The Future of Canadian Rail - 2014

It is true that as a railway history researcher, one's focus tends to be on the past.
On the other hand, I have often been asked at railway history presentations what I think the future of railways is.
Broad question. In Canada? Passenger, or freight - or both? Yes and yes.

My answer? I have tried to be 'guardedly optimistic'. I speak of re-invention, the economic imperative, the vital contribution to Canada's economy, low population density, our environmental future, deregulation, technical innovation, (passenger) service for profit or service to the public, public subsidy of highway infrastructure that allows trucking to compete on a tilted playing field, and so forth.

Privately, I think of the vibrancy of the role of railways in Europe, the renaissance of rail south of the Canadian border, the pursuit of hi-speed technology and its implementation around the world, and then I think of the perilous state of VIA Rail, the challenges of the bulk transportation of dangerous or flammable substances, the steady shrinkage of a rail network that not only once served so many fair-sized communities but also often provided alternate route options, the daily almost frightening freight tonnage on our highway system, and so forth. One then starts to wonder just how optimistic one can really afford to be without invoking a suspicion that to be that optimistic, one must be smoking something. It was in that frame of mind that I came across this article that I feel deserves scrutiny, constructive debate and support:

The article is by Peter Miasek, the president of Transport Action Ontario, and it appeared in its July-August 2014 newsletter. I reproduce it here with his kind permission. Its parent Transport Action Canada is a non-profit organization whose primary purpose is research, public education and consumer advocacy. It promotes environmentally-sound transportation solutions and gets actively involved in a wide range of issues such as: public transportation, safety, accessibility, energy efficiency, protection of the environment, intermodal cooperation and government regulation. (For anyone with an interest in, or concerns about, current Canadian railway and transit issues, an organization most worthy of support. Ed.) 

Here is the article:

"New direction for investing in transportation infrastructure

"July 6, 2014 marked the one year anniversary of the Lac Mégantic, Quebec tragedy where a 72 car freight train carrying volatile crude oil became a runaway before derailing and exploding in the centre of the town, with a loss of 47 lives. The national media gave the anniversary a lot of attention. I had several interviews, including a long one on Canada AM, CTV's flagship morning show. The interview can be seen on the Transport  Action Ontario website.

"The media questions were along the line of "what has the government done in the past year to correct the safety problems, and what more needs to be done?" My answers went beyond the safety question and spoke to a number of major issues faced by Canada's railways.

"After the incident, Transport Canada immediately mandated a series of changed operating procedures. In early 2014, Transport Canada followed up with regulations to phase out the problematic thin-walled DOT-111 cars.

"In our view, these changes only go a short distance to curing the ills of Canada's railway system. To quote our colleague Greg Gormick, "that tragic accident really resulted from decades of failed federal and provincial transportation and the public spending decisions that flowed from them."

"Since World War II, all levels of government have invested heavily in roads and highways. Although trucks and buses pay higher license fees, numerous studies have shown that these do not cover the high cost of publicly-funded highway construction, operations and maintenance. In contrast, the railways must cover all their fixed infrastructure costs - tracks, crossings, bridges, security, maintenance - and deliver a profit to their shareholders. In view of this non-level playing field, despite numerous advantages such as fuel efficiency and worker productivity, railways have been losing market share to trucking for decades.

"A presentation by CP Rail to Transport Action Ontario in 2009 gave a glimpse into the seriousness of the problem. In the 1960s CP had a substantial intermodal business in Ontario. In 1965, CP moved 63,000 trailers by rail, for a market share of 33 per cent. Ten years later (1975), after Highway 401 had been continually improved and widened by the Province, intermodal movements dropped by half, to 30,000.

"Our railway system is showing numerous symptoms of being in trouble, due to an inability to raise sufficient capital funds. There are four large problems:

" • Safety Issues - the Quebec incident, together with others such as Gainford, AB and Plaster Rock, NB point to an industry where the physical and human assets are constantly being squeezed to wring out necessary profits. Important safety improvements such as Positive Train Control, long recommended by the Transportation Safety Board, cost money that is hard to find.

" • Capacity Issues - the difficulties for the industry to handle Western Canada's bumper grain crop during the severe winter earlier this year again shows that assets are being squeezed with no surge capacity. The government responded with strange legislation ordering the railways to move the grain, but this does not address the fundamental problem.

