Rail Traffic Slips in February

OTTAWA - Apr 25/18 - SNS -- Rail freight volume slipped 0.2% from last year to 27.2 million metric tons (MT) in February, according to Statistics Canada.

Freight originating in Canada decreased 1.8% from the same month last year to 24.2 million MT. Non-intermodal freight fell by 2.1% to 264,000 carloads in February. The amount of freight loaded into these cars fell 2.3% from February 2017 to 21.4 million MT.

In February, the commodities with the largest increase in tonnage compared with February 2017 were iron ores and concentrates (+522 000 MT or +12.9%), potash (+198 000 MT or +13.2%), gypsum (+88 000 MT or +215.7%), other metallic ores and concentrates (+84 000 MT or +35.1%) and alumina (+79 000 MT or +29.9%).

Conversely, tonnages declined over the same period for colza seeds (canola) (-289 000 MT or -33.3%), wheat (-260,000 MT or -17.6%) and fresh, chilled or dried vegetables (-170 000 MT or -42.7%).

Intermodal freight loadings rose 5.0% from February 2017 to 187,000 units in February 2018. The gain stemmed from a 5.0% increase in containers-on-flat-cars, and an 8.3% increase for trailers-on-flat-cars. In terms of weight, intermodal traffic increased 2.3% to 2.7 million MT.

Freight traffic received from the United States rose 14.3% to 3.0 million MT as a result of increases in both non-intermodal (+15.0%) and intermodal (+5.6%) freight.

Commodity Traffic Down in 2016

In a separate release, Statistics Canada said the volume of commodities transported by Canadian rail carriers in 2016 was down 3.9% at 292.9 million MT.

The drop was largely attributable to lower shipments of fuel oils and crude petroleum (-5.9 million MT or -35.7%), coal (-3.2 million MT or -7.8%) and wheat (-3.1 million MT or -12.7%).

Over half (57.4%) of all rail shipments by weight originated in three provinces in 2016: British Columbia (61.0 million MT), Alberta (58.3 million MT) and Saskatchewan (48.9 million MT).

From 2015 to 2016, tonnage loaded in containers-on-flat-cars edged up 0.5% to 36.6 million MT, while tonnage loaded in trailers-on-flat-cars decreased by 96.8% to 18 000 MT.

Shipments of coal and wheat decreased in 2016, but these products remained the top two commodities by weight. The top six commodities shipped by Canadian railways accounted for 43.2% of the total tonnage in 2016.

Bottom Line Hurt

The drop in commodity traffic contributed to a 4% drop in operating revenue in 2016 to CDN $13.8 billion in 2016.

In 2016, operating expenses of the rail carriers fell by 7.2% to $9.2 billion, down from $10.0 billion in 2015. The drop was driven by lower expenses in all four expense accounts (way and structures, equipment, rail operation and general expenses).

As a result of the larger drop in operating expenses over operating revenue, the railways recorded a higher net rail operating income in 2016 of $4.6 billion.

The amount of revenue freight tonnage declined 3.7% to 319.9 million tonnes, down from 332.1 million tonnes in 2015. There was also a corresponding drop of 3.9% for the revenue freight tonne-kilometers in all freight carriers.

The average number of employees fell 6.3% in 2016 compared with 2015, while total employee compensation declined 5.8%. However, the average annual employee compensation rose 0.4%.

In 2016, the number of locomotives in service decreased 0.8% to 3,157, the third consecutive yearly decline. The total number of freight cars (-3.0%) and the total number of passenger cars (-6.1%) also declined. In addition, the total amount of track operated by all carriers fell 2.1% to 62 207 kilometers.

Results from the Annual Capital and Repair Expenditures Survey indicated that capital spending on non-residential tangible assets fell by 9.6%, from $3.3 billion in 2015 to $3.0 billion in 2016, following seven consecutive annual gains. However, preliminary estimates for 2017 show that the industry's capital expenditures in non-residential tangible assets rose 1.4% and are anticipated to rise by 2.0% in 2018, largely attributable to an increase in spending on capital construction as spending on machinery and equipment is expected to drop.

Overall, fuel consumed by all railway rolling stock fell 6.3%, from 2.0 billion liters in 2015 to 1.9 billion liters in 2016, the second consecutive yearly decrease. Similarly, the total cost of diesel fuel purchased by the rail carriers fell 17.5% to $1.3 billion. Freight diesel consumption, which represented over 94% of total fuel consumption, also declined in 2016.