Canadian Rail Handle Off in December

OTTAWA - Feb 27/08 - SNS -- Canadian railway traffic ended the 20078 calendar year on a down note, with traffic falling in December, but handling volumes were still up for the full calendar year, reports Statistics Canada.

Railways loaded 21.4 million metric tons (MT) in December, a 12.4% decrease from November and a 6.0% drop from the December 2006 level. The drop in loadings was the second consecutive monthly decline and was attributable to reduced loadings in forestry and paper products.

The non-intermodal portion of the freight loaded in December decreased 11.9% to 19.3 million MT. Declines occurred in 56 of the 64 commodity classifications during the month. However, the drop in tonnage was mainly the result of reduced loadings in forestry and paper products, particularly loadings of lumber (-22.1%) and wood pulp (-4.3%). The fall in lumber and wood pulp loadings was the result of a weak housing market in the United States.

The intermodal portion of the freight loaded decreased as well in December, falling 17.0% to 2.1 million MT. This decrease was the result of declines in both containers and trailers loaded on flat cars.

Rail freight traffic, either destined for or passing through Canada from the United States, declined 9.8% to 2.7 million MT in December.

On an annual basis, the majority of the months in 2007 saw an increase in loadings, with the second and third quarter loadings being the highest quarterly loadings since 1999. However, labor disruptions and weather-related issues in February, as well as tough market conditions faced by the forestry sector in December, resulted in the industry incurring a small overall decline in tonnage loaded.

For the year, railways loaded 284.5 million MT of freight, a 0.9% drop from the 287.0 million MT loaded in 2006. The decrease in loadings stemmed from a 1.2% decrease in non-intermodal loadings, which declined to 255.7 million MT.

The decline in non-intermodal loadings for the year can be attributed to market pressures affecting the forestry sector, and declining demand for exports surrounding raw minerals and manufactured products.

Within the forestry sector, lumber loadings had the largest decline, falling 15.5% to 13.5 million MT. The main factors contributing to this decline were a weak housing market in the United States, mill closures, rising lumber imports from South America, and the appreciation of the Canadian dollar.

Loadings related to raw minerals decreased 4.3% to 66.4 million MT in 2007. Iron ores and concentrates incurred the largest decrease, dropping 3.2% to 32.9 million MT. The decrease stemmed from declining demand for shipments to Asia.

On the manufacturing side, manufactured products declined for the fifth consecutive year, as loadings decreased 3.2% to 4.5 million MT. The decline occurred mostly in shipments surrounding automobiles and minivans, and parts and accessories for motor vehicles. For the year, loading of automobiles and minivans fell 5.0% to 1.7 million MT, while parts and accessories for motor vehicles fell 11.6% to 695,000 MT. Among the factors contributing to these decreases were declines in motor vehicle assembly and a slowdown in the US economy.

The remaining commodity groupings in the survey all realized gains in 2007. Among those with the strongest gains were basic chemicals and chemicals, and agriculture and food products.

For basic chemicals and chemicals, loadings rose 9.3% to 40.6 million MT. The increase was due primarily to a 30% rise in potash loadings — itself the result of strong market conditions and increased demand from Asia and South America.

Loadings related to agriculture and food products edged up 0.6% to 34.5 million MT in 2007 — the fifth consecutive year agricultural loadings have increased.

In contrast to the decline in non-intermodal loadings, intermodal loadings increased 1.7% in 2007 to 28.8 million MT. The rise in intermodal loadings was the result of an increase in the number of containers and trailers loaded on flat cars. For the year, container loadings rose 1.7% to 27.8 million MT, while trailer loadings rose 0.6% to 984,000 MT.

Rail freight traffic destined for or passing through Canada from the United States for the year increased 13.0% to 32.3 million MT in 2007.