Rail Trends: The Economic Spin-Offs Benefit all Canadians

Canada’s rail sector has bounced back from the 2009 global economic downturn and is posting solid volume growth. The industry continues to invest significantly in increased capacity and efficiencies. The findings are outlined in Rail Trends 2011, an annual compendium of statistics about rail sector performance published by the Railway Association of Canada (RAC).

The rail mode moves over 70 million people and more than 70 per cent of all surface goods every year, relieving road congestion and helping to limit harmful emissions with only 3 per cent of transportation sector GHGs coming from (attributable to) rail. Rail is growing, innovative, safe and secure and provides access to national and international markets. Rail facilitates more than $75 billion in trade per year.

Canadian rail employs 32,000 people, pays $2.5 billion in wages, and creates 50,000 indirect rail supplier jobs.

Unlike other modes, rail builds and maintains its entire infrastructure and invests about 20 per cent of revenue (on average, every year) back into its network to improve transit time for customers. Rail is the most capital-intensive industry in Canada.

About RAC

The Railway Association of Canada (RAC) is an authority on issues concerning Canadian rail and the trusted body government consults in establishing regulations and standards. Headquartered in Ottawa, RAC counts among its members Class 1 freight railways, as well as passenger, short line and regional railways; tourist, commuter and intercity rail lines; and more than 60 associate member suppliers and partners. RAC’s members operate about 60,000 km of main line track.

This is an exciting time for the rail sector. The rail mode is enjoying a rediscovery, a renaissance. Historically, rail received considerable public subsidy. Beginning in the late 1980s and early 1990s, there was a progressive increase in awareness of the need to introduce more market forces in order to encourage self-sufficiency, competitiveness and efficiency. This awareness has been reflected in public policy changes to help facilitate market mechanisms that are conducive to private sector investment and to free management in order to establish a highly efficient, privately funded network stretching across North America.

A combination of changes in regulations, such as the National Transportation Act (1987) and Canada Transportation Act (1996), resulted in the cancellation of explicit transportation subsidies, and the privatization of CN Railway (1995). These changes, coupled with the 1994 North American Free Trade Agreement (NAFTA), opened the way for rail to take its rightful place as the backbone of Canada’s transportation network. There is a new strategic approach. The trunk line component, formerly concentrated on an east-west axis, has now become continental, with a strong and vibrant north-south focus. This framework is successfully fed by a dynamic short line and regional railway component that is an entrepreneurial, flexible, well-managed and customer-focused sector. This symbiosis has created the best rail system in North America, according to RAC.

Rail in this country has vigorously responded to competitive challenges. Canada has some of the most successful railways in the world – critical to the competitiveness of our industrial sector and, by extension, to the standard of living of all Canadians.

Short Lines

Short line and regional railways represent those which “feed into and take away from” high-volume, trunk-line railways. Between 1996 and 1999, CN and CPR transferred more than 8,500 km of rail line to short line operators – over 80 per cent of the total identified for discontinuance over that period.

Short lines play a fundamental role in the industry as they provide a direct link to the Class 1 networks for shippers on branch lines. The traffic is collected by the short lines and generally interchanged with its main line partners who, on average, move the long-haul, high-volume traffic five times further to destination. They strive, in conjunction with their Class 1 partners, to provide seamless transportation service from points of origin to destination. Short lines originated 23 per cent of the carloads in 2010.

The success story is the excellent ‘fit’ between the long-haul, high-efficiency Class 1s and the local customer service and logistics capabilities of the short lines.

Innovation

A reinvigorated rail mode is constantly innovating. What are the rail sector’s innovation priorities?

According to Bruce R. Burrows, Vice-president, Public and Corporate Affairs at the RAC, one of the areas the rail sector is quite focused on is operating longer trains. “There’s a tremendous benefit from a safety perspective, an energy consumption perspective and a cost perspective, because the more goods we can handle with a given amount of power, the less cost that will ultimately be in terms of pricing to customers. This is more complicated than it sounds to be able to do it technically, but we’ve developed distributed power units through the length of the train. This has allowed us to run trains that are 30 per cent longer, if not more. We have found distributive power (or DP) trains put far less stress on track curves, for example, which allows the railways to extend the life of rail, ties and car wheels and to lower fuel consumption. This also means enhanced carrying capacity and customer service, while improving safety.

“Another area of innovation is better withstanding cold and erratic weather,” Burrows adds. “We’re doing a lot of research right now in cooperation with the National Research Council and the University of Alberta in Edmonton, looking at ways to better manage and handle varying weather conditions which could lead to avalanches or mudslides that wipe out operations for periods of time. It’s very disruptive to service and operations. We have also had success with the DP technology in maintaining proper brake pressure through a long train in cold temperatures; in the past, we have had to run shorter trains during the winter. Furthermore, new ‘quick start’ technology automatically shuts off the main diesel engine and allows it to remain warm in the wintertime when sitting in rail yards waiting for its next assignment. This is good for the environment because locomotives can be easily restarted and don’t have to be kept idling in cold weather, further reducing fuel consumption and emissions.”

A More Integrated Transport System

How integrated is Canada’s intermodal transport system at the present time – and where does rail fit in?

“Rail is increasingly working on a very cooperative basis with the trucking sector,” Burrows says. “We have a very integrated port/rail network with Asian outsourcing and the vast increase in the number of containers moving across the Pacific Ocean into Canada to places like Vancouver and Prince Rupert, B.C., and there’s a lot of activity going in and out of these ports. The rail industry is now much more import-oriented and export-oriented. A lot of the domestic logistics patterns have changed, with many small regional manufacturing facilities being closed and replaced by big manufacturing clusters close to intermodal hubs for final delivery to the customer on a longer-haul basis. Chronic road congestion is pushing a lot of business back to the rail mode. So we have to be much more innovative in terms of the service we offer to our customers. And this is happening. We’re seeing a new golden age for Canadian rail!”

Canadian rail is building on its recent gains to make an important contribution to Canada’s future prosperity by assisting governments in achieving their public policy objectives. Rail has identified policy areas where it can assist: economic competitiveness, integration of the multi-modal transportation system, land-use planning, highway and urban congestion, the environment and public safety. The return of inner-city rail service to urban Canada will be explored in a later installment in this series.