BC New Democrats Leader Carole James letter to
B.C. Auditor General RE: BC railcar shortages

Wayne Strelioff
Office of the Auditor General of British Columbia
8 Bastion Square
Victoria, BC
V8V 1X4

SENT BY FAX TO: 250.387.1230

March 30, 2005

Dear Sir,

A number of concerns have recently been brought to my attention with regard to service levels provided by CN since the sale of
BC Rail.

It has become apparent that delays in shipping times and railcar shortages are posing a threat to northern industry. These
concerns coming from shippers and mills along the rail line must be addressed, and demonstrate a clear need for your office to
determine why such problems are occurring.

According to a Canfor Daily Newsletter, warehouse pulp inventory "has reached a critical level" due to a lack of railcars available
for transferring goods to market. This concern is coming from a number of mills, and as a result some operations have had to
erect temporary facilities to store finished pulp inventory that, due to railcar shortages, is unable to be shipped.

According to the government's briefing that outlined details of the sale of BC Rail to CN in November 2004, reduced rates and
faster shipping times were to be some of the benefits of the sale. These benefits are not being realised by the mills dependent on
the rail line.

CN's failure to deliver on the government's public commitment is having a significant and negative impact on regional industry.

I am aware that CN has officially stated that poor weather is to blame for the shipping backlog and railcar shortages. However,
managing northern BC winters should come as no surprise to CN, nor do weather conditions answer for the lack of railcars
operating on the line. In fact, BC Rail faced such weather conditions and never had such shortages occur.

I also have broader concerns that CN's railcar shortage is North America-wide, and will only worsen as export traffic increases to
meet the growing needs of the American market. For example, backlog at the Port of Vancouver will potentially be the next point
of concern in the shipping line - a reality that would further impact the region's ability to be competitive and efficient.

With shipping backlogs, I can only assume that mills are incurring financial penalties based on late delivery and may even be
facing a loss of valuable customers due to an inability to meet delivery targets.

It is my further understanding that mills are now relying more heavily on trucks for shipping in an effort to meet delivery deadlines.
Such trucks are already at a premium and as a result, a truck shortage is already on the horizon.

The failure to get products to market in a timely fashion is limiting the ability for the pulp industry to prosper, and threatens
economic stability and job security for the region.
I am sure you would agree that all of the above are undesirable and hold potentially devastating outcomes for our province.

Given the political sensitivity surrounding this issue, and the partisan interests of all the participants as we enter the election
period, it is appropriate for the Auditor General to investigate why these delays are happening, if they constitute a breach of
commitment, and what remedies exist to assist businesses negatively impacted thus far.

There are a number of outstanding questions with regard to the sale of BC Rail. These questions have been asked often, but
without an independent assessment of the impact of the sale they have not, and will not, be answered.

What I have raised today only adds to those mounting unanswered questions. It is now time for answers.

It is my sincere hope that your office will agree to review and assess the impact of the current situation for the benefit of regional
industries, communities and the public trust.


Carole James
Leader, BC New Democrats

cc.         Gordon Campbell, Premier
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