Presenting forIranian Association of Rail Transport

Engineering

Railway Operations in Canada

(Potentials and Challenges)

Majid Babaie2010/01/11

Did you know?With 48,000 kilometers of track, Canada

has one of the largest rail networks in

the world.

Transport Canada regulations, standards

and programs work to make railway

system safe, secure, accessible,

competitive and more environmentally

responsible.

Did you know?

More than 4.8 million passengers travel by rail each year, a total distance of about 1.5 billion kilometers(trip average,332 Kilometers). Canada's rail system moves over 300 million tones of cargo each year(400 billion Tone-kilometers).

Average cars per freight train(1999-68, 2008- 82)Average passenger load factor 59%Passenger trains’ on-time performance 75%Average annual wage per employee $75000

There are 13 commuter rail lines in total in Montreal, Toronto and Vancouver. Commuter trains handled 58.6 million passengers in 2006.

Did you know?$1.7 billion of goods traded daily with the

U.S; efficient and cost-effective border is critical

From 1992 to 2002, goods exports to the US rose from 72% to 85% of Canadian total

Rail handles a significant share of surface traffic across the border; Ontario Corridors handle 65% of all Canada/US trade by value (with 80% of rail traffic handled through Ontario gateways)

Did you know?Over 40% of GDP comes from exports of goods

and services. Highest in G-8. Rail moves half of goods.

Most Canadian exports go to U.S.

The Railways’ Commitment Be the safest and most reliable mode of

transportation for people and products.

Provide superior, reliable, and cost-effective service to Canada's intercity passengers and urban commuters.

Be the most energy-efficient surface mode of transportation, reduce highway congestion and optimize land use for future transportation needs.

The railway industry employs over 35,000 people directly, another 60,000 indirectly with suppliers, from coast to coast.

The Railways’ Commitment .

Environmentally friendly

- Rail has a significant environmental advantage over other surface modes of transportation when comparing greenhouse gas emissions (GHG).

- Despite carrying 65% of the nation’s surface tone- kilometers of freight, rail produces only 3% of transportation GHG emissions; rail moves one tone of freight 168 kilometers on just one liter of fuel

For freight: a deregulation success story

• Rates are down, lowest in the world• CN, CPR now best operating ratios in NA• Labor productivity up substantially• Freight subsidies have been eliminated ($ 700M in

1995)• Lowest level of accidents/incidents in North

America• Growing the business, competing directly with

trucks• But short of capital funds

Up 18% since 1990

PASSENGER KILOMETRES

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

mill

ions

LOWEST RATES IN THE WORLD...• Canadian rail rates have declined 40%, now the lowest in the

worldU.S. Cents per Tonne-Kilometre

0 2 4 6 8 10 12

Switzerland

U.K.

France

Netherlands

U.S.

Source: RAC

Canadian rates are 60% lower than the

international average

Railroads passing on their efficiency gains as a result of competition …

Up 169% since 1990 …

LABOUR PRODUCTIVITYCANADIAN RAIL INDUSTRY

1990-2002

Revenue tone-km/employee (000)

Source: RAC

169%

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

EXPORTS AND THE RAILWAY ROLE

Canadian GDP Canadian Exports

By Rail 51%

41%Exports

Freight revenue (cents) per ton-mile (tonne-kilometre)

Revenue per Index ton-mile tonne-kilometre 1999=1001999 3.35 2.29 100.02000 3.28 2.24 97.92001 3.27 2.23 97.62002 3.44 2.35 102.72003 3.32 2.28 99.12004 3.37 2.31 100.62005 3.64 2.49 108.72006 3.87 2.65 115.52007 3.84 2.63 114.62008 4.20 2.87

125.3

CHALLENGESPopulation growth is significant

Truck growing rapidly: 61% by 2020

Congestion is unsustainable in Toronto, Vancouver, etc.

