6 Rail Transportation

FREIGHT TRANSPORTATION

The overall output of railways operating in Canada has been increasing since 1998, and it continued to increase slightly from 2000 to 2001 due to CN's 1.1 per cent increase to 168.1 billion tonne-kilometres. CPR's output remained similar to that of 2000, at 124.8 billion tonne-kilometres. Class II carriers reported a combined output of 28.4 billion tonne-kilometres, a decrease of almost four per cent from 2000. This was the first decrease of Class II carrier output since 1998, and was largely due to a decline in iron ore traffic in 2001.

Since 1996, movements of traffic forwarded to CN and CPR from Class II carriers have increased. From 2000 to 2001, however, such movements decreased by 3.6 per cent, from 19 to 18.3 million tonnes, due mainly to a drop in coal traffic from BC Rail. Movements whereby Class II carriers received traffic from CN and CPR remained steady at 11.2 million tonnes in 2001, putting a halt to the increasing trend since 1996. Traffic that originated on a Class II carrier, and was then forwarded to CN or CPR and subsequently forwarded to another Class II carrier to be terminated, totalled 1.45 million tonnes in 2001. The latter traffic, because it involves a bridge movement over CN or CPR, has both a forwarded and received component and would be double-counted if it was to be 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 1990.

Based on three quarters of data for 2002, CN output is expected to remain near 168 billion tonne-kilometres and CPR output is expected to decrease slightly to 121 billion tonne-kilometres. Output of Class II carriers is estimated to have decreased slightly to just over 20 billion tonne-kilometres.

Rail Freight Traffic — Commodities

As shown in Addendum Table A6-9, annual rail loadings for 2002 decreased slightly to 261 million tonnes (not including receipts from U.S. connections). Volumes in Western Canada dropped 4 per cent to just below 140 million tonnes, while volumes in Eastern Canada increased four per cent to almost 122 million tonnes. Principal commodities loaded in Western Canada included coal, forest products, fertilizer materials and grain, while dominant loadings in Eastern Canada were iron ore, other ores and mine products, forest products and intermodal shipments.

Grain

Grain shipments decreased in 1998 and 1999 to as low as 26.5 million tonnes and then rose to just over 30 million tonnes in 2000 and 2001. In 2002, grain shipments fell again, dropping by 28 per cent to 22 million tonnes. Shipments dropped 25 per cent in the West and 14 per cent in the East.

Coal and Coke

Coal and coke shipments experienced a significant increase in 1999, but this commodity group dropped 11 per cent in 2002 to just below 37 million tonnes. This is the lowest volume reported for this commodity group since 1993.

Forest Products

Following a decline to just above 16 million tonnes in 1998, volumes of non-processed forest products remained steady until 2002, when shipments of this commodity increased 16 per cent to 19 million tonnes. In contrast, the volume of processed forest products has increased each year, reaching nearly 26 million tonnes in 2002. 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.

Ores and Mine Products

Following a decline experienced the year before, shipments of iron ore increased four per cent to 30 million tonnes in 2002. Other ores and mine products continued to increase, up one per cent to 25.4 million tonnes in 2002.

Fertilizer Materials

Although shipments of fertilizer materials dropped in 2001 to the lowest value since 1994 at 24.5 million tonnes, they rose almost seven per cent to 26.1 million tonnes in 2002. Potash, sulphur and phosphate rock all experienced an increase from 2001.

Industrial Products

Chemicals, the largest commodity of this group, increased 5.3 per cent to 15 million tonnes. Metals increased almost 10 per cent to 10.6 million tonnes and automotive increased 19 per cent to just below six million tonnes. Petroleum products decreased six per cent to 11.3 million tonnes, bringing to a halt the increasing trend since 1997.

Intermodal

Between 1996 and 2001, CN and CPR intermodal tonnage grew by 6.7 million tonnes, for an average annual growth rate of 6.5 per cent. North American intermodal traffic was very robust, as growth exceeded eight per cent per year over the same five-year period. These trends are evident in Addendum Figure A6-1. As seen in Addendum Figure A6-2, Canadian origin-destination volumes increased at an even higher average annual growth rate of 11 per cent over the five-year period. There was a significant difference in growth between rail intermodal exports and imports to/from offshore regions: exports increased by an annual average of 1.7 per cent, while imports grew by 7.7 per cent annually.

Compared with the historical trend, growth in total rail intermodal volumes was considerably slower between 2000 and 2001 (2.5 per cent); however, this was mostly due to the flat performance of both import and export volumes. North American traffic volumes remained strong, increasing by 8.4 per cent and accounting for 46 per cent of total rail intermodal volumes, as seen in Addendum Figure A6-3. Canadian origin//destination volumes increased by 9.3 per cent during the year, making up 33 per cent of total market share.

As seen in Addendum Figure A6-4, containers on flat cars (COFC) continued to increase their market share, accounting for more than 92 per cent of total intermodal volumes in 2001. This is up considerably from 1996, when COFC only accounted for 77 per cent of total intermodal traffic. This increase in COFC share came at the expense of trailer on flat car (TOFC) volumes, which decreased proportionately.

Rail Freight Traffic Between Canada and the United States

Addendum Table A6-10 shows rail export and import volume by commodity since 1996. Export rail tonnage increased slightly to 65.2 million tonnes in 2002, continuing the increasing trend since 1996. Forest products remained the largest contributor to export tonnage, increasing to 24.8 million tonnes. Other major export commodities included chemicals and fertilizer materials, accounting for 17.8 million tonnes, or 27 per cent of total export tonnage in 2002. The largest change was experienced by grain, which dropped 24 per cent to 3.9 million tonnes, placing exports of metals as the third-largest commodity with 4.2 million tonnes.

After exports of coal volume almost tripled in 2000 and increased again in 2001, they decreased slightly to 1.4 million tonnes in 2002, accounting for two per cent of total export volume. Exports of iron ore took another large jump, almost tripling to 405,000 tonnes in 2002. This change, however, is contrary to overall movements of iron ore which are predominantly exported by marine.

Addendum Table A6-11 shows rail export and import value by commodity since 1996. Consistently, automotive has been the largest contributor to the value of exports. In 2002, this commodity accounted for almost 55 per cent, followed by forest products at 20 per cent. Like volume, the value of exports increased slightly to $75.6 billion.

Ontario remained the largest contributor to rail export volume and value, originating 27.4 per cent of export volume (17.9 million tonnes) and 67.9 per cent of export value ($51.4 billion) in 2002.

British Columbia and Saskatchewan were the other major contributors of export volume, originating a combined 22.8 million tonnes, or 35 per cent of total exports. Quebec and British Columbia followed Ontario with a combined 19.1 per cent share of export value, totalling $14.4 billion. These values are observed in Addendum tables A6-12 and A6-13, which show export volume and value by province of origin.

Import rail tonnage had been increasing at a larger rate than exports since 1996, but in 2002 experienced a slight decline to 19.6 million tonnes. Major commodities included chemicals, grains, ores and mine products and other agricultural and food products. In combination, these commodities accounted for 63 per cent of total import volume.

Although not as large as the year before, imports of grains rose 30 per cent in 2002 to 2.4 million tonnes.

Automotive and chemicals remained the top commodities in terms of value, accounting for 56 and 21 per cent of total imports, respectively, or a combined $16.5 billion.

As seen in Addendum Table A6-14, Ontario cleared 47 per cent of imports, 9.3 million tonnes in total. Quebec and British Columbia cleared a combined 4.8 million tonnes. In terms of value, Ontario was also the dominant province of clearance with $15.2 billion, up 15 per cent from 2001, as seen in Addendum Table A6-15.

Further details on exports and imports can be seen in Addendum tables A6-16 to A6-19. These tables show major commodities originating from and cleared in the provinces mentioned above.

Border Crossing Points

As seen in Addendum Table A6-20, Fort Frances and Sarnia, both in Ontario, were the dominant border crossing points for rail exports by volume, accounting for 22 per cent (14.3 million tonnes) and 17 per cent (11 million tonnes) of exports, respectively, in 2002. Forest products, fertilizer materials and chemicals were the major commodities exported at these border points.

As seen in Addendum Table A6-21, Sarnia, Windsor and Fort Erie were the dominant border crossing points by value of exports (accounting for 75 per cent of total exports), due largely to movements of automotive products. Other commodities exported at these locations that were significant contributors to export value include metals and forest products.

Sarnia was also the leading border crossing point for import tonnage, accounting for 15 per cent of total rail import volume in 2002 (2.9 million tonnes), as shown in Addendum Table A6-22. The major commodities imported at Sarnia were chemicals, agricultural products and food and grains.

Rail imports cleared at Calgary increased in 2002 due to the continuing rise of corn shipments from the U.S., as well as a slight increase in iron and steel imports. A change in the port of clearance from Huntingdon to Vancouver for limestone flux resulted in a significant decline and rise of tonnage at these locations. Other major locations as port of clearance included Toronto, Sault Ste. Marie and Montreal. Windsor, by far, was the leading border crossing point by value of imports, largely as a result of being the dominant border crossing point of automotive products. Just over 16 per cent of imports by value entered Canada at this location ($3.5 billion), as seen in Addendum Table A6-23.

Overseas Trade

Class I railways carried a total of 91 million tonnes of goods to and from Canadian ports in 2001, a 5.3 per cent decrease from 2000. Traffic in transit to and from the United States decreased by six per cent in 2001 to 3.9 million tonnes. Addendum Table A6-24 shows the fluctuation of rail-marine exports and imports since 1996.

British Columbia, Alberta and Saskatchewan continued to be the major contributors to rail-marine exports in 2001, with a combined 69.3 million tonnes, although both Alberta and Saskatchewan experienced a drop in export volume. Addendum Table A6-25 shows rail-marine exports since 1996 for all provinces of origin and the U.S.

Coal traffic remained steady at slightly above 31 million tonnes in 2001, while rail-marine exports of grain decreased by 6.5 per cent to just under 20 million tonnes. Other major commodities included agricultural and food products, and fertilizer materials, which also declined in 2001. Addendum Table A6-26 shows rail-marine exports by commodity since 1996.

Rail-marine imports of Class I carriers decreased slightly in 2001 to 7.7 million tonnes, but the portion of intermodal traffic continued to increase to 90 per cent of total imports.

Ontario and Quebec remained the top two destination provinces for rail-marine imports, totalling 4.6 million tonnes in 2001 (59 per cent of the total). The volume of goods destined for Alberta continued to drop, down 21 per cent to 0.5 million tonnes in 2001. Addendum Table A6-27 shows rail-marine imports since 1996 for all destination provinces and the U.S.

Fertilizer materials continued to decrease substantially to 96,000 tonnes in 2001, while petroleum products experienced a dramatic increase from 3,000 tonnes in 2000 to 17,000 tonnes in 2001. Addendum Table A6-28 shows rail-marine imports by commodity since 1996.

Major Events in 2002

Infrastructure

Industry Structure

Employment

Energy

Freight Transportation

Passenger Traffic

Price, Productivity and Financial Performance