By The Canadian Press

Ottawa accused of preferential treatment with coming rail subsidies for steel, lumber

Mar 5, 2026 | 1:09 PM

OTTAWA — The federal government is being accused of creating an uneven playing field in Canada’s shipping industry, and critics claim the Prime Minister’s Office is unwilling to rectify it.

Later this spring, Ottawa is expected to launch a federal subsidy program to help reduce the cost of shipping lumber and steel between provinces by 50 per cent. But the subsidies — promised by Prime Minister Mark Carney back in November — will only go to rail companies.

“We support this initiative to give a boost to those Canadian industries. But what we were asking was for parity because many destinations and commodities, only maritime transport can handle that,” said Etienne Duchesne, business development project manager at Degsgagné, a maritime shipping company based in Quebec.

He said officials with Transport Canada were receptive to their plea but they were referred to the Prime Minister’s Office.

“The decision apparently came from (PMO), and there seemed to be a difference,” Duchesne said, in French.

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“On Transport Canada’s side, there seemed to be an openness. But within the Prime Minister’s Office, we’re reading between the lines that there isn’t, and that (the subsidies) will only be for rail and not for maritime shippers.”

The Prime Minister’s Office did not immediately respond to a request for comment.

In the House of Commons last week, Bloc Québécois MP Claude DeBellefeuille said the government was creating “unfair competition between rail transportation and marine transportation,” putting jobs and supply chains at risk.

In a letter to Transport Minister Steve MacKinnon, DeBellefeuille said Ottawa’s decision to favour rail over maritime contradicts a declaration under the Transportation Act, which says the government can’t favour “any particular mode of transportation.”

“I don’t understand why maritime transport is being ignored, given that it is a strategic and essential interprovincial mode of supply chain transportation, and that Transport Canada’s mandate is precisely to promote an integrated transportation system,” DeBellefeuille wrote on Feb. 26.

Speaking with The Canadian Press, DeBellefeuille said that by favouring one transportation method over another, the government is diminishing the maritime shippers’ competitiveness. Duchesne said the move will cost his company millions of dollars.

“What we don’t understand is there seems not to have been an analysis on the part of the government that maritime shippers already ship steel interprovincially,” DeBellefeuille said in French.

Carney announced the measures in November, saying Ottawa would work with CN and CPKC and provide government funding to discount freight rates for steel and lumber by half.

Carney said the move was to help foster domestic supply chains to mitigate the impact of United States tariffs on Canada’s steel and lumber sectors. Those tariffs have been at 50 per cent since June.

In 2024, 75 per cent of Canada’s exports — and 90 per cent of its lumber, aluminum and steel exports — went to the U.S. Almost half of Canada’s steel goes to the U.S. in a typical year, but those exports were down 24 per cent annually last year.

And while the government plans to provide funds directly to the rail companies, DeBellefeuille said it should be up to companies who need steel and lumber shipped to decide what mode of transportation to use.

“Whichever offers the best service at the best price. It’s not up to the government to choose one mode of transportation over another,” she said.

Duchesne said companies like his also serve parts of the country rail can’t reach.

Nunavut doesn’t have any rail lines into the territory, where construction costs are already higher than in the rest of the country. The territory’s premier said while his government supports measures to help Canada’s steel and lumber sectors, Nunavut has raised concerns about the subsidy program only applying to rail shipments.

Still, there’s been no response from Ottawa.

“We just want to be put on a fair playing field in terms of any subsidies or supports to reduce the cost of transport,” Nunavut Premier John Main told The Canadian Press.

“We know that the North is on their radar, and we have been encouraged by just the amount of attention that the North is getting. We’re more than willing to engage and to offer suggestions or ways that this program could be made equitable and bring Nunavut into the fold.”

When the measures were announced in November, The Canadian Press asked Carney whether Ottawa would extend the subsidies to the territories.

“The short answer is the rail subsidy theoretically would extend to the North, but practically doesn’t,” Carney said at the time.

“There’s lots of issues with transport costs for the North, and one of the things that we’re doing is looking where are the biggest areas where we can reduce.”

This report by The Canadian Press was first published March 5, 2026.

Nick Murray, The Canadian Press