Transport Canada; Policy; Transportation in Canada 1996

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Transportation in Canada 1996

Table of Contents

Acronyms/ Abbreviations

Report Highlights

1. Introduction

2. Transport and the Economy

3. Government Spending

10. Private Passenger Vehicles

11. Financial Performance of Carriers

12. Intermodal Freight

13. Safety

14. Environment

15. Industry Trends in Price and Productivity

16. Transport and Trade

17. Transport and Tourist Travel

List of Tables

List of Figures

REPORT HIGHLIGHTS

The new Canada Transportation Act requires that the Minister of Transport lay before Parliament each year a report reviewing the state of transportation in Canada. This is the first annual report to be produced under the Act.

Overview of Transport and the Economy

The transportation sector in Canada directly employed 462,000 people in 1995.
The average Canadian house-hold spends substantially more on transportation than on food. Total spending on transport in 1994 was more than $100 billion, including $48 billion on private vehicle purchase and use, $13 billion on commercial passenger carriers, $20 billion on business freight spending and about $14 billion on business in-house transport.
Total domestic travel in 1995 amounted to 500 billion passenger-kilometres (or nearly 17,000 kilometres per capita), of which private motor vehicles accounted for about 94 per cent, aviation for a little over four per cent, urban transit for about one per cent, and bus and train in combination for about one per cent.
Total domestic freight amounted to 410 billion tonne-kilometres, of which rail accounted for about 51 per cent, trucking for 39 per cent, marine for 10 per cent and aviation for about one-tenth of one per cent.
Among a range of goods produced in Canada, transport costs amounted to about 5.1 per cent of total costs, averaging 3.5 per cent among manufactured products, and 11.8 per cent among primary products.
Government Spending on Transport
Federal government spending on transport declined by more than 30 per cent between 1991/92 and 1996/97, as a result of reductions in subsidies, increases in revenues (notably for air navigation services and airport operations), and commercialization of air navigation services and airports.
Direct federal subsidies were cut by more than half - from $1.6 billion in 1993/94 to $781 million in 1996/97 - primarily because of the elimination of subsidies for Western grain transport by rail and freight transport in the Atlantic region, and reductions in subsidies for rail passenger services.
Spending on transport facilities and services provided through direct federal operations - for Coast Guard services, harbours and ports, and airports - amounted to $659 million in 1996/97.
In 1993/94, government spending on transport, net of revenues assigned to transport budgets, was $16.8 billion, broken down as follows: $3.2 billion by the federal government, $7.1 billion by provincial or territorial governments, and $6.5 billion by municipal governments.
Additional unassigned government revenues from the transport sector in that year amounted to $2.6 billion in provincial/territorial licence fees, $5.8 billion in provincial fuel taxes and $3.6 billion in federal fuel taxes.
Air
Downward pressure on prices and increased air service options in the domestic market have resulted from the entrance of new carriers and the decision of the "charter" operators to fly Canada's east-west routes in their own name.
Air services between Canada and the United States (transborder) are in transition as carriers from both countries test new routes, taking advantage of the freedom afforded by the 1995 "Open Skies" air services agreement to enter and exit markets.
International air policies designed to make full use of all existing route rights, together with the gradual liberalization of existing bilateral air agreements and the negotiation of new ones, have increased Canada's trade and tourism opportunities throughout the world and notably in the Asia-Pacific region.
Commercialization of air navigation services and the sale or transfer of authority for the management of Canada's airports has shifted the role of the federal government from that of operator to that of regulator and landlord (in the case of the National Airports System).
Marine
In mid-1994, the Minister of Transport announced a sweeping review of federal marine policy with the overall objective of ensuring the availability of affordable and efficient marine transportation services to Canadians.
The review culminated in the introduction of Bill C-44, the proposed Canada Marine Act (CMA), in the House of Commons on June 10, 1996. This legislation was intended to make it >easier for ports to operate according to business principles, to enable the Minister of Transport to commercialize the operations of the St. Lawrence Seaway and to improve the way pilotage authorities and ferry services operate in Canada. [Editor's note: Bill C-44 did not complete the parliamentary process prior to the dissolution of Parliament in April 1997.]
Deficit reduction targets are being met by cutting subsidies to ferries, facilitating the financial independence of pilotage authorities and establishing a system of national ports that will be self-sufficient. Ports providing regional and/or local service are being transferred to other interests.
