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Railway Association of Canada

Railway Association of Canada. Border Rail Challenges: Improved Integration to Foster North American Security and Trade Presentation to the Canada – U.S. Transportation Border Working Group Meeting Vancouver, BC December 5 th , 2002. www.railcan.ca. OUTLINE. About the RAC Trade and Rail

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Railway Association of Canada

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  1. Railway Association of Canada Border Rail Challenges: Improved Integration to Foster North American Security and Trade Presentation to the Canada – U.S. Transportation Border Working Group Meeting Vancouver, BC December 5th , 2002 www.railcan.ca

  2. OUTLINE • About the RAC • Trade and Rail • The Border: Policy Context • The Border: Markets and Challenges • What Rail Offers • Rail Solutions: Intermodal and Border Initiatives • Rail Can Do More : 20/20 Vision • Conlusions for the Border

  3. ABOUT THE RAC • We are the Canadian Rail Industry: 57 members • Represents virtually all Railways operating in Canada today • Class 1s (CN and CPR) • Short lines • Inter-city Passenger (VIA) • Commuter • Tourist • Together members carry • 4.2 million carloads annually • 1.7 million containers and trailers • 51 million commuters, inter-city and tourist train travelers

  4. ABOUT THE RAC - CANADA • The industry operates close to 50,000 kilometres of track and employs 41,000 people…another 50,000 employed in supply industry in many communities • $10 billion contribution to the economy • Over 60% of Canada`s goods moving by surface (ton-kms) depend on rail to reach their market • 300 million tonnes of rail freight are originated every year – equivalent to over 18 million truckloads • Considerable deregulation since 1987 with very positive results

  5. CANADA - A TRADE DEPENDENT NATION • Over 40% of GDP comes from exports. Highest in G-8. Rail moves about half. • NAFTA volumes, now massive, were growing at 10% per year until 2001 • Ports of Vancouver, Montreal and Halifax key for international trade (vital to North American economy) in Canada • Numerous Canadian industries are consolidating and integrating into a continental structure under NAFTA • Canada is a convenient entry point for others looking to access the growing NAFTA marketplace

  6. THE BORDER : POLICY CONTEXTcont’d • Transportation Systems are becoming globally seamless andlogistics and new e-technologies, are changing conduct of business • Customers look at overall efficiency, cost and reliability of transparent integrated supply chains; increasing importance of “J-I-T” and intermodal deliveries • Efficient and cost-effective border is critical

  7. THE BORDER: MARKETS AND RAIL ROLE • Canada is leading export market for 38 US states, and with NAFTA, a North American rail industry is emerging. • Over $1.5 billion of goods traded daily with the US • From 1992 to 1999, exports to the US rose from 77% to86% 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, and 80% of US-destined rail traffic moves through Ontario gateways

  8. CANADIAN EXPORT CARRIERS Truck – Rail Surface Export Share to the US Volume 1999 Truck 56 % Rail 44 % Source: Transport Canada CN AND CPR ARE TRULY NORTH AMERICAN COMPANIES

  9. THE BORDER: CHALLENGES Outcomes • Events of “September 11th” have underlined security and impact of U.S. response on Canada • Economic slow-down was exacerbated, but Canadian domestic economy has rebounded • Canadian exports to U.S. declined $ 7.8 Billion in 2001; most decline was by truck and air • Careful control and processing of individuals crossing borders • Need for new spending by governments (Federal Budget and 30 Point Border Accord)

  10. THE BORDER: CHALLENGES Competitive implications: • With US/Cda trade barriers having fallen, competition faced by railways intensified through the ’90s: - Modal and product sourcing competition has intensified - Transport regulations in Canada have given shippers wider access to competing railways - While Canadian railways have dramatically improved their productivity, U.S. gains even better • U.S. Budget proposing more for transport security while cutting highways (-26%); intent is better use of existing road and rail integration (TEA-21 reauthorization) in U.S.

  11. THE BORDER: CHALLENGES Additional, emerging implications • Risk of significant tightening of US security posture at Canadian border; U.S. Customs threatening to step up rail inspections at border (vs. secure, inland terminals where service delays would be minimal) • Long term Canadian economic performance closely tied to border efficiency; potential for disinvestment • Tremendous pressures on key corridors; massive spending on roads required (infrastructure costs to governments) • Commensurate congestion, land use, gas consumption and emission concerns growing • Business as Usual not sustainable

  12. WHAT RAIL OFFERS • Dedicated, private and controlled corridors, own police service • Small, professional and stable workforce for volumes handled • User pay; mini reliance on publicly funded highways • Environmental sustainability • Most cost effective mode over longer distance/rail is also moving into shorter haul movements • Safe mode of transport for people and goods • New scheduled ‘just-in-time’ service

  13. WHAT RAIL OFFERS (Cont’d) • “Transborder rail operations were not affected by interruptions and/or long delays at the border after the September 11 attacks on the United States. Streamlined, electronic exchange of rail traffic information occurs before arrival at border locations. Such a comparative advantage may explain the uninterrupted flow of transborder traffic and, also, the slight increase in Canada’s rail trade with the United States observed from October to November of 2001 compared with 2000.” • (Transport Canada annual report 2001, p.119)

