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PRESENTATION TO: THE
GREATER TORONTO
TRANSPORTATION CONFERENCE
State of the Rail Industry
“Rolling Into the Future”
Bruce R. Burrows, Acting President & CEO
The Railway Association of Canada
January 27, 2006
Toronto, Ontario
OUTLINE
1. Who We Are
2. Railways’ Role in Canada
3. The Challenge
4. Meeting the Challenge
5. Conclusion
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1. WHO WE ARE
We are the Canadian rail industry
• Some 60 members: virtually all of the industry
Core representation from all sectors
• Class 1s: CN and CPR
• Short lines: Over 40 across Canada
• Passenger
 Commuter: GO, WCE, Capital Railway, AMT
 Intercity: VIA Rail Canada
 Tourist: 8 across Canada
RAC = One industry voice
3
Canadian railways are continental, with global reach4
2. RAILWAYS’ ROLE IN CANADA
The Economic Engine
• Contribute $10 billion annually to the economy
• Handle 65% of surface traffic; over 6 million carloads & containers
annually; move 40% of GDP
• Employ 36,000; Suppliers employ even more
• Partner with key Canadian ports, core capacity
– 39% of rail activity is import/export movements through ports
• Enhance mobility: more than 59 million passengers annually
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RAILWAYS’ ROLE IN CANADA
The Economic Engine
• Vital to Economy & Global Competitiveness
– Basis for smart growth
– Diverts traffic off roads; less pollution, congestion, accidents
– Coast to coast national carriers: vital to Canada’s industries
• Extension of Canada’s industry and resource base
• Efficient trans-border NAFTA movements; by-pass jams
• Rail facing competition:
– US ports & railways: US Govt. support: e.g. SAFETEA & Tax
– China: threatening to replace Canada as principal US supplier
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RAILWAYS’ ROLE IN CANADA
Passenger Rail
Intercity Rail
Number of passengers (000)
•
Number of passengers up 10% since 1995
4,300
4,200
•
Operating subsidies down
4,100
4,000
3,900
•
Existing highway and infrastructure policies
= gridlock, pollution
3,800
3,700
3,600
1995
Commuter Rail
In Ontario, BC & Quebec:
• commuters up by 34% to almost 55 million
since 1997
1996
1997
1998
1999
2000
2001
2002
2003
2004
Rail commuters
(000)
60,000
50,000
40,000
•
GO demand = 78,000 rush hour passengers
by 2011
– the equivalent of 58 lanes of highway
traffic every day
30,000
20,000
10,000
0
1997
1998
1999
2000
Source: RAC, Railway Trends 2004
2001
2002
2003
2004
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3. THE CHALLENGE
Global Trade
• NAFTA trade dominates, but soaring Asian expansion
– In 2005 record movement of TEUs through Port of Vancouver
– 6% increase over 2004; 15 year growth trend
• International trade is seeking the most efficient
& cost effective routings
• Vancouver & Montreal – sustained growth
• Prince Rupert seeking trans-Pacific container
traffic
• Halifax – seeking to grow Asian trade
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THE CHALLENGE
Status Quo Not An option
Demand Surpassing Road Capacity
• Surface transportation trends point to unsustainable future
- Highway congestion; delivery delays
- Pollution; accidents; border tie-ups and port backlogs
- One 138,000 lb truck = pavement impact of 20,000 cars
• Highway pricing distorts the freight market, yet a demand has emerged
that cannot be met by road construction alone (AASHTO)
• National funding gap for transportation: between $50 and $100 billion
• Government transportation policies have yet to fully recognize the
railways’ role
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THE CHALLENGE
Current Outlook: Global Context
Meeting Demand – A Global Issue
• Pressure of population growth on cities
• Costs of building & operating infrastructure
• EU tradition: support rail/transit/intermodal transportation
– Diverse initiatives to shape and control demand
– Renewed EU emphasis on rail freight (vs. road congestion)
• China’s massive investments: $12 billion to rail
infrastructure in 2005
• New imperatives: e.g. security issues, fuel costs,
pandemic fears
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THE CHALLENGE
Outlook: GTA, Central Ontario
• Rapid growth: The GTA has approved development of 128,000 acres
since 1998, a rate of 9,100 acres per year
• Kilometres driven estimated to grow by about 60% over 20 years
• Central Ontario: Freight movements to increase by 80% in next 20 years
• BAU implies massive truck growth on roads
• Next 30 years, Golden Horseshoe population to grow by four million
• The Toronto Board of Trade estimates:
– gridlock costs the GTA $2 billion a year in truck and delivery vehicle delays
– this could reach $3 billion, or 1.3% of the regional GDP by 2021
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THE CHALLENGE
Outlook: GTA, Central Ontario
TORONTO IS EXPECTED TO LEAD THE COUNTRY
IN ECONOMIC GROWTH FROM 2007 TO 2010
Real GDP (%) 2007-2010
4.5
4
4.2
3.5
3.6
3.4
3
3.3
3.3
3.2
3.0
3.0
2.9
2.5
2.8
2
1.5
1
0.5
0
Toronto
Calgary
Vancouver
Ottawa–
Gatineau
Abbotsford
Hamilton
London
Edmonton
Montréal
Sherbrooke
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4. MEETING THE CHALLENGE
What Rail Can Do
• Rail = corridors and capacity for the future
• Rail can alleviate pressure, facilitate community & economic growth:
– 100-car freight train = 280 trucks
– 1 commuter train = up to 1000 cars
– Rail = 1/3 land use of highways
• Rail can divert traffic away from urban roads
– Reduce accidents, pollution, policing/emergency services, road
infrastructure, cost to communities
– Increase community well-being, economic sustainability
•
•
•
•
Intermodal freight: optimizes efficiencies of rail & truck for shippers
Commuter rail: increasing role in mobility
Inter-city rail: efficient alternative in congested population corridors
Tourism rail: magnet for growing tourist travel
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MEETING THE CHALLENGE
Capacity, Efficiency, Modernization
• Gains in efficiency & capacity derived
from improved technologies, asset
utilization & operating practices
• CN, CPR agreements to
increase joint capacity
• CN & BNSF streamline
traffic through Vancouver, Chicago,
Memphis & southern Illinois
• Short lines & the Class 1s working together
• GO Transit & VIA Rail: joint fares, through tickets
• VIA partners with national & international tour operators
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MEETING THE CHALLENGE
Fiscal Issues
• Railways paid $698 million in taxes in 2004,
up 49% since 1995
• Canadian railways pay a much higher
percentage of revenue as tax vs U.S.
