Written for Daily Hive Urbanized by North Vancouver resident Johnathan French.
Railways in Canada are monopolistic and expensive, dominated by two companies: Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC).
Freight is devoid of meaningful competition, and passenger rail services are practically non-existent. It doesn’t have to be this way; with some simple federal legislation, we could fix this.
As it stands, if you want to do business on rail lines owned by CN or CPKC, there is a direct conflict of interest: they want to prioritize their own freight services, and they don’t want competition.
This is understandable. Shareholders want to maximize profit and will do so however they can.
However, imagine if this was the case with our highways. Imagine if two private companies owned all the highways in Canada and prioritized their own trucking services above all else.
CN and CPKC’s operations are a duopoly that envelops Canada from coast to coast. Because of this, our freight services are uncompetitive, and our passenger rail services are tiny and inflexible, held hostage by the incumbents.
How do we fix this?
Like our highways, we could nationalize them. This would honestly be the best long-term solution, but it would be very expensive.
There is a simpler solution: we break them up. We pass a law that separates the ownership and operation of tracks and signals from the freight companies.
With this legislation in place, freight companies would no longer own the tracks. The newly separated track and signal companies would own them instead, with laws in place to ensure fair competition, like an open bidding system for contracts.
This would eliminate the conflict of interest at its core. We could force CN and CPKC to meaningfully compete with each other, and with others.
The resulting track and signal companies would have one simple priority: move as many trains as possible along their tracks. This would allow for true competition and a rapid expansion of freight and passenger rail services.
Under this system, if a new freight company wanted to come in and compete, they could simply negotiate with the track and signal companies. There wouldn’t be a conflict of interest, and they would compete fairly against the incumbents. The same would be true for passenger rail services, with public and private companies free to compete against each other.
This kind of arrangement would incentivize the track and signal companies to expand their rail capacity, double-tracking and quad-tracking as much as possible. The more trains they can run, the more money they can make.
The track and signal companies would be incentivized to upgrade their tracks make trains run faster, with shorter consists, as this would allow them to run more trains overall. They would also be incentivized to upgrade their signalling systems to allow trains to safely operate closer together, again allowing for much more service, and much safer operations.
This open-access model would significantly improve competition. Freight companies would compete fairly against each other, allowing for many more shipping options, especially for farmers.
We should look to Europe as a model for how this could work. For the past few decades, they have been slowly moving towards a similar open-access model, allowing for much more competition for freight and passenger rail services.
They have done this because they acknowledge that railways are inherently monopolistic without government intervention.
Canada needs to acknowledge this fact. We need proper competition on our railways, and we need more options for freight and passenger rail services.
We must break up our railway monopolies.