and rest facilities allow. Designate a single contact (e.g., John, operations coordinator) to receive crew-change requests and to send relief notices by email and SMS within 30 minutes of any schedule change. Train one supervisor per division to watch compliance videos that represent the new handoff procedures; require that each crew has watched the 6-minute briefing before the first shift under the new plan.

Yard flow changes: convert two classification tracks in each major yard into dedicated grain arrival and departure tracks, creating a one-way flow that avoids back-and-forth switching. Assign yard-switching quotas: breakouts at 30 cars/hour and build-ups to 110-car trains with a <6-hour build window. Implement immediate cut-and-ride policy for spot holds, sign visible notices above each lead indicating expected release time, and push automated release emails to truckers and elevator operators. Track dwell metrics in real time and trigger a mandatory re-prioritization when any yard exceeds 24-hour average loaded dwell for two consecutive days.

Monitoring and commercial alignment: measure weekly volumes at each gateway and publish a short dashboard that ties volumes to trade value (example target: preserve grain export volumes that represent roughly $10–12 billion in annual trade). Use USMCA lanes where applicable to ease cross-border flows and coordinate with rail partners to avoid bottlenecks that can create political scrutiny. If a bottleneck appears, somebody must escalate to John and send a corrective plan within 6 hours. These steps let rails convert capacity into predictable throughput, give growers visible service signals, and keep customers watched on performance rather than promised.

How will the order affect contracts with key shippers and short-term liability exposure?

Start renegotiating key shipper contracts now: demand explicit 90-day service commitments, a 30-day cure period for operational failures, and caps on short-term liability tied to per-load and aggregate limits.

Conduct a 72-hour contract audit focused on the seven largest customers by volume – farmers, grain elevators, west-coast exporters, southerns terminals and major industrial shippers – because these seven typically represents the bulk of scheduled load and revenue and create the most immediate exposure.

Amend contract language to reflect current conditions: add a regulator-order clause that clarifies when liability applies, require allocation protocols for trains under constrained conditions, and insert liquidated-damage formulas (for example: CA$500 per late car with an aggregate 30-day cap of CA$50,000 unless parties agree to a higher, risk-adjusted figure). These specific caps limit short-term liability while keeping commercial incentives to restore service.

Protect customers and the company simultaneously: require shippers to provide firm nomination windows and weekly forecasts so carriers can prioritize loads, and require shippers to indemnify carriers for third-party rerouting costs when they change nominated destinations. This reduces ambiguous claims and speeds dispute resolution in the marketplace.

Communicate clearly and publicly: notify customers, employees and regulators within 48 hours about contract amendments, service priorities and dispute procedures. Put a cross-functional team in place that includes commercial managers, ops planners and legal counsel to handle claims from farmers, elevators and other affected customers so disagreements dont escalate into costly public disputes.

Address cross-border and trade implications: review USMCA-related shipping terms where cross-border transit created special customs or transit obligations; flag contracts that reference foreign delivery points and reprice them to reflect added operational risk and potential competition from alternative routes.

Mitigate cashflow and litigation risk with short-term financial controls: require partial prepayment or rolling letters of credit for high-risk loads, institute expedited arbitration for claims under CA$100,000, and set a 90-day timetable to resolve larger disputes. These measures reduce the chance that brief service interruptions translate into significant balance-sheet stress.

Execute a three-step timeline: within seven days contact the seven priority customers and present proposed amendments; within 30 days finalize signed addenda that include the caps and notice requirements; within 90 days operationalize allocation rules for trains and update sales terms on the public-facing marketplace so customers know what to expect. Dorgan noted customers and carriers will judge the market by those first 90 days, and many believe swift, concrete action represents the best path to limit exposure to claims and competition for scarce capacity.

What are the likely near-term financial impacts: penalties, service disruption costs, and revenue shifts?

Negotiate caps on daily penalties and sign interim amendments to contracts today to limit cash outflows and secure operational credits; do not wait to ask the president or board to approve emergency tariff adjustments.

Estimate penalties using a clear, transparent formula: number of affected trains × days of noncompliance × regulator fine rate. Example scenario: 4 blocked routes × 2 trains/day × 3 days = 24 train incidents. If a regulated fine averages CAD 25,000 per incident, direct penalties reach CAD 600,000. Adjust that figure upward for repeat infractions and public affairs costs.

