Railways serving port facilities in the Lower Mainland are failing to provide prompt and reliable service, harming the port’s international reputation and imposing extra costs and risks upon customers, according to a Port Metro Vancouver submission to Transport Canada.

The rail system moving goods in and out of the port works “reasonably well” on a broad level, but fails customers and stakeholders on a “day-to-day, week-to-week and month-to-month” basis within the confines of terminals, Port Metro Vancouver said in a recent report to the transportation agency’s rail freight service review panel.

The port and many of its customers are pushing for Canadian Transportation Act changes which would bind rail operators — notably Canadian Pacific and Canadian National — as well as terminal operators into a regulated commercial relationship within the port.

That relationship is proposed to include “level-of-service agreements,” independent service monitoring, performance reports and dispute resolution.

Railways counter that they are confident they can work through issues with customers in a consultative commercial environment — with less risk of pushing up costs.

The crux of the port’s concern is a “lack of consistent and reliable” service in the so-called “last mile” — the movement within a terminal of container cargo between a ship and a train.

“This imposes additional costs and uncertainty upon supply chain participants and increases the financial risks of current and future investments in the port system,” the submission states.

Vancouver is Canada’s largest port, and fourth-largest in North America in terms of annual tonnage. Last year it handled 102 million tonnes of cargo for 160 different economies — and expects to annually handle 150 million tonnes by 2050.

The port said that 84 per cent of its rail customers surveyed between November 2008 and February 2010 are either dissatisfied or very dissatisfied with rail service within the port. Vancouver Gateway’s “dwell time” target is to have 90 per cent of containers moved in three days or less.

Only 60 per cent of containers moving through the port of Vancouver hit the three-day target, with “the remaining 40 per cent being delayed four days or more.”

“This [three-day] performance target is widely recognized across North America as a minimum standard for intermodal dwell time. Shorter dwell time standards are common,” the port said.

TSI Terminal Systems Inc., which handles more than 75 per cent of containerized cargo through two terminals it operates within the Vancouver port, says in its submission to the panel that a “chronic” under-supply of rail car equipment “imposes costs and uncertainty on supply chain partners and customers whose cargo values and investments in the supply chain far outweigh those of the railways.”

Vancouver port president and CEO Robin Silvester noted that CN and CP are “very good and very efficient at long-distance line haul -amongst the best if not the best in North America.”

“It wouldn’t be right to say it’s just the railways who are wrong,” Silvester said in a phone interview.

He is asking the panel to consider recommending level-of-service agreements among all the key players in the supply chain “so that there’s a very clear understanding of what each party is going to do, what they are accountable for, and how they make sure the supply chain works in an optimal way.”

Shippers have been pushing for major rail freight service reforms since 2006, when they complained to the minister of transport that CN and CP were failing to provide acceptable levels of service.

In 2008 the federal government responded with some amendments to the Canada Transportation Act -although the port of Vancouver in its submission to the panel portrayed those changes as a “compromise outcome.”

The feds also committed in 2008 to a comprehensive review of rail service in Canada.

The deadline closed last Friday for submissions to the review panel, and a final set of recommendations is expected by year’s end.

CN spokesman Jim Feeney said in a telephone interview that the entire supply chain has to be examined “and it’s not reasonable to hold the railways accountable for delays or shortfalls in the performance of other parts of the chain. The port is right -we have to look at every aspect of it.”

He noted CN’s acknowledgment of a need to examine the “last mile” of the supply chain, adding that deregulation of the Canadian railway sector over the past decade “has produced a pretty good logistics chain.CN’sperformance is really pretty strong and the data shows that.

“There are areas that we need to address, and that’s what we want to do, but we believe that the best way to go ahead with that is on a commercial basis as opposed to a regulatory basis.”

In a telephone interview, CP spokesman Mike Lovecchio noted that a letter from CP president and CEO Fred Green was included in the railway’s submission to the review panel.

“Canada, as a trade-dependent nation, must excel in the face of increasing competition in world markets,” Green’s letter said. “We in the freight rail business understand the critical role we play in enabling Canada’s economic performance.”

Green said increased regulation “would have a negative effect on the rail supply chain” and would erode investors’ confidence in an industry that is capital-intensive.