- Operating revenues for the Canadian rail industry increased to $17.1 billion in 2021, up 3.7% from 2020, but not reaching the record $17.5 billion in 2019, as the industry recovers from the pandemic.
- Freight revenues dominated the industry, accounting for $15.6 billion or 9 out of every 10 dollars of operating revenues, while passenger revenues increased to $132 million.
- The top commodities moved by rail in Canada remain agricultural and energy products, and although cargo movements increased in the first half of 2021, movements for the entire year decreased slightly by 0.2% to 321.1 million tonnes, impacted by supply chain disruptions and lower volumes of principal field crops.
Editor’s Notes: In this report, we have used data from the Statistics Canada website.
Rail transportation in Canada has been a key mode of transportation for decades, with the industry being comprised of two mainline freight carriers, several short-line freight railways, and passenger companies. In this article, we will examine the performance of the rail transportation industry in Canada in 2021, with a focus on operating revenues and performance.
Operating Revenues of the Rail Transportation Industry in Canada
In 2021, railways reported operating revenues of $17.1 billion, representing an increase of 3.7% from 2020. This increase in operating revenues was a result of business activities resuming after the COVID-19 pandemic that affected the industry in 2020. However, the operating revenues reported in 2021 fell short of the record $17.5 billion that was posted in 2019.
Freight Movements and Revenues
Freight movements continued to dominate industry activity in 2021, accounting for 9 of every 10 dollars of operating revenues, which translates to $15.6 billion, a 5.5% increase from 2020. Although the volume of cargo moved by this industry remained flat in 2021, revenue tonne-kilometers edged up to 423.9 billion tonne-kilometers. This indicates that railways were able to generate more revenue per tonne of cargo moved.
Passenger Rail Services
The COVID-19 pandemic significantly affected passenger rail services in 2020, and although these services remained affected in 2021, the revenue generated by it rose to $132 million in 2021, an increase of 36.6% from 2020. This was a positive indication that these services were slowly recovering. However, government contributions towards passenger rail services decreased by 11.3% to $424 million in 2021, indicating that governments were scaling back on subsidies as the pandemic impacts started to taper off.
Operating Expenses of Rail Transportation Companies
In 2021, total operating expenses reported by railways declined 1.6% from 2020 to $10.7 billion. This decrease was led by general administration costs (-11.2% to $1.8 billion) and equipment costs (-7.1% to $2.0 billion), while costs of operations (-0.9% to $4.3 billion) remained relatively steady. Maintenance of way expenditure, however, rose by 11.2% to $2.6 billion in 2021, indicating that companies were investing more in the maintenance of infrastructure. Fuel expenditures also increased 5.5% from 2020 to $1.9 billion, due to the upward pressure put on oil prices by the reopening of national economies.
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Operating Performance
In 2021, the average number of employees reported by railways was 31,692, up slightly (+0.3%) from 2020. However, total annual wages and other benefits and emoluments in 2021 increased to $3.2 billion, up 5.6% from 2020. This indicates that the companies were investing in their employees.
For instance, revenue tonne-kilometers rose to 423.9 billion tonne-kilometers in 2021, up 0.9% compared with 2020. Although this increase was small, it showed that rail companies were able to earn more freight revenue in 2021 compared with 2020. At the same time, labor productivity (revenue tonne-kilometers per employee) remained virtually unchanged (+0.6%) at 13.4 million.
Other Performance Metrics
The average revenue freight distance increased by 2.9% from 2020 to 1,253 kilometers in 2021. This indicates that rail carriers transported goods over longer distances, likely due to shifts in supply chain patterns and other factors.
However, the average train speed continued to decline, slowing to 33 kilometers per hour in 2021. This represents a continued trend of declining train speeds, which can be attributed to several factors, such as increased congestion on networks and infrastructure limitations.
The average number of cars per freight train edged up to 121 cars in 2021, indicating that rail carriers continued to optimize their operations by transporting more goods per train. This trend of increased efficiency can help to offset the negative effects of declining train speeds.
Labor productivity
Labor productivity, as measured by revenue tonne-kilometers per railway employee, remained relatively unchanged at 13.4 million. This suggests that rail carriers were able to maintain a consistent level of output per employee, despite the challenges posed by the pandemic and other factors.
Freight movements
Freight movements remained relatively unchanged in 2021, with total cargo volumes decreasing slightly by 0.2% to 321.1 million tonnes. While cargo movements were higher in the first half of the year, some factors moderated these volumes in the second half of the year, such as supply chain disruptions and lower volumes of principal field crops, such as wheat, canola, and barley.
Top Six Commodities
The top six commodities moved by rail in 2021 remained largely unchanged from the previous year, with agricultural and energy products continuing to be key commodities for freight carriers in Canada. Coal and potash were the only commodities to see a year-over-year increase in tonnage, with coal increasing by 14.8% to 49.4 million tonnes and potash increasing by 2.8% to 23.1 million tonnes.
Wheat saw the largest decline, decreasing by 17.1% to 23.5 million tonnes, while fuel oil and crude petroleum also saw a decrease of 5.9% to 14.3 million tonnes. Overall, the top six commodities accounted for roughly half (49.6%) of the entire rail freight volume in 2021.
| Operating revenues in 2021 | $17.1 billion |
|---|---|
| Change from 2020 | +3.7% |
| Freight revenues | $15.6 billion |
| Passenger revenues | $132 million |
| Top commodities moved | Agricultural and energy products |
| Cargo movements in 2021 | 321.1 million tonnes |
| Change from 2020 | -0.2% |
| Operating expenses in 2021 | $10.7 billion |
| Change from 2020 | -1.6% |
| Average employees in 2021 | 31,692 |
| Change from 2020 | +0.3% |
| Total annual wages and benefits in 2021 | $3.2 billion |
| Change from 2020 | +5.6% |
| Labor productivity | 13.4 million revenue tonne-kilometers per railway employee |
| Revenue tonne-kilometers in 2021 | 423.9 billion |
| Change from 2020 | +0.9% |
| Average revenue freight distance in 2021 | 1,253 kilometers |
| Change from 2020 | +2.9% |
| Average train speed in 2021 | 33 kilometers per hour |
| Average number of cars per freight train in 2021 | 121 cars |
Conclusion
Overall, the Canadian rail industry showed signs of recovery in 2021, with operating revenues increasing by 3.7% and freight revenues continuing to dominate industry activity. Although passenger rail services remained affected by the pandemic, passenger revenue rose to $132 million, an increase of 36.6% from 2020.
While the volume of cargo moved by this industry remained relatively unchanged, revenue tonne-kilometers increased slightly, indicating that rail carriers were able to transport goods over longer distances. However, the average train speed continued to decline, posing a challenge for the industry.
The top commodities moved by rail in 2021 remained largely unchanged, with agricultural and energy products continuing to be key commodities for freight carriers. While some commodities saw a decline in tonnage, others, such as coal and potash, saw an increase.
Looking forward, the Canadian rail industry will need to continue to adapt to changing market conditions and emerging trends, such as the increasing demand for sustainable transportation solutions. With its strong track record of innovation and efficiency, the rail industry is well-positioned to meet these challenges and maintain its role as a key player in Canada’s transportation sector.
