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11
STRUCTURE OF THE TRANSPORTATION INDUSTRY
Rail Industry Structure
For many years, the rail freight industry consisted of two national
railways, CN and CPR, plus five large regional rail carriers,
a small number of US railway subsidiaries (operating only a short
distance into Canada), and about a dozen switching, terminal
or bridge railway companies, or some 30 railways in total. In
recent years, Canada's rail industry has undergone dramatic
change.
In the late 1980s and early 1990s, a modest number of recent-eraNote
1 shortline railways began to appear. After 1995, however,
the number of shortlines began to increase significantly, as illustrated
in Figure 11-1. Since the late 1980s, over 40 shortline carriers
have formed, operating more than 9,600 kilometres of track and
having aggregate annual revenues of almost $140 million. Over
75 per cent of these new carriers were formed after 1995.
While the number of shortline carriers continues to grow, ownership
has not. In 1998, six companies controlled the majority of shortlines
formed since the late 1980s. In 1999, however, the makeup of the
Canadian shortline industry changed. RailAmerica Inc.Note 2 purchased both
RaiLink (the largest Canadian shortline company) and RailTex,
increasing the concentration of ownership within the industry.
RailAmerica currently owns nine operations in Canada (both coasts
and numerous others in the Canadian interior), dominating the
Canadian shortline scene in the number of rail operations, length
of track and geographic distribution.
Table 11-1 shows the nature of ownership concentration within
the Canadian shortline industry.
Another recent change is the extent of US ownership. Of the
five major corporations listed in Table 11-1, four are US-owned.
While US companies have had a presence in Canada for some time,
it was not until the recent Rail America acquisitions that US-based
corporations assumed such a dominant role in the Canadian shortline
industry.
These five corporations account for 63 per cent of the total
number of shortline carriers formed since the passage of the Canada
Transportation Act in July 1996, as well as over 83 per cent
of the trackage transferred. In 1999, however, these corporations
accounted for only about 35 per cent of the transfer activity.
Most transfers during the past year were to smaller carriers or
corporations with limited Canadian shortline holdings.
In contrast to the rail freight sector, the rail passenger
sector has remained essentially unchanged for many years. VIA
Rail continues to dominate the sector in both revenue and traffic,
with about 95 per cent of passenger-related revenues (including
subsidies) and about 95 per cent of total passenger-kilometres
and passengers. Although it owns relatively little trackage, VIA
Rail has extensive running rights, largely over CN trackage. Smaller
rail passenger services are offered by BC Rail, the Algoma Central
Railway, the Ontario Northland Railway and the Quebec North Shore
& Labrador Railway. In addition to these services, Amtrak
provides services into Montreal and Vancouver, as well as into
Toronto, the latter in conjunction with VIA Rail. Great Canadian
Railtour also operates a seasonal service between Vancouver,
Calgary and Jasper. Appendix
11-1
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CANADIAN NATIONAL (CN) / BURLINGTON NORTHERN SANTA
FE (BNSF) COMBINATION |
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On December 20, 1999, the Canadian National Railway Company
(CN) and Burlington Northern Santa Fe Corporation (BNSF) announced
that their boards of directors had approved an agreement to combine
their businesses, subject to shareholder and government regulatory
approvals. Under the agreement, both railways intend to maintain
their current regional operating and marketing focus, but share
information technology, purchasing and selected marketing functions.
To implement the transaction, North American Railways Inc.
is to be created as the parent company for BNSF and as the companion
company for CN. Each company is to have the same shareholder
base and each shareholder, the same economic benefits and voting
rights.
- - - - - - - - - - - - - - - - Overview of operations
- - - - - - - - - - - - - - - -
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Canadian National Railway Company
- the largest rail network in Canada and the only transcontinental
network in North America
- 26,000 kilometres of tracks
- serves 9 Canadian provinces and 15 US states
- serves the ports of Vancouver, Montreal, Halifax, New Orleans
and Mobile (Alabama)
- has the shortest route from the Atlantic coast to the US
Midwest
- employs roughly 23,500 employees in Canada and the US
- operates 1,650 locomotives and 66,000 freight cars
- operates an average of 265 scheduled freight trains per day.
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Burlington Northern Santa Fe Corporation
- one of the largest rail systems in North America
- 54,000 kilometres of tracks
- serves 28 US states and 2 Canadian provinces
- serves all major West Coast ports and the Gulf of Mexico
- has the shortest route between the Pacific Northwest and
Chicago and the only single-line service route between Southern
California and the Southeast
- employs roughly 43,000 employees
- has about 5,000 locomotives (3,800 road units) and
98,000 rail cars
- operates an average of 1,300 freight trains per day.
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Rail Industry Structure
- Appendix 11-1 Railway Operators
by Region, 1999
- Appendix 11-2 Selected Urban
Transit Systems of Importance to Canada
NOTES
1
Shortline and regional railways existed prior to this time, but
were not termed such. The term "shortline" gained widespread
acceptance following the explosive growth of this sector
in the US during the early 1980s. This followed the passage of
the Staggers Rail Act, which allowed railways, particularly the
Class I railways in the US, to embark on the rationalization of
their systems on a significant scale.
2
Previously, Rail America's only other Canadian property was the
E&N Railway on Vancouver Island.
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