Traffic through Canadian ports in 1995 registered significant increases in overseas shipments. Preliminary statistics indicate healthy growth in container traffic at major ports in 1996, and Seaway traffic between 1994 and 1996 has been 20-25 per cent greater than it was during the recessionary period of 1991 to 1993.
Rail
The Canada Transportation Act received royal assent July 2, 1996, facilitating network rationalization, enhanced railway viability and growth of the shortline railway industry.
Aggregate rail freight volumes have fallen slightly from a 1994 peak, while rail passenger volumes have been stable.
Canadian National and Canadian Pacific continue to dominate rail freight activity, although their networks are contracting and those of shortline and regional railways are expanding.
Shortline and regional railways tend to depend on one or more resource commodities, such as coal, iron ore or forest products, for their viability.
Strong growth continues in US-Canadian rail traffic (up 50 per cent since 1986).
The reduction of employment in the rail sector by 53 per cent since 1980 has raised productivity levels.
Road Network
The Canadian road network extends some 900,000 kilometres. Nearly 26 per cent of the network is provincial or territorial, 73 per cent is municipal, and less than two per cent is federal (roads on federal land: in parks, Aboriginal reserves and military bases, for example).
Thirty-five per cent of the network is paved and most of the remainder is surfaced with gravel.
The value of the entire network in 1993 has been estimated at $80 billion. The value (in constant dollars) doubled between 1961 and 1975, then grew by 16 per cent between 1975 and 1993.
The network is aging: between 1961 and 1993, the average age of roads increased to 14 years from nine and the average age of bridges to 23 years from 11.
Road expenditures in 1993 totalled $11.3 billion, of which $5.8 billion was provincial, $5.2 billion municipal and $300 million federal.
Of the primary inter-urban network, the busiest 5.2 per cent of route-kilometres carries 45 per cent of the traffic.
Traffic growth averaged 3.4 per cent annually on the inter-urban network between 1986 and 1993, and more than four per cent annually on the busier half of the network.
Trucking
The trucking industry accounts for about two-thirds of total surface freight revenue and comprises more than 50,000 carriers, ranging from single-unit owner-operator enterprises to large firms operating several thousand trucks and trailers.
Extra-provincial carriers, under federal jurisdiction, generate 80 per cent of for-hire revenue, with about 1,400 carriers reporting annual revenues in excess of $1 million.
A number of truck-rail alliances have developed in the past several years, although the use of intermodal services by trucking firms is not yet widespread. Rail carriers are still strongly promoting their own retail intermodal operations.
The North American Free Trade Agreement (NAFTA) greatly accelerated the growth of transborder trade. Revenues from international operations have been the most significant source of Canadian carrier revenue growth for most of the last decade.
NAFTA paved the way for the creation of a North American trucking market and set goals for motor carrier regulatory harmonization. Trucking is the predominant mode in the movement of North American trade - accounting for two-thirds of trade between Canada, the United States and Mexico.
Regulatory initiatives currently under way are geared to greater emphasis on performance-based safety regulation. Policy directions in the harmonization of standards underlie the gradual integration of the North American trucking market.
Bus
Deregulation of the intercity bus market is occurring in many Canadian jurisdictions, and a national task force has recommended full deregulation of charter and parcel activities, with continuing review of deregulation of scheduled services.
Revenues of bus operators in 1994 totalled $5.1 billion, of which $260 million was from scheduled intercity services, $212 million from charter services, $950 million from school bus services, $1.4 billion from urban transit services through the farebox, and $2.2 billion in transit subsidies or parcel revenue.
Scheduled intercity buses carried 11.4 million passengers in 1994, an average of only 0.4 trips per person, compared to 10 trips per person at the peak bus period in the late 1940s.
Unlike scheduled services, charter traffic is expanding: charter bus-kilometres increased 38 per cent between 1981 and 1994.
Eighty urban transit companies carried 1.36 billion passengers in 1995, or an average of 46 trips per capita. Passengers increased 37 per cent between 1975 and 1989, then dropped 11 per cent by 1995.
Private Passenger Vehicles
The total number of motor vehicles registered in Canada has grown 12-fold in the last 50 years, to reach 17 million in 1995.
Private passenger travel in 1995 is estimated to have amounted to 250 billion vehicle-kilometres and 475 billion passenger-kilometres.
Per capita vehicle ownership in Canada remains about 30 per cent lower than in the United States, but 10 to 20 per cent higher than in Western Europe or Japan.
Financial Performance of Carriers