" • Secondary and Branch Line Maintenance and Abandonment - As freight traffic shifts from rail to truck, rail lines with lower densities of customers become uneconomic. This results in lower maintenance levels and track speeds or, in the long run, abandonment of the line. The poster child for this problem is the recent abandonment of both CN and CP lines in the Ottawa valley. This results in all East-West Canadian freight traffic being routed through Greater Toronto, past millions of residents and numerous important assets such as nuclear power plants. Any incident on this line would completely sever east-west rail connections in Canada.

" • Decline of Passenger Rail - the decline of VIA Rail Canada is well known to readers of this newsletter. There are numerous causes, including inadequate government investment over the decades in passenger rail, increased freight/passenger conflicts on undersized railway corridors which limits ability to increase service, and schedule challenges on under-maintained secondary lines.

"In our view, the root cause of all these issues is a lack of money in the freight railway system, caused largely by subsidized trucking.

"We believe the issue can be addressed by taking a page from our USA neighbours. The US rail industry faced similar issues to Canada's in the 1970s. It has made a lot of progress but still faces a capital shortfall of $39B to fund required improvements on the core rail freight system. The USA has instituted a series of Public Private Partnerships (PPPs) where the federal and state governments, along with the private railways, jointly invest in improved infrastructure. Current examples include:

" • Chicago Region Environmental and Transportation Efficiency Program (CREATE), a partnership between six freight railways (including CN), two passenger railways and three levels of government. Seventy projects to improve freight movement in the Chicago region are completed or planned, costing $3.8B. The benefits to government include improved economic vitality, reduced traffic congestion, better passenger rail service, reduced highway maintenance, reduced air pollution and increased public safety.

" • Heartland Corridor, a PPP between Norfolk-Southern Railway, the federal government and three states, to improve railroad freight operations between Norfolk, Virginia and the US Midwest. It includes higher tunnel clearances to allow double stack intermodal trains and new intermodal shipping yards.

"In all cases, the improved infrastructure will continue to be owned by the private railways.

"There is limited but growing recognition among Canadian provincial and federal governments that rail is in trouble. In February, 2014, Ottawa and New Brunswick announced financial grants to allow CN to upgrade a branch line in New Brunswick, enabling VIA Rail to continue service on this line. In March, Ottawa announced a one year delay for elimination of the subsidy for the Algoma Central Railway passenger service in Northern Ontario.

"In June, Transport Minister Lisa Raitt announced a statutory review of the Canada Transportation Act, one year ahead of schedule, using a panel of eminent Canadians. The early review was triggered by the grain transportation issue, but will also cover numerous other areas, including:
international competitiveness
improved transportation policies
innovative financing mechanisms for infrastructure
northern transportation systems
railway safety
gateways and corridors and federally regulated passenger rail services.

"The review is to be completed by spring, 2016. Transport Action Ontario intends to make a submission to the panel, including the points in this article.
 
My Op:
Better late than never (for the federal review). But of course the review will have to translate into action. We can always hope. There has been talk for years of the need for a national transportation strategy or policy to address the pressing issues recited in the above article. It is clear that Canada's railways have challenges that are having a real impact on our national economy and our productivity, let alone the issue of the viability of a transportation system that is the only real option for many segments of the Canadian population (dare one say taxpayers? Perhaps there are some taxpayers who may really prefer a train to another tax cut ... ?). And the national economy is supposed to be this government's specialty? Should this not have been a slam-dunk a long time ago? But hey, what do we know.

And when it comes to safety and environmental hazards, the optics are that Transport Canada has been rubberstamping anything that enhances a corporate economic bottom line until there is a calamity and the Transportation Safety Board blows the whistle.

All in all, it does indeed seem to be a very curious way "to run a railroad" by and for a G7 industrialized nation. In a moment of sardonic reflection on government leadership, Keystone Cops does come to mind.

1 comment

  • Kyle Miller

    Kyle Miller Vancouver, BC

    Great article and reference, really enjoyed it. Wholeheartedly agree that Canadian railways and infrastructure, for both freight and passenger traffic, need to supported by industry and government. They were the original backbone of Canada (and all of North America). Thanks gents!

    Great article and reference, really enjoyed it. Wholeheartedly agree that Canadian railways and infrastructure, for both freight and passenger traffic, need to supported by industry and government. They were the original backbone of Canada (and all of North America). Thanks gents!

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