Quality of life concerns growing: land use, air, safety

Infrastructure costs to government

CHALLENGES (cont’d)Projected growth between 1995-2020

Air freight 90%

Truck freight 61%

Rail freight 38%

Passenger vehicle travel 36%

Air travel 53%

PERCENTAGE OF CAPITAL SPENDING TO REVENUES25%

18%

16%

16%

11%

10%

10%

9%

9%

8%

6%

5%

10%

0 5 10 15 20 25 30

Weighted Group Average

Metals

Forest Products

Steel

Paper Products/Packaging

Industrial Products

Chemicals

Automotive

Transportation

Oil and Gas Services

Cement

Integrated Oils

Railways (Average)

Railways are the most capital intensive industry …

Source: Globe and Mail

HOW RAIL CAN HELP

Congestion: - 1 freight train = up to 280 trucks - 1 passenger train = up to 1400 cars (GO trains = 48 lanes)

Emissions: - 5 times less GHG emissions per unit of work

- Significantly lower on other emissions as well - Commuter trains generate 25% as many GHG’s

as urban autos/km

Competitiveness:Significant productivity gains which have been

passed on to customers in lower ratesService levels increased considerably (new

scheduled services)

HOW RAIL CAN HELP (cont’d)

• Cost to Governments/Society: – Rail corridors are privately owned, built, maintained and financed– User pay ; mini reliance on publicly funded highways

• Land use: – 1/3 of that of highways– Several studies have shown that trucks cover only 50% of their

highway/environmental costs

• Safety:– Private, dedicated, secure corridors with own police service– Safest mode of transportation

91%

91%

73%

66%

60%

25%

32%

Perceived Strengths of Rail and TruckFor Freight TransportationDifferent modes of transporting freight, such as trucks and trains, have different advantages and disadvantages. I’m going to read you a list of characteristics and I would like you to tell me whether that word most accurately describes truck transportation or rail transportation.

Percent Choosing Rail Percent Choosing Trucks

environmentally friendly

Safest

society overall

Most cost effective

reliable

6%

6%

22%

Base = 1,000 adult Canadians

Directions to Government

Base = 1,000 adult Canadians

I'm going to read you a list of statements about transportation in Canada, and I would like you to tell me whether you strongly agree, somewhat agree, somewhat disagree, or strongly disagree.

92%

82%

76%

75%

74%

6%

17%

22%

24%

24%

Total Agree Total Disagree

Government should invest to improve tracks for commuter and inter -city

passenger rail

Government should help rail to compete with other modes of freight transportation

Government should pass laws requiring more freight be moved by train

Rail transportation should be the highest transportation priority in Canada

Railways should receive special assistance from government

29%31% 32%

34%

40%44%

47%49%

52%

57%60%

62%65%

0%

10%

20%

30%

40%

50%

60%

70%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

VIA RAIL CANADA : REVENUE / EXPENSE RATIO

Excludes restructuring and non-cash expenses

GOVERNMENT’S AGENDA

These involve six relevant public policy criteria:

- Congestion- Emissions- Competitiveness- Cost to government- Land use- Safety

• Competitive equity• Recognize rail’s role and benefits• Assist with investment• Assess rail as solution

What Can Government Do?

Infrastructure Overview (New Rail Paradigm)

Past• Significant rail restructuring in the last twenty years• Deregulation has benefited shippers and general public – since

1987• Rates declined 40%• Productivity improvements of over 200%

Present• More rail capacity needed in key corridors in North America for

full economic growth potential• Rail is not a mature industry – it is a growth industry again

Rail Association of Canada (RAC)Member Companies 54Associate Members 40

ABOUT THE RAC• Formed in 1917 to help the war effort. Mandate:

– Promote the benefits of railways in Canada

– Provide input into public policy decisions related to the railway sector in Canada

– Provide information for public, government and industry– Coordinate rulemaking and regulatory affairs for industry

– Provide safety and operational assistance to membership

ABOUT THE RAC (cont’d)

• Some 60 members: We are the Canadian rail industry

• Represents virtually all Railway operating in Canada today• Class 1s: CN and CPR• Short lines: Over 40 across Canada• Passenger

• Commuter: AMT, GO, WCE, Capital Railway• Intercity: VIA

• Tourist: 8 across Canada

• Together members carry• 4 million carloads annually• 1.8 million containers and trailers• 53 million commuters and other train travellers

ABOUT THE RAC (cont’d)

• Created policy and advocacy capacity

• Bolstered ongoing Safety and Operations capacity

• Working to create a more rail-friendly public policy environment

RAC’s Members of the Board of Directors

Mr. Mario Brault, President, Genesee & Wyoming Canada Inc.

Mr. Paul Côté, President and CEO ,VIA Rail Canada Inc.

Mr. Keith Creel, Executive Vice-President, Operations CN

Mr. Sean Finn,Senior Vice-President, Public Affairs CN

Mr. Mike Franczak,Vice-President, Transportation CPMr. Fred Green, President and CEO, CPMr. Gordon Peters, CEO, Cando Contracting Ltd.Mr. Peter Touesnard, General Manager, Ottawa Valley

Railway