6 RAIL TRANSPORTATION

FREIGHT TRANSPORTATION

Generally, the output of railways operating in Canada increased from 1990 to 2002. After CN experienced a four per cent decrease in revenue tonne-kilometres in 2003, down to 164 billion, it experienced a five per cent increase to 172 billion in 2004. CPR also experienced a significant increase in output, up 8.7 per cent to 140 billion revenue tonne-kilometres. Combined output of Class II carriers has been declining since 2000, from 30.7 billion tonne-kilometres to 24.0 billion tonne-kilometres in 2004.

From 1996 to 2000, movements of traffic forwarded to CN and CPR from Canadian Class II carriers increased. In 2001, however, these movements decreased slightly, to 18.5 million tonnes, due mainly to a drop in coal traffic from BC Rail. Since then, this traffic has generally continued to decrease, down to 16.3 million tonnes in 2004, largely as a result of CN's takeover of both Algoma Central and BC Rail. After a large jump in 1998 of Class II carrier traffic received from CN and CPR, this amount has fluctuated slightly around an average of 8.1 million tonnes. Traffic originating on a Canadian Class II carrier, forwarded to CN or CPR and then forwarded to another Canadian Class II carrier to be terminated also increased drastically in 1998 and had remained steady around 0.5 million tonnes. In 2004, however, this traffic decreased to 0.39 million tonnes. Because it involves a bridge movement over CN or CPR, the latter traffic has both a forwarded and received component and would be double-counted if included in either forwarded or received traffic. Addendum Table A6-7 shows the trend of forwarded and received rail traffic since 1996, while Addendum Table A6-8 shows tonnage originating by railway sector since 1994.

Based on three quarters of data for 2005, CN and CPR output is expected to increase to 203 and 145 billion tonne-kilometres, respectively.

RAIL FREIGHT TRAFFIC — COMMODITIES

As Addendum Table A6-9 shows, annual rail loadings increased four per cent in 2005 to reach 284 million tonnes (not including receipts from U.S. connections). Volumes increased almost five per cent in western Canada to 157 million tonnes and four per cent in eastern Canada to 128 million tonnes. Coal, fertilizer materials, forest products and grain were the main commodities loaded in western Canada, while iron ore, other ores and mine products, forest products and intermodal shipments dominated in eastern Canada.

GRAIN

After large decreases in 2002 and 2003 to 22 million tonnes, grain shipments increased in 2004 and remained steady in 2005 near 27 million tonnes. However, these shipments are still well below the 35 to 40 million tonnes shipped in the early 1990s.

COAL AND COKE

Shipments of coal and coke fell sharply in 2003 to 31.8 million tonnes, increased slightly in 2004 to 33.1 million tonnes, and then increased again in 2005 to 35 million tonnes. This is just below the average of 38 million tonnes loaded since 1992.

FOREST PRODUCTS

Shipments of non-processed forest products fell to just over 16 million tonnes in 1998 and then remained steady until 2002 when they increased to 19 million tonnes. They fell again slightly to 17.5 million tonnes in 2003, held at 17.8 million tonnes in 2004 and increased slightly to 18.0 million tonnes in 2005. Shipments of processed forest products, by contrast, have been increasing since 1998. In 2005, volumes increased 16 per cent to almost 32 million tonnes. The net result has been a relatively stable volume of forest products, hovering around 40 million tonnes, until 2002, when loadings reached 45 million tonnes. After only slight changes in 2003 and 2004, total loadings of forest products increased again in 2005 to reach almost 50 million tonnes.

ORES AND MINE PRODUCTS

Shipments of iron ore peaked at 39 million tonnes in 1997. After a large decline in 2001 and an iron ore workers strike in 2004, shipments have remained relatively steady near 30 million tonnes, increasing only slightly in 2005 to 32 million tonnes.

Since 2000, shipments of other ores and mine products have remained steady near 25 million tonnes. In 2005, these shipments increased two per cent to 25.9 million tonnes.

FERTILIZER MATERIALS

Shipments of fertilizers have fluctuated since 1992, but have been increasing since 2001. They rose significantly in 2004 to 30.7 million tonnes and held steady in 2005 at 30.1 million tonnes.

