Interswitching is an operation performed by railway companies (carriers) where one carrier performs the pickup of cars from a customer (shipper) and hands off these cars to another carrier that performs the “line haul” (the majority of the linear distance of the overall railway movement). The interswitching arrangement is made in cases where a shipper has immediate access to a single carrier, but is within a defined distance (zone) to one or more of the competing carriers.
Regulated in Canada since 1904, interswitching is a commercial agreement between railway companies whereby one railway company will carry traffic for the other railway company to ensure that captive shippers (i.e. shippers with only one choice of railway) have fair and reasonable access to the rail system at a regulated rate. Railway companies are fully responsible for reimbursing each other on a yearly basis.
Interswitching allows shippers to negotiate, through normal commercial processes, suitable terms and conditions of carriage with competing carriers for the line haul portion of the overall car movement.
The Railway Interswitching Regulations set the rates to be charged for interswitching services provided by the terminal carrier, thereby establishing a predictable and fair pricing regime that is applied equally to all terminal carriers providing interswitching services.
Undersection 128 of the Act, the Agency may:
- make regulations prescribing terms and conditions for the interswitching of traffic;
- determine the rate per car to be charged for performing this operation: and
- establish distance zones for that purpose.
The interswitching provisions of the Act are considered to be competitive access provisions, allowing the shipper to choose their carrier despite having physical access to only one carrier.
As part of the every five-year review of the rates, the Agency undertook broad consultations in both 2007 and 2010. The aim of the consultations was to obtain input from stakeholders, including shippers, railway companies, industry experts, representatives of provincial governments, before drafting amendments to the Regulations.