2002 12 19 DM DinnerRailCaucus en

ON TRACK FOR THE FUTURE“Rail Day on the Hill”: 

ON TRACK FOR THE FUTURE “Rail Day on the Hill” Railway Association of Canada October 30th and 31st, 2002

WHO WE ARE ?: 

WHO WE ARE ? We are the Canadian Rail industry 57 members: virtually all of the industry Core representation from all sectors Class 1s: CN and CPR Short lines: Over 40 across Canada Passenger Commuter: AMT, GO, WCE, Capital Railway Intercity: VIA Tourist: 8 across Canada RAC = One Industry Voice

RENAISSANCE OF RAIL: 1992-2002: 

RENAISSANCE OF RAIL: 1992-2002 For freight: a deregulation success story Class 1s: Rates are down, lowest in the world CN, CPR now best operating ratios in NA Labour productivity up 127% since 1992 Freight subsidies have been eliminated ($700 mil in 1995) Lowest level of accidents/incidents in North America Short lines: Completely new entrepreneurial focused sector Vital to regional economies, 30% of originated carloads Growing the business, competing directly with trucks

RENAISSANCE OF RAIL: 1992-2002: 

RENAISSANCE OF RAIL: 1992-2002 For passenger: more efficient, reducing congestion and improving sustainability in the corridor and in urban areas Intercity passenger: Business is increasing Operating subsidies down considerably Exciting new developments, esp. in Quebec City/Windsor corridor operations Commuter: Considerable growth, new routes and operations Increased recognition of public benefits by decision makers

Slide5: 

Truck 34 % Rail 66 % RAIL – TRUCK MARKET SHARE Tonne - Kilometres 2001

Down 21% since 1992, 35% since 1987: 

Down 21% since 1992, 35% since 1987 Freight Rates Revenue per tonne-kilometre 0.6 0.7 0.8 0.9 1 1.1 92 93 94 95 96 97 98 99 2000 2001 cents Indexed 1992=100

Up 127% since 1992: 

Up 127% since 1992 Labour Productivity RTK per employee (000) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 92 93 94 95 96 97 98 99 2000 2001

Railways paid $654 million in taxes in 2001: 

Taxes Paid by Railways - 2001 Payroll taxes 23% $153 mil Income tax 6% $36 mil Capital tax & customs duties 9% $58 mil Other sales tax 16% $104 mil Property tax 21% $139 mil Locomotive fuel & excise tax 25% $164 mil Railways paid $654 million in taxes in 2001 Percent of Revenue Paid as Tax KPMG 2001 Can. Railways = 13.4% U.S. Railways = 6.4% Can. Trucking = 10.4%

Federal freight subsidies have been eliminated: 

Federal freight subsidies have been eliminated Cdn $ Mil 1995 1998 1994 1997 1996 1999 2000 683 696 248 26 28 27 25 2001 25

Huge growth in short lines, over 40 new shortlines since 1992: 

Huge growth in short lines, over 40 new shortlines since 1992 Originated Carloads 2001 Shortlines 30% Class 1s 70%

Slide11: 

Intermodal is the fastest growing line of business

Slide12: 

Rail’s NAFTA corridors parallel the highway system

Slide13: 

Canadian Pacific CPR Lines Haulage Mexican Rwy. Canadian railways are continental, with global reach

Slide14: 

Canadian National Canadian railways are continental, with global reach

Slide15: 

Originated carloads by commodity grouping - 2001 Intermodal 18% 14% Manufactured & Miscellaneous 2% 3% Food Products 1% 2% Paper Products 6% 8% Minerals 14% 12% Coal 10% 12% Agriculture 12% 16% Forest Products 11% 11% Metals 7% 5% Machinery & Auto 7% 6% Fuels & Chemicals 12% 12% Rail is just-in-time … not just bulk 1992 percentage for CN shown in yellow

Slide16: 

GHG Emissions per tonne-kilometre Freight Total Freight Marine Freight Rail Freight Truck 0 100 200 300 400 grams/tonnes kilometre Rail is virtually Kyoto compliant

Up 17.6% since 1992: 

Up 17.6% since 1992

Up 37.2% since 1997: 

Up 37.2% since 1997 Rail Commuters in Canada 30,000 35,000 40,000 45,000 50,000 55,000 60,000 1997 1998 1999 2000 2001 Trips per year (000’s)

Over 10 billion in investment since 1996; Rail is the most capital intensive industry: 

Over 10 billion in investment since 1996; Rail is the most capital intensive industry CN and CPR Investment 1996 to 2001 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 1996 1997 1998 1999 2000 2001

Rail has grown, but at a much slower rate than trucking: 

Modal Distribution of Transportation Gross Domestic Product 1981 - 1997 0 5 10 15 20 25 30 35 40 1981 1991 1997 Rail Truck Water Rail has grown, but at a much slower rate than trucking

IT’S A FRAGILE RECOVERY: 

IT’S A FRAGILE RECOVERY Railways face intense competition Other Canadian railways US carriers Other modes Source competition Financial stability is new Imbalances in Gov’t policy a significant challenge, gains made in period of robust growth Significant economic uncertainty especially in the US

GOVERNMENT’S AGENDA: 

GOVERNMENT’S AGENDA In the Speech from the Throne four themes relevant to surface transportation in Canada: Climate Change and Kyoto Urban Sustainability and Congestion Transportation Corridors and Borders Smart Regulation

GOVERNMENT’S AGENDA: 

GOVERNMENT’S AGENDA These involve six relevant public policy criteria: Congestion Emissions Competitiveness Cost to Government Land Use Safety

HOW CAN WE HELP YOU: 

HOW CAN WE HELP YOU Congestion: 1 freight train = up to 280 trucks 1 passenger train = 1000 cars Emissions: 5 times less GHG emissions per unit of work Significantly lower on other emissions as well Competitiveness: Significant productivity gains which have been passed on to customers in lower rates Service levels increased considerably (new scheduled services)

HOW CAN WE HELP YOU: 

HOW CAN WE HELP YOU Cost to Governments/Society: Rail corridors are privately owned, built, maintained and financed 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 Safest mode of transportation

YOU CAN HELP US HELP YOU: 

YOU CAN HELP US HELP YOU Level the Playing Field - Smart Regulation No re-regulation especially