Calculate service disruption costs per railcar and per cargo load rather than using flat percentages. Use a working metric: lost throughput cost = (inventory carrying cost due to inflation + demurrage + alternative transport premium) × cargo value share per day. For grain moving from saskatchewan to export elevators a one-week delay on a 100-railcar unit (≈12,000 tonnes) carrying $3.6M of crop at current market prices implies added holding costs of roughly CAD 45,000–90,000 (using a 3–6% annual inflation proxy for short-term carrying charges), plus demurrage and switching fees of CAD 100–200/railcar, or another CAD 10,000–20,000.

Expect revenue shifts: short-term rate erosion where shippers have leverage, modal diversion to trucks, and temporary volume re-routing between hubs in minnesotas and Canadian terminals. Local customers and grain elevators will push for credits or rate rollbacks; that pressure implies lost margin of 4–10% on spot haulage over 60–90 days. Mergers and historical network concentration reduce quick capacity alternatives, so competition-driven price concessions will hit gross revenue before any long-term market reallocation.

Account for reputational and operational spillovers: carriers having frequent outages will face contract disputes with large agricultural groups and industrial shippers, and may see increased claims processing and legal costs–retain counsel like Shecter-style specialists and create a direct line (email/telegram channel) for key shippers to provide real-time status and accept interim remedies. Active communication helps de-escalate groups fighting publicly and can reduce penalty escalation.

Operational recommendations you can implement within 48–72 hours: (1) reallocate spare railcars to priority corridors and document decisions to reduce regulatory exposure; (2) provide targeted credits to affected elevators and big cargo customers to preserve long-term contracts; (3) model three financial scenarios (mild, moderate, severe) that quantify penalties, lost revenue, and extra handling costs for board review; (4) seek temporary relief or rule clarification from the regulated authority and be prepared to take legal challenges if relief failed. These steps will help limit short-term cash burn and position the carrier to be able to recover lost volumes when service normalizes.

What legal challenges can the railways mount and what timelines should stakeholders expect?

Seek an immediate Federal Court injunction within 10–30 days to pause implementation and assemble a litigation team led by senior counsel; expect an initial hearing in 2–8 weeks and a written interim ruling in 3–6 months.

File multiple, parallel claims: judicial review for statutory error and ultra vires, procedural fairness challenges to any abrupt rule changes, a division-of-powers challenge if federal authority is stretched, and Competition Act defenses against forced divestitures or imposed mergers. Move for urgent disclosure narrowly targeted to operational records, and prepare a stay application before implementation steps proceed.

Quantify harms with hard data: compile years of tonnage, ton-miles, average distances, interchange dwell times, and modal switch rates; produce economic models showing how throughput falls at choke points and how public congestion and customer costs rise when traffic is rerouted. Include route-level scenarios that trace effects into Minneapolis and New York to show cross-border and national system impacts.

Expect concrete timing milestones: injunction hearing 2–8 weeks; full Federal Court judicial review decision 3–9 months; appeal to the Federal Court of Appeal 6–12 months from filing; Supreme Court leave applications add 6–24 months before a final hearing, which can extend another 9–18 months. Regulatory tribunal processes or merger reviews add 12–24 months, so plan for multi-year exposure and parallel tracks to limit further operational risk.

Operational and litigation playbook: preserve documents, freeze asset transfers, suspend non-essential corporate restructures, and notify key shippers. Assign tasks across a small cross-functional team–litigation counsel, economists, operations leads–and designate one communications lead to read and rebut headlines quickly. Simultaneously pursue negotiated mitigations with ministers, offering targeted capacity guarantees, infrastructure commitments, or service-level covenants to address immediate congestion.

Balance court fighting with political and regulatory engagement: never rely solely on litigation. While lawyers pursue expedited remedies, the company should propose measurable fixes for the public and shippers, brief national stakeholders and affected municipalities, and prepare for further litigation where necessary. Known successful defenses combined technical evidence with direct offers to fund short-term relief; consider appointing a point counsel (for example, Barbara Wade) to coordinate those mixes of legal, operational and public strategies.

Prepare for outcomes and contingency moves: if courts deny stays, switch to damage and indemnity planning for customers and shippers hauling critical freight; if courts grant relief, use the extra months to negotiate durable solutions that reduce the risk of future headlines and of repeated interventions. Read the record, close procedural gaps that opponents will attack, and map what further discovery or appeals are likely so stakeholders know where the fight will move and how many years of uncertainty to budget for.