Canadian Pacific CEO says shippers have stonewalled purchase of safer cars: Globe

Canada’s two large railways anticipate substantial growth in the transportation of crude oil in coming years, but the CEO of Canadian Pacific Railway has accused the country’s petroleum, chemical and commodity producers of persistently stonewalling the purchase of safer tanker cars.

Hunter Harrison, who has been CEO of Canadian Pacific since mid-2012 and before that headed Canadian National Railways, made the comments in an interview published Wednesday in the Globe and Mail newspaper.

“The root of all this is the dollar sign,” he said. “We can fix all this stuff, it is fixable.”

The veteran and highly regarded railway executive also said “turmoil” and “bureaucracy” are hampering the adoption of precautions that are needed to avoid further accidents like the deadly Lac-Megantic derailment in Quebec.

Harrison said it’s up to regulators to require sturdier rail cars, tighter safety rules and stiffer penalties, including jail time, for companies and employees who knowingly mislabel hazardous goods or fail to obey existing regulations.

He said reform was been hampered for decades by large shippers who own the vast majority of North America’s tankers.

Canadian Pacific and other railways have to abide by federal guidelines for carrying hazardous materials such as chlorine and crude oil, despite their complaints of gaps in current regulations, Harrison said.

His comments come as Canadian Pacific is under scrutiny for its role in the Lac-Megantic disaster, which killed 47 and devastated the Quebec town’s centre.

The derailment involved a train operated by Montreal Maine & Atlantic Railway, which was moving tanker cars with crude oil on their way to an Irving oil refinery in Saint John, N.B.

Canadian Pacific moved the cars along an earlier stage of its journey from the source in the U.S. Midwest.

CN’s chief executive, Claude Mongeau, said shipment of dangerous goods by rail remains very safe but tragic incidents such as Lac- Megantic require the industry to reassure the public.

He said 99.997 per cent of dangerous goods safely reach their destination without release but such a statistic means little in the face of disasters like the Lac-Megantic tragedy.

“I think our biggest challenge is to reassure the public,” he told a CIBC conference on Wednesday, adding that rail remains a cost-effective way to move goods across the country.

“From a spill standpoint, railroads are as safe, if not slightly safer than pipelines. From an accident standpoint, this accident was tragic. But you look back over … 15 years, very few fatalities in the rail industry (have been) caused by the movement of dangerous goods.”

Mongeau said Montreal-based CN expects to double its shipments of crude from last year to 70,000 carloads this year and increase that again going forward.

He said that growing shale oil from the Bakken region of North Dakota would have had trouble getting to market had it not been for rail. About two-thirds of such oil is moved by rail.

Rail shipments have included liquids and light oil but as more pipelines are built there will be a shift to heavier crude and diluted bitumen where railways will be able to go “head to head” with pipelines, he added.