6 RAIL TRANSPORTATION
PRICE, PRODUCTIVITY AND FINANCIAL PERFORMANCE
RAIL FREIGHT INDUSTRY
In 2003, the revenues of CN and CPR operations in
Canada grew by 1.4 per cent. This was down slightly from
the average yearly increase of 1.8 per cent from 1998 to
2003. Rail freight rates fell by an average 1.7 per cent in
2003 (as rates declined in nearly all commodities)
compared with an estimated average 1.4 per cent annual
decrease over the 1998 – 2003 period. Demand for rail
freight services was strong, posting an overall increase of
3.2 per cent, with agricultural shipments and intermodal
experiencing increases of 5.6 and 7.4 per cent,
respectively. By commodity groupings, household
products, intermodal, and machinery and equipment
had the largest year-over-year revenue fluctuations,
with variations of 10.5, 4.5 and -7.5 per cent, respectively.
Intermodal services accounted for an estimated
27 per cent of total freight revenues, compared with
20 per cent in 1998.
In 2003, productivity increased by 2.4 per cent, the
eighth consecutive yearly increase. Gains in productivity
in the industry have averaged 5.4 per cent a year since
1998. In terms of unit costs, the surge in oil prices has
translated into an increase of 3.3 per cent in unit fuel
costs. Both labour and capital unit costs declined,
however, resulting in an overall 0.5 per cent drop in unit
costs in 2003.
The combined operating profit of $1.45 billion for CN
and CPR in 2003 was 2.2 per cent lower than in 2002;
however, the operating ratio remained below 80 per cent.
The shortline railways' financial performance improved
somewhat in 2003, with a calculated return on assets of
10 per cent (see Table 6-7). Addendum tables A2-61 to
A2-64 provide more details on the railway industry.
TABLE 6-7: FINANCIAL INDICATORS OF SHORTLINE 1 RAILWAYS,
2000 - 2002
| |
2001 |
2002 |
2003 |
| Net Fixed
Assets in $M |
453.3 |
488.7 |
495.4 |
| Operating
Revenues in $M |
339.0 |
337.6 |
332.6 |
| Operating
Expenses in $M |
296.8 |
310.4 |
283.1 |
| Net Income
in $M |
42.2 |
27.2 |
49.5 |
| Return On Assets in % |
9.3 |
5.6 |
10.0 |
| CTA 2 Approved Cost of Capital in % |
11.4 |
11.0 |
10.0 |
Note: ROA = Return on Assets; CTA = Canadian Transportation
Agency.
- Excludes regional railroads and Canadian connectors to U.S. railroads.
- Canadian Transportation Agency
Source: Transport Canada and Statistics Canada
VIA RAIL
In 2003, VIA Rail's own revenues decreased by an
estimated 8.1 per cent, reversing a seven-year trend of
increasing revenues. While changes in prices were
marginal, the demand dropped on all business segments
(corridor, long haul and remote-regional) for an overall
decrease of 8.5 per cent. Passenger traffic decreased
by 4.8 per cent, possibly reflecting the impact of the
SARS outbreak.
Although VIA Rail's overall productivity declined by 1.3 per cent in
2002, it was still 10.6 per cent higher than its 1996 level. Total unit
costs in 2002 increased by 1.4 per cent but remained 3.4 per cent lower
than in 1996.
VIA Rail's productivity fell in 2003 by an estimated
8.7 per cent, with declines in all production factors: labour,
fuel and capital. For their part, unit costs increased by
an estimated 12.2 per cent, bringing costs close to their
1995 level.
Total costs increased by 2.7 per cent in 2003. VIA Rail
recovered an estimated 45 per cent of total costs in 2003,
the first time since 1992 that this ratio has declined.
Major Events in 2004
Infrastructure
Industry Structure
Employment
Energy
Freight Transportation
Passenger Traffic
Price, Productivity and Financial Performance
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