– Canadian Railways = 9.13%
– U.S. Railways = 5.41%
• Key Issues:
– Federal fuel excise tax
– CCA rates for rail rolling stock and track
– Future intermodal & freight rail
development
Payroll taxes
21%
$150 mil
Locomotive fuel &
excise tax
25%
$174 mil
Income tax
17%
$118 mil
Property tax
20%
141 mil
Capital tax &
customs duties
4%
$25 mil
Other sales tax
13%
$90 mil
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MEETING THE CHALLENGE
Fiscal & SL Investment Issues
Ontario Tax & Short Lines Initiatives
• Seeking low density property tax credit with province
• SLs initiative – re: Fed-Prov-SL shared funding potential
for infrastructure improvement
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MEETING THE CHALLENGE
Safety – A Fundamental Objective
• Proactive maintenance: monitoring rails operations, equipment & track
(under SMS)
• Safety standards, procedures, enforcement (e.g. Dangerous Goods, car
loading)
• Emergency response protocols in place
• Accidents – thorough reviews (TSB)
• Training regimes, IRT programs at colleges, CHTR facility
Railways operate under strict regulations &
practices
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MEETING THE CHALLENGE
Safety
Railway Accidents & Accident Rate
(per million Train Miles)
25
1,400
20
1,200
1,000
15
800
10
600
400
5
200
0
Accident Rate per million Train Miles
Freight and Passenger Train Accidents
1,600
0
88
89
90
91
92
Accidents
93
94
95
96
97
Accident Rate
98
99
00
01
02
03
04
Linear Trend Line
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MEETING THE CHALLENGE
Security – A Key Industry Focus
• Rail is a secure mode operating in dedicated corridors
• Class 1’s have own security forces
• Stable work force; also screened & well trained
• Emphasis on coordination, monitoring, enforcement
– MOU w/ Transport Canada
– Emergency plans, exercises
– Canada-US agencies, ports, borders
– Police & first responders; AAR
• RAC Security Working Group in place
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MEETING THE CHALLENGE
Railways and Communities
2003 MOU – RAC/FCM Cooperation
• Seeking common approaches to proximity issues:
– Noise, crossings, safety, land use
– Research, e.g. testing wayside horns, etc.
• Proximity Issues website www.proximityissues.ca:
– Legislation, “Frequently Asked Questions”, Municipal &
Railway Contacts, etc.
– Land use planning; dispute resolution committee;
coordinated communications & raising awareness
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MEETING THE CHALLENGE
Environment
•
Transportation accounts for ¼ of
Canada’s Greenhouse Gas
(GHG) emissions
•
1990-2003: 51% of
transportation growth came from
heavy duty diesel trucks
•
Rail GHG emissions are held
down, despite an increase in rail
traffic of more than a third
•
Rail contributing to Canada’s
GHG goals
– Emissions (MOU)
TOTAL FINAL ENERGY CONSUMPTION BY
THE TRANSPORT SECTOR, 2001
Inland Navigation
3%
Road
75%
Pipeline
9%
Air
9%
Source: OECD Environmental Performance
Reviews: Canada, 2004
Rail
4%
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MEETING THE CHALLENGE
Public Perceptions
Survey Results: Positive public image of rail
• Public recognizes fundamental benefit of rail to:
–
–
–
–
Economy
Community life
Environment
Safety
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The Future of Rail
Total Agree
Total Disagree
Increasing the use of trains to move freight would
significantly reduce road congestion and accidents.
94%
With growing congestion in Canada’s major urban
centres, there should be greater use of the rail
network by passengers to commute to and from
work.
92%
Rail transportation should be the highest
transportation priority in Canada.
Redfern Research
72%
Don't know
6%
6%
26%
Sample = 1,500 adult Canadians
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Perceived Strengths of Travel Options
- For Inter-City Passenger Transportation -
Rail
Bus
Car
Most convenient
11% 6%
49%
Best for society overall
Most affordable
12% 4% 12%
55%
Safest
Most comfortable
Don't Know
69%
Most environmentally friendly
Most reliable
Air
17%
41%
29%
13%
6%
26%
11% 10%
Redfern Research
26%
14%
16%
29%
14%
44%
41%
64%
20%
26%
4%
14%
Sample = 1,500 adult Canadians
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5. CONCLUSION
Rail is a Partner to:
– Grow the economy, trade, employment
– Provide fluid capacity to meet future demand
– Break gridlock; encourage good urban growth
– Support economic, social, community goals
Government can increase these benefits through:
– A stable rail regulatory environment
– Equitable taxes; level US-Canada playing field
– Support for passenger rail & short lines
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