STAT Communications Ag Market News

June Canadian Rail Traffic Slump

OTTAWA - Aug 22/23 - SNS -- the amount of freight carried by Canadian railways in june was down 6.9% from the same month last year, totalling 28.3 million metric tons (MT) for the slowest June in more than five years, according to Statistics Canada.

Reduced shipments of iron ores and concentrates, potash, and fuel oils and crude petroleum were the main contributors to the overall decline. Wildfires raging across the country in June may have resulted in some supply chain adjustments.

Partially offsetting the declines were large increases in grains. Last year's bumper harvest has meant that grain shipments by rail remained strong. Loadings of wheat rose year over year for the 10th consecutive month in June, up 65.8% (+791 000 MT). Loadings of canola were 96.2% (+250 000 MT) above June 2022 levels, their ninth straight month of growth.

For the first two quarters of 2023, total cargo volume moved by rail amounted to 185.6 million MT, up 3.3% compared with the same period in 2022. Despite the recent slowdown, the six-month cumulative total for 2023 was just above the five-year average, largely as a result of delivering a bumper grain crop from the 2022 growing season.

The traffic volume decline in June was the result of lower volumes across all types of rail operations, both domestic and cross border. The decline in tonnage in June was felt across the country, with an 8.9% drop in eastern Canada compared with June 2022, while traffic in western Canada was down 6.3%.

Non-intermodal rail operations fell for the second month in a row, down 4.7% year over year to 22.1 million MT in June. The largest decrease was reported in iron ores and concentrates, with loadings down 10.8% (-483 000 MT) in June. This decline resulted from a temporary suspension of operations at a Quebec and Labrador mine site following wildfires, as well as from the softening in global demand for steel.

Similarly, loadings of potash dipped for a third consecutive month, down 18.8% (-413 000 MT) year over year in June—the largest drop in tonnage in more than three years.

Carloadings of certain energy-based commodities also declined in June. Loadings of fuel oils and crude petroleum have decreased for 13 straight months and were down 27.2% (-294 000 MT) from June 2022. Loadings of other refined petroleum and coal products (e.g., propane and butane) were 16.2% (-113 000 MT) below June 2022 levels, marking a fourth consecutive year-over-year decline.

These decreases reflect sharp year-over-year drops in Canadian imports (-40.4%) and exports (-37.9%) of energy products in June 2023.

Other decreases were reported for sand, gravel and crushed stone, with loadings down 33.9% (-138 000 MT) in June compared with the same month a year earlier.

Intermodal shipments originating from Canada—mainly containers—continued their downward trend for the seventh straight month, declining 8.5% year over year to 2.9 million MT in June.

This decrease may reflect diminishing consumer demand, as Canada's exports (-7.4%) and imports (-5.9%) of consumer goods were down year over year in June, according to the Canadian international merchandise trade data for the month of June.

Freight traffic coming from connections with American railways was well below June 2022 levels, falling 18.6% to 3.3 million MT in June 2023, marking the 10th consecutive month of such decline.

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