INDUSTRIAL PRODUCTS

After reaching a 13-year peak in 2004, shipments of chemicals decreased just four per cent to 15.3 million tonnes in 2005. Continuing with a steady increase, shipments of metals rose almost four per cent to 12.2 million tonnes. For the second year in a row, shipments of automobiles and parts decreased, down almost six per cent to 4.9 million tonnes in 2005. After doubling in 1998, shipments of petroleum products have increased each year, reaching 14.5 million tonnes in 2005.

INTERMODAL

CN and CPR intermodal tonnage grew by 12.1 million tonnes from 1996 to 2004, an average annual growth rate of 6.5 per cent. Domestic North American traffic fell slightly in 2004, lowering the average annual eight-year growth rate to 7.3 per cent. Overall marine–rail intermodal traffic, however, increased for the third year in a row, resulting in average annual growth rates of 3.5 per cent for marine–rail exports and 8.8 per cent for marine–rail imports over the same period. Addendum Figure A6-1 shows these intermodal traffic trends. Growth in total rail intermodal volumes was most significant between 1998 and 1999, at 12.6 per cent. From 2003 to 2004, growth was three per cent, reaching 30.4 million tonnes. Figure A6-2 in the Addendum shows the origin and destination of CN and CPR intermodal traffic. As seen in Addendum Figure A6-3, the share of domestic North American intermodal traffic in 2004 dropped to 41.4 per cent, contrary to 2003, while the share of both rail–marine exports and imports increased.

As Addendum Figure A6-4 shows, the market share of containers on flat cars (COFC) continued to increase in 2004, accounting for more than 94 per cent of total intermodal volumes. This is up considerably from 77 per cent in 1996. This increase was balanced by a proportionate decrease of trailer on flat car (TOFC) volumes.

RAIL FREIGHT TRAFFIC BETWEEN CANADA AND THE UNITED STATES

Addendum Table A6-10 shows volumes of rail export and import by commodity since 1996. Export rail tonnage in 2005 totalled 76.4 million tonnes, 0.3 per cent less than in 2004. At 29.9 million tonnes, a 6.6 per cent increase, forest products were again the largest contributor to export tonnage. Chemical exports remained the same at 12.5 million tonnes, while exports of fertilizer materials increased 2.6 per cent to 9.5 million tonnes. Exports of iron ore fell 188,500 tonnes, the third consecutive decrease; however, these movements by rail are still above the norm. Metals experienced the largest increase, up almost 15 per cent to 5.6 million tonnes; this is just above the nine-year average of 4.1 million tonnes. By contrast, grain exports fell 14 per cent to 4.0 million tonnes, just below the nine-year average of 4.2 million tonnes.

Addendum Table A6-11 shows the values of rail exports and imports by commodity since 1996. Automotive has consistently been the largest contributor to these totals, accounting for 45.5 per cent in 2005. Forest products followed at 18 per cent. Automotive exports decreased nine per cent to $34.7 billion, while forest products remained steady at $17.6 billion. Although other value export commodities of chemicals and metals increased, overall export value decreased two per cent to $76.6 billion.

Ontario remained the largest contributor to rail export volume and value, originating 23 per cent of export volume (17.6 million tonnes) and 58 per cent of export value ($44.5 billion) in 2005. However, these shares represent a 6.8 per cent and 8.5 per cent decline, respectively.

Alberta's contribution to rail exports increased from 1996 to 2004 before decreasing slightly in 2005 to 14.0 million tonnes. Nonetheless, it was still the second largest province of export by volume, accounting for 18.3 per cent of total exports in 2005. In terms of value, Quebec remains the second largest contributor to rail exports, accounting for 14 per cent and originating $10.7 million, a 10.9 per cent increase from 2004.

Import rail tonnage was 24.6 million tonnes in 2005, nearly a 15 per cent increase. Chemicals accounted for almost 24 per cent of rail imports and remained steady at 5.8 million tonnes, making it the largest contributor. Metals, the second largest group, increased significantly for the second year in a row, up 24.5 per cent to 3.6 million tonnes. This accounted for 14.4 per cent of total rail imports.

Automotive imports remained just above one million tonnes in 2005 totalling 12.7 billion, a 3.4 per cent increase. Automotive remained the top commodity by import value, accounting for 46 per cent of total imports.