  14. CANADIAN TRADE WITH U.S. BY RAIL CONTINUED TO GROW IN 2001 Data source: Transport Canada annual report

  15. Vancouver Blaine Huntingdon Calgary Moose Jaw P C C Winnipeg P Kingsgate Coutts Portal Emerson F S 5 N B Duluth Jct. Montreal C P 15 C Sault.Ste-Marie CN P Portland Massena Rouses CN (WC) CN Point / East Alburgh C 25 BNSF N Minneapolis 87 C Niagara B P ( N D ) H & D ( C P S Falls & F 15 25 29 Sarnia U C H P P Buffalo ) ) P C ( S N P 5 P C U Detroit/ New York L R M I Salt Lake Windsor I M R L 90 S N City 81 L Chicago 78 R Sacramento M I F 83 55 S Washington DC N Denver B P U X S S C Kansas City N U P 15 5 81 P U P U Colton 44 N C P 69 U Barstow Oklahoma 40 S N City 40 25 Memphis U P 8 35 Mexicali 19 U P C Dallas P N U El Paso Nogales New Eagle 10 U 35 P P Orleans Pass U P U C 10 S X Legend 95 Railroad Laredo Miami Highway * Railroad lines represented here are examples of major railway connections; other routes may also offer similar connecting service A RAIL NETWORK PARALLEL TO HIGHWAY SYSTEM

  16. RAIL SOLUTIONS: INTERMODAL • Railways have made major investments in infrastructure and intermodal systems • New technology and market-based innovations being tested and introduced to shift over truck traffic • New fuel-efficient locomotives and innovative rolling stock (e.g. double stack container cars; constructed Sarnia tunnel, proposed tunnels in Detroit and Vancouver) • Short line railways have attracted traffic off the roads for short hauls and as feeders/distributors to the main line and transborder rail systems • Trucks have short haul service advantage, but face driver turnover/shortage and road congestion

  17. RAIL SOLUTIONS : INTERMODAL (cont’d) Benefits • Promote greater use of existing rail capacity as an alternative to costly expansion of highways • A train can take up to 280 trucks or 1000 cars off the roads • Address public objectives for environment, fuel conservation, safety and land use • Railways are up to 5 times more fuel efficient than trucks and generate significantly less pollution • Encourage the most efficient transportation output through a combination of modes: help truckers address their challenges • Bottom line: reduced, travel time, shipping and goods transfer costs

  18. RAIL SOLUTIONS: BORDER INTIATIVES • Electronic commerce • Significant investment in information technology • Automated customs transactions and pre-filing systems in place for the vast majority of rail traffic … improved customer service • What else can be done? Better alignment of customs policies needed, including: 1) Canada – U.S. external border for uniform inspection and security clearance of containers 2) Customs inspections of shipments at destination or origin terminals away from border 3) Integrate systems to link Cdn and U.S. customs computer and data systems 4) Pre-qualify low risk customers and their commodities • Customs needs to adhere to Border Accord approach of separating high risk traffic from low – consistent with equitable treatment across all modes

  19. BORDER INTIATIVES - INLAND • A rail pre-screening system is needed for inland processing to complement external border • 100% VACIS screening (a tool with some limitations) at border will create serious safety, service delays and local disruption risks • Vast majority of domestic rail traffic includes BIG THREE auto companies, petro-chemicals, forest products and some other bulk: these are C-TPAT companies with low risk cargo • Targeting and examination of high-risk shipments should be performed at key rail hub sites; plan incorporates risk targeting, VACIS screening and comprehensive supply chain security (CSI principles) • Rail industry recently commended by U.S. agencies for being one of first to develop a detailed security management plan: CN and CPR are C-TPAT and PIP registered

  20. RAIL CAN DO MORE : 20/20 VISION • Leave a smaller environmental footprint • Use parallel network to lessen highway congestion and land use consumption; expand system of hub and spoke transfer terminals • Facilitate N/S trade through dedicated corridors into the US which can lessen bottlenecks at border crossings • Trade advantage of primarily privately funded and maintained networks with complementary government funding

  21. RAIL CAN DO MORE : 20/20 VISION • What are other ways for Canada to achieve increased modal balance? Policy changes include: • Tax harmonization/equity • Introduce innovative approaches to promote environmental sustainability and efficiency, such as incentives to use intermodal • Develop and implement a comprehensive national Surface Transportation Policy: think transportation solutions not just road-building

  22. CONCLUSIONS FOR THE BORDER • Trade is critical to Canada’s economic performance – especially Canada/U.S. – and harmonization more important than ever • Trade success with the US requires: - pro-competitive investments - elimination of economic distortions - streamlined regulation - overall efficiency in transportation networks • Border security must be enhanced yet trade must continue to flow, more smoothly if possible (increase alignment of customs policies) • Intermodal key to medium/long haul traffic, improved border efficiency and congestion, and meeting environmental goals • Rail can help solve some challenges facing other transport sectors and can help governments to reduce their public costs and liabilities • Canada needs 20/20Vision to promote, invest in, and build a competitive system

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