(The Railway Association of Canada issued the following news release on October 14.)
OTTAWA — The Canadian rail industry faced a tough year in 2002 with a mixed North American economic performance and a severe two-year drought in the Prairie Provinces that had a harsh impact on grain traffic.
Despite these obstacles, the industry fared quite well.
The railway industry’s workload of 321 billion revenue tonne kilometres (RTK) was virtually unchanged from the year prior. However, 2002 RTK are the third-best ever recorded. 2000, the record year, was only half of one per cent better, said W.A. Bill Rowat, President and CEO of the Railway Association of Canada.
The results are in the 11th edition of Railway Trends released today. It is an annual publication of the RAC that tracks the industry’s financial and statistical performance.
Compared to a decade ago when Canadian rail moved 244 billion RTK, the industry’s workload has surged ahead by 31.7 per cent. Carloads originated reveal a similar pattern. Compared to 2001, they were fractionally lower by 0.6 per cent. But compared to 10 years ago, 2002 carloads originated were a significant 33.7 per cent greater.
Two key market segments prevented overall growth in workload from 2001 to 2002. The major impact came from lower volumes of grain. A severe and prolonged drought was responsible for the smallest grain crop in 25 years, as well as a 24 per cent drop in grain shipments from 2001, said Mr. Rowat.
The other market segment to experience a downturn in traffic was coal. Metallurgical coal, used in the steel-making process, experienced lower export and North American sales.
Largely offsetting those impacts were two market segments that achieved a remarkable year in 2002 — automotive and intermodal. Automotive shipments benefited from strong motor vehicle production in both Canada and the United States. In 2002, all sectors of the intermodal market segment experienced growth.
Not only did the volume of the industry’s workload change dramatically over the past 10 years, so did the manner in which it was handled, said Mr. Rowat. In 1993, 474,122 of the Canadian industry’s carloads originated on short lines. By year-end 2002, 1,099,203 carloads originated on short lines, more than double the 1993 amount.
As well, during the past decade, track kilometres operated by short lines grew from 13.2 per cent of the total freight network to 27.9 per cent, largely the result of Class 1’s transferring lower density lines to the short line operators. This period of re-structuring ended in 2000. Since then, the rate of transfers and discontinuances has slowed significantly.
“Ten years ago, the RAC represented 26 freight and passenger railways,” said Mr. Rowat. “Membership also more than doubled to 57 by the end of 2002, and is 60 today.”
Operating Revenues and Expenses
Despite the industry’s flat change in workload from 2001 to 2002, its freight revenues managed to grow by 0.9 per cent. This growth, although modest, was achieved by a 1.2 per cent improvement in its revenue per unit of workload – revenue per RTK which rose from 2.23 cents per RTK in 2001 to 2.27 cents per RTK in 2002, largely the result of the change in traffic mix last year.
This improvement is a reversal of a negative trend that saw revenue per tonne-kilometre slide 4.7 per cent from its high of 2.35 cents per RTK in 1997 to a low of 2.23 cents per RTK in 2001. Nevertheless, compared to a decade ago, revenue per tonne-kilometre is still down a significant 5.4 per cent.
Total industry revenues of $8,142 million in 2002 hit a record high. Revenues grew 1.1 per cent from the previous year but a noteworthy 25.7 per cent since 1993. Total operating expenses for 2002 were $6,714 million compared to $6,618 million a year earlier, an increase of $96 million or 1.5 per cent.
Ten years earlier, expenses were 2.6 cents per RTK compared to 2.09 cents per RTK in 2002, a significant 19.5 per cent drop in expenses per unit of workload.
Productivity
The key measure of employee productivity in the railway industry is RTK per employee. 2002 was no exception, said Mr. Rowat. RTK per employee grew an impressive 6.4 per cent over 2001, despite transporting virtually the same workload two years in a row. This was accomplished by a 5.6 per cent reduction in the workforce which shrank from 39,511 employees in 2001 to 37,296 in 2002.
Even more impressive than the year-over-year gain in RTK per employee was the 10-year gain of 125.7 per cent since 1993 — achieved through the combined effects of a 31.7 per cent increase in workload handled by a 35.0 per cent smaller workforce.
The improvements do come at a cost, though. The industry invested heavily in training, computer technology, and communication systems, upgraded infrastructure to handle new, heavier locomotives and freight cars, shared some savings with shippers, and paid its smaller, smarter workforce more.
Passenger Services
Intercity rail passenger service continued its year-over-year winning streak of better revenues, earning $278 million in 2002 compared to $255 million in 2001, a $23 million or 9.0 per cent gain. Compared to a decade ago, intercity passenger services generated $104 million or 59.8 per cent more revenue in 2002.
A total of 4.2 million intercity passengers travelled in 2002, up by 100,000 or 2.4 per cent and the most passengers travelled during the past decade. The number of rail passenger cars in 2002 grew by 52 or 12.4 per cent from 2001, and 21 new Genesis locomotives, purchased from GE Transportation in 2001, went into service in 2002.
VIA Rail operates more than 480 trains a week on 12,829 kilometres of track connecting more than 450 communities. Capital investment in various projects contributed to the better passenger counts in 2002.
Railway Trends began tracking the number of rail commuters in 1997.
“Steady growth has been reported each year since,” said Mr. Rowat. “The number of rail commuters in British Columbia, Ontario and Quebec grew from 48 million in 2001 to 49.3 million in 2002, up 2.7 per cent. Compared to 1997, though, the number of rail commuters jumped by 8.3 million or 20.1 per cent.”
The lack of a “level playing field” in public and fiscal policies has prevented rail from realizing its full potential in contributing to the movement of both freight and people in Canada,” said Mr. Rowat.
“The railway industry paid $644 million in taxes last year. All or any part of those taxes would have been better spent on railway infrastructure which would have benefited communities across Canada, and improved freight and passenger services.”
Further details are available on te RAC website at www.railcan.ca.