As Addendum Table A6-14 shows, Ontario cleared 48 per cent of imports, 11.9 million tonnes in total. Alberta and Quebec followed Ontario with 16.6 per cent (4.1 million tonnes) and 10.1 per cent (2.5 million tonnes) shares of import volume, respectively. These shares represent increases for all three provinces of clearance. In terms of value, Ontario was also the dominant province of clearance in 2005, with $19 billion, a five per cent increase from 2004. This is evident in Addendum Table A6-15.

Addendum tables A6-16 to A6-19 give further details on exports and imports, including major commodities originating from and cleared in the provinces mentioned above.

BORDER CROSSING POINTS

As Addendum Table A6-20 shows, the main border crossing points for rail exports by volume in 2005 were Fort Frances and Sarnia, both in Ontario. They accounted for 20.2 per cent (15.4 million tonnes) and 16.2 per cent (12.4 million tonnes) of exports, respectively. Forest products and chemicals accounted for about 60 per cent of rail export volumes through these locations.

As Addendum Table A6-21 shows, the main border crossing points for rail exports by value in 2005 were Sarnia and Windsor. They accounted for 31.2 per cent ($23.9 billion) and 21.8 per cent ($16.7 billion) of exports, respectively. Automotive products accounted for about 70 per cent of rail export value at these locations.

Addendum Table A6-22 shows that Sarnia was also the leading border crossing point for import tonnage in 2005, accounting for 18.5 per cent of total rail import volume (4.6 million tonnes). Chemicals accounted for 41 per cent of rail imports through this city. Other major locations as ports of clearance included Toronto, Edmonton, Sault Ste. Marie and Montreal.

The value of imports cleared in Sarnia and Windsor increased about 36 per cent in 2005, to $5.4 billion and $5.3 billion, respectively. This placed Toronto as the third largest port of clearance for 2005, at $4.0 billion. Automotive was the most valuable commodity group cleared at Sarnia and Windsor. Addendum Table A6-23 shows rail imports by value and port of clearance.

OVERSEAS TRADE

At 97.6 million tonnes in 2004, goods carried to and from Canadian ports by Class I railways was up significantly from the 83 million tonnes carried in 2003. Traffic in transit between Canada and the United States increased by 15 per cent to 6.3 million tonnes, the third consecutive increase. Addendum Table A6-24 shows fluctuations of rail–marine exports and imports since 1996.

Rail–marine exports originating in British Columbia increased by 29 per cent in 2004, due mainly to an increase in CPR's coal traffic and CN's movement of forest products from former BC Rail locations. Exports originating in Saskatchewan and Alberta also increased in 2004. These three provinces accounted for 82 per cent of total rail–marine exports in 2004. Addendum Table A6-25 shows rail–marine exports since 1996 for all provinces of origin and the United States.

After falling 11 per cent in 2003, rail–marine exports of coal traffic increased 6.6 per cent in 2004, to 26.7 million tonnes. While exports of grain jumped 31 per cent to 18.2 million tonnes, this was still considerably less than the average volume from 1996 to 2001 of 24.4 million tonnes. The third largest rail–marine export group, fertilizer materials, increased 30 per cent to 13.9 million tonnes, the largest volume reported within the nine-year series of data. Addendum Table A6-26 shows rail–marine exports by commodity since 1996.

Rail–marine imports by Class I carriers totalled 10.9 million tonnes in 2004, up 10.9 per cent from 2003. About 87 per cent (9.5 million tonnes) of these imports were intermodal.

Ontario and Quebec were again the main destinations of rail–marine imports in 2004, totalling 6.2 million tonnes, or 57 per cent of the total. This represented a 14 per cent increase over 2003. Rail–marine imports to the United States increased for the third year in a row, to 3.6 million tonnes, or 33 per cent of the total. Every other province of destination experienced an increase in rail–marine imports in 2004. Addendum Table A6-27 shows rail–marine imports since 1996 for all provinces of destination and the United States.

Although substantially less than intermodal traffic, forest products were the second largest commodity group for rail–marine imports in 2004, at 0.8 million tonnes. Imports of ores and mine products continued to decline, down five per cent to just under 0.2 million tonnes. Table A6-28 shows rail–marine imports by commodity since 1996.

Freight Transportation

Passenger Traffic

Price, Productivity and Financial Performance