The Daily – Rail transport, 2020 | So Good News
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Released: 2022-04-08
Operating income from rail transport
16.5 billion dollars
2020
5.6%
(annual change)
Freight tonnage
321.7 million tonnes
2020
2.6%
(annual change)
In 2020, the impact of COVID-19 pandemic helped end three years of revenue growth, as Canadian railways had operating revenues of $16.5 billion in 2020, down 5.6% from 2019. The Canadian rail transportation industry consists of two mainline freight carriers and several short-line freight railroads along with passenger rail companies.
Shipping revenues fall
Freight revenue, which accounts for 90.0% of the industry’s total operating revenue, fell 6.0% from 2019 to $14.8 billion in 2020. This decline was not as steep as many other industries, such as airlines, since railroads is considered an important service in the context of COVID-19 pandemic and continues to move goods and critical goods.
However, short liners were hit harder during the pandemic than mainline carriers, as short liners often serve specific commodities or industries. These smaller carriers, which accounted for 2.6% of total railroad operating revenues, experienced a 42.3% decline in operating revenues.
Diagram 1
Railway revenue and expenditure, 2010 to 2020
Passenger trains were hit hard as journeys dwindle
Ridership declined in 2020 due to Canada-wide restrictions on non-essential travel during the pandemic. Accordingly, passenger revenue fell 76.7% to around $97 million compared to 2019. While service reductions brought a sharp decline in passenger revenue, other rail revenue and government payments (including pandemic support) increased 22.2% to $1.6 billion.
Some expenses fall more
Operating costs for the railroad also fell, down 4.9% from 2019 to $10.9 billion in 2020. But among spending items, the decline was uneven. For example, general administrative expenses, which include wages and salaries, fell sharply by 16.5% to $2.1 billion, while rail operations fell by 9.9% to $4.3 billion.
In 2020, with less freight to carry and lower world oil prices, rail fuel expenses fell sharply from $1.9 billion in 2019 to $1.8 billion in 2020, down 4.2%. On the other hand, in 2020, equipment increased by 13.1% to $2.2 billion, and maintenance increased by 3.1% to $2.3 billion.
With overall expenses falling at the same rate as operating revenues, the industry’s operating ratio (operating expenses expressed as a proportion of operating revenues) was unchanged at 0.66, the same rate achieved in 2018 and 2019. In other words, the railroad incurred $66 in expenses to generate $100 in revenue.
Fewer employees as revenues in tonne kilometers fall
With the pandemic reducing some railroad activity in 2020, the average number of railroad employees fell to 31,607, an 8.7% decrease from 2019. This resulted in some savings, with total annual wages and related benefits falling from $3.4 billion in 2019 to $3.0. billion (-11.0%) in 2020. Consequently, labor productivityy—tonne kilometers per railway employeeaincreased 2.0% to 13.3 million.
The decline in railway revenues together with a shorter average haul affected revenue tonne-kilometres (revenues earned for transporting one tonne of goods over one kilometre). The total decreased by 6.9% from 451 billion tonne kilometers in 2019 to 420 billion tonne kilometers in 2020, the lowest annual level since 2017. In addition, the average number of cars per freight train rose to 120 cars, with average train speed unchanged at 37 kilometers per hour.
Impact on shipping volume is small
The rail shutdowns in February in support of the Wet’suwet’en First Nation followed by the first wave of pandemic shutdowns did not appear to significantly hamper rail freight. In fact, freight tonnage fell 2.6% from 2019 to 321.7 million tonnes, but there were noticeable changes in relative cargo weights.
Figure 2
Total freight volume transported by rail, 2010 to 2020
While the March 2020 economic shutdown slowed freight activity on rail significantly in the second and third quarters, freight volumes began to pick up in the fall and ended the year on a stronger note. Essential goods and raw materials continued to be shipped by rail, mostly due to a global demand for farm and food products.
Despite this sharp increase in farm goods moved by rail, there was sufficient capacity available with lower demand for energy-related shipments. Accordingly, the higher volume of agricultural and food commodities transported by rail moderated the impact of the pandemic on overall freight tonnage.
Pandemic changes some important goods
Of the total rail tonnage in 2020, six goods continued to contribute half of the entire freight volume, but with changes in the relative contribution. Within the top six commodities, wheat (+3.4 million tonnes) and potash (+1.8 million tonnes) experienced the largest absolute year-on-year increases.
Conversely, fuel oils and crude oil (-70.0 million tonnes) and coal (-30.5 million tonnes) showed the biggest year-on-year declines, with travel restrictions persisting throughout the year and some industrial activity being shut down.
Figure 3
Top six goods transported by rail, 2014 to 2020
Western Canada continues to dominate
Of all commodities originating from a Canadian location, almost three-quarters (74.8%; 208.4 million tonnes) came from Western Canada (Alberta, Saskatchewan, British Columbia and Manitoba).
Loadings in the West increased for farm commodities including wheat, up 14.0% from 2019 to 27.5 million tonnes in 2020. Similarly, canola shipments increased 27.7% from 2019 to 12.9 million tonnes in 2020, while loadings of potash, a non -metallic mineral, used in the production of fertiliser, was up 8.5% to 22.5 million tonnes in 2020.
However, shipments of energy products from the West fell sharply due to weaker demand. Fuel oil and crude oil loadings from the region were down 33.3% from 2019 to 13.7 million tonnes in 2020. Although coal shipments were down 7.3% to 33.8 million tonnes in 2020, it remained the leading commodity over the entire region transported by rail.
Note to readers
This release is based on two data sources, an annual survey and an administrative file for origin and destination statistics from Transport Canada. The former collects financial as well as operational and employment data from a census of Canadian railways that offer for-hire freight and passenger services.
The commodity origin and destination statistics file measures the movements of commodities carried by Canadian National Railway (CN), Canadian Pacific Railway (CP), carriers that interline with CN and CP, as well as a number of short-line carriers that do not interline with either CN or CP.
Financial, operational and origin and destination data may change from year to year due to fluctuations in exchange rates, reclassifications of accounts, etc. Data is also affected by mergers, acquisitions and companies entering or exiting the industry.
Data aggregation is available for Canada and selected geographic regions.
It is important to note that the universe of short-line carriers changes regularly. In particular, in 2018, data from one company was added to the estimates for the first time. In previous years, this company was classified as inactive, and no estimates were made. Therefore, any comparison of 2018 data with previous years should be done with caution, as this represents a break in the series.
A short-line freight railway usually takes goods from one or more points to a point on the larger transport network, which is usually a main line, but may be a transshipment point to another mode of transport. These are operators with less than $250 million in annual revenue, for at least two consecutive years.
Mainline freight railroads typically move goods on the larger transportation network and are carriers with $250 million or more in annual revenue for at least two consecutive years.
Products
The infographic “Rail transport in Canada, 2020” is now available as part of the series Statistics Canada ― Infographics (11-627-M).
Contact information
For more information, or to inquire about the concepts, methods or data quality of this release, contact us (free 1-800-263-1136; 514-283-8300; [email protected]) or Media Relations ([email protected]).
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