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11
STRUCTURE OF THE TRANSPORTATION INDUSTRY
Rail Industry
In large measure, the structure of the Canadian rail industry
changed only modestly during 2000 compared with 1999. This is
in marked contrast to the pace of change seen over the previous
four years. Whether this is a signal that the restructuring of
the rail system in Canada has plateaued remains to be seen.
As has been well documented, the Canadian rail system for many
years consisted of the two Class I carriers, CN and CPR, along
with a handful of regional carriers and a series of carriers conducting
relatively limited operations.Note 1 This situation began to change
during the late 1980s and early 1990s, when a small number of
shortlineNote
2 railways began operations. The number of new shortlines
being created clearly began to accelerate with the introduction
of the Canada Transportation Act in 1996, as is shown in
Figure 11-1.
Since 1990, over 45 new railways have appeared, 16 at the federal
level and 30 under provincial regulatory jurisdiction. These new
railways have almost 11,000 route-kilometres of track and
account for approximately $170 million in annual revenues, which
represents about 2.2 per cent of total Canadian rail
revenues for 1999. The majority of the increase in shortline trackage
(60 per cent) belongs to the provincially regulated railways formed
since 1990, while the majority of the revenues (60 per cent) recorded
went to the new federally regulated railways.
Although several new shortlines were created during 2000, there
was only marginal change in the ownership structure of the shortline
sector. A small Ontario carrier was exchanged among a number of
the principal shortline corporations.Note 3 This did not,
however, change the overall complexion of concentration in the
shortline sector, where five corporations - RailAmerica Inc.,
OmniTRAX, Société des Chemins de fer du Québec,
Genesee-Wyoming and Iron Road - controlled almost 85 per cent
of the revenues earned by the 21 shortlines created since 1990
that they own.
The structure of the rail passenger sector has remained unchanged
for many years, with VIA Rail continuing to provide the bulk of
the service offered in Canada. VIA Rail has about 95 per cent
of the passenger-related activity (in terms of numbers of
passengers carried and passenger-kilometres generated) and passenger-related
revenues. Although it owns relatively little track itself (approximately
217 route-kilometres), VIA Rail has extensive running rights over
other railways, principally CN.Note 4 Less extensive passenger services
are offered by the Ontario Northland Railway, the Algoma Central
Railway, the Quebec North Shore & Labrador Railway and BC
Rail, while the Great Canadian Railtour operates seasonally between
Vancouver, Calgary and Jasper. Amtrak, the US passenger rail corporation,
offers service to several Canadian cities (Montreal and Vancouver,
as well as Toronto in co-operation with VIA Rail) from its US network.
Perhaps the most noteworthy event during 2000 concerning the
rail industry's structure was the decision of the US Surface Transportation
Board to effectively sideline the proposed Canadian National/Burlington
Northern Santa Fe combination by placing a moratorium on rail
mergers in the United States until June 2001, at which time the
STB is expected to issue guidelines for future mergers in the
rail sector.
In August 2000, the city of Toronto acquired Union Station
from CN and CPR. The federal government has committed $35 million
towards the redevelopment of the station. Of this amount, $10
million would be contributed by VIA Rail, while the balance would
be from funds previously provided to VIA's Asset Renewal Fund.
Rail Industry
NOTES:
1
Terminal and switching railways as well as US carriers operating
into Canada.
2
The use of the term "shortline" railway developed in
the United States following the passage of the Staggers Rail Act
in 1980, which encouraged restructuring of the US rail system
and led to the rapid formation of the shortline sector with almost
500 entrants.
3
RailAmerica transferred one of its properties (the L'Orignal)
to the Société de Chemins de fer du Québec,
with the former now controlling eight Canadian railways at the
federal and provincial level and the latter now controlling five
railways.
4
VIA Rail operates over about 9,430 kilometres of CN track, 540
kilometres of CPR track and 2,740 kilometres of track owned by
various shortlines.
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