What is required to succeed?

Apart from the requirement to consider the existence of competitive transportation alternatives, the CTA does not specify the criteria which an arbitrator must consider in reaching a decision. In preparing the information to be submitted to the arbitrator in support of its final offer, a shipper should accordingly also address why the information is relevant in the specific circumstances. This may differ from case to case.

Evidence to support the shipper’s final offer may include the following:

• absence of competitive transportation alternatives
  
  The shipper should provide evidence that there is not available to it an alternative, effective, adequate and competitive means of transporting the goods to which the arbitration relates. This will include information regarding the absence of rail alternatives (or their lack of effectiveness because of higher costs, circuitous routing or additional handling involved). The limitations of other modes of transport should also be addressed, for example, by explaining why trucking over very long distances is not efficient. A shipper with large shipping volumes may be able to argue that the trucking industry simply does not have the resources to handle all of its traffic.


• rate history
  
  The rates under which the shipper’s traffic moved immediately before the dispute being arbitrated may be evidence of what both parties considered reasonable in the recent past, if the rates in question were contained in a confidential contract. Freight rates unilaterally established by the railway in a tariff are evidence of what the railway considered reasonable. This can provide the basis for an argument that the railway company is seeking an excessive freight rate increase.
  
  In some cases, the shipper may wish to include a more extensive rate history to demonstrate that the increase now being sought by the carrier is disproportionate to the year-over-year increases it has accepted over a representative period of time. Alternatively, a longer history could be used to support an argument that after a series of substantial rate increases, a more moderate hike is now appropriate.


• rate negotiations preceding the FOA
  
  An account of negotiations leading up to the arbitration and, where appropriate, during the early stages of the arbitration process will generally provide the arbitrator with a better understanding of what has led the parties before him or her. Depending on the circumstances, this evidence may show that the carrier’s final offer represents a retreat from a more reasonable position taken during the negotiations or that, while the shipper has already made significant concessions, the carrier has not. The carrier’s conduct in negotiations may also provide more general evidence of an imbalance in bargaining strength.


• railway costs
  
  The costs incurred by the carrier to provide service to the shipper may also be a relevant consideration. Railway costing is a specialized area of expertise, and a shipper wishing to lead evidence in this area will normally require the assistance of a consultant who can provide expert evidence of the costs associated with moving the shipper’s traffic. A railway costing consultant will ordinarily require details of how the shipper’s traffic moves, including routing, equipment, shipment weights and particulars of ancillary services provided.


• shipper investments in efficiency
  
  Depending on the circumstances, evidence of facility upgrades or operational improvements implemented by the shipper that enable the carrier to provide the transportation services more efficiently may be of assistance to the shipper.


• the market for the shipper’s product
  
  Commodity prices in the markets into which the shipper sells may also be a relevant consideration, for example, where the shipper can show that market conditions make the freight rates contained in the carrier’s final offer unsupportable. Including such evidence is not without risk, however, since it may enable the carrier to raise a multitude of issues relating to the shipper’s operating costs and efficiency.


• freight rates charged by the carrier on similar traffic
  
  Where the shipper is able to access information that freight rates charged by the carrier on similar traffic are more comparable to those contained in the shipper’s final offer than to the rates advanced by the railway company, this may be of assistance. Access to this type of information, however, is normally limited. Rates published in general tariffs are typically higher than those offered by a carrier in negotiations for a confidential contract, and a shipper will generally not be able to obtain information about contractual rates enjoyed by other shippers. There may be circumstances, however, where evidence in this area is available, for example, if the FOA relates only to a portion of the shipper’s traffic and where rates paid by the shipper on its remaining traffic (which is not the subject of the FOA) offer a favourable comparison. To provide a proper basis for the comparison it may be necessary to also provide a railway costing analysis in respect of this other traffic.

The above list is not exhaustive. Depending on the circumstances, some of the types of evidence identified here may not assist the shipper. A shipper may also identify additional areas of evidence to support the argument that the shipper’s final offer is more reasonable than that of the carrier and more representative of what the carrier would be able to charge if it had to compete for the shipper’s traffic with other transportation service providers.