All transport industries have shown improvements in profitability since 1993. The rail freight industry's operating margin ratios (net operating income over revenue) increased from six per cent in 1993 to 14.5 per cent in 1996. Higher margins were also achieved in the trucking, bus and marine industries. Although the average operating margin of the air industry as a whole has improved, some carriers are still incurring operating losses.
The operating margins required to meet long-term capital costs are different among modes, because of variations in asset investment and sources of financing. It is estimated that the capital-intensive railway industry needs to achieve an operating margin of 17 per cent of revenues to cover its cost of capital when in a fully taxable position. This is much higher than the required margins of other modes, which range from four to eight per cent.
Intermodal Freight
Intermodal freight is carried either in containers or trailers. Containers accounted for 85 per cent of intermodal tonnage in 1995 and trailers for 15 per cent. While the market share of containers has been growing, trailers have lost ground.
In 1996, container traffic increased in terms of tonnage handled at the major ports of Montreal (11 per cent), Vancouver (18 per cent) and Halifax (one per cent). Although traffic at Halifax has increased in recent years, it has not recovered the levels reached at its previous peak in 1990.
Twenty-two per cent of Canadian overseas container traffic in 1994 was shipped via US ports; 35 per cent of traffic through Canadian ports was traffic to or from the US.
In 1996, rail carriers began trials to test new technologies for hauling truck trailers by rail.
Safety
Transport safety continues to improve. Annual fatalities in the rail, air, road and marine modes combined totalled 3,617 in 1995, 18 per cent fewer than the 4,420 recorded in 1984.
When traffic increases are taken into account over the same period, the conventional indicators of fatality rates per unit of traffic were eight per cent lower in rail, 23 per cent lower in air, eight per cent lower in commercial marine, and 37 per cent lower in road.
In September 1996, the Council of Ministers of Transport adopted Road Safety Vision 2001, with the objective of making Canada's roads the safest in the world by the year 2001.
The new Canadian Aviation Regulations (CARs) were implemented on Oct. 10, 1996.
Amendments to the Canadian Railway Safety Act were introduced in Parliament in May 1996. [Editor's note: These amendments did not complete the parliamentary process prior to the dissolution of Parliament in April 1997.]
A joint government/industry task force - the Safety of Air Taxi Operations (SATOPS) Task Force - was established to examine safety issues and cultural attitudes within the air taxi segment of the aviation industry in Canada.
Canada conducted 863 safety inspections of foreign vessels entering Canada during the first nine months of 1996.
Governments and industry combined in a program designed to bring about a 50 per cent improvement in safety at road-rail crossings and in railway trespassing over the next decade.
The federal government committed another $20 million to the development of the National Safety Code, to improve commercial vehicle safety.
The North American Emergency Response Book was released, a trilateral Canada-US-Mexico document dealing with the transportation of dangerous goods.
Transportation and the Environment
Transport was responsible for 74 per cent of petroleum fuel consumption in 1995. Road transport accounted for 82 per cent of transport fuel consumption.
Largely in consequence of federal motor vehicle fuel consumption standards, transport fuel consumption per vehicle-kilometre declined substantially between 1980 and 1995.
However, since the mid-1980s, traffic has grown more quickly than have improvements in fuel efficiency. The result is growth in total fuel consumption (except during the recession years from 1989 to 1991).
Transport-related emissions of the main "greenhouse gas" - carbon dioxide - increased by 9.2 per cent between 1990 and 1995.
Transport emissions of nitrogen oxides and volatile organic compounds, the precursors of low-level ozone (smog), have declined substantially per vehicle-kilometre since the introduction of federal motor vehicle emission standards in the 1970s. However, since 1991, traffic growth has been such that total transport emissions have begun to increase.
Transport Canada is in the process of developing an environmental management system and a sustainable transportation strategy.
Industry Trends in Price and Productivity
Between 1981 and 1995, revenue growth of the largest carriers has averaged four per cent annually, divided between price (1.8 per cent) and output (2.2 per cent) changes. Both prices and output rose more slowly in the transport sector than in the economy as a whole.
Lower transport prices have meant savings exceeding $3.5 billion for transport users in 1995. Savings for freight users in 1995 were equal to 24 per cent of their transport costs.
Total productivity of the transport sector in Canada grew by 1.9 per cent over the period 1981 to 1994. This was faster than in the economy in general in the first half of the 1980s. Productivity continued to grow in transport between 1986 and 1991, even though it was declining in the economy as a whole. Since the end of the recession in 1991, the productivity gains in the transport sector have been robust, measuring more than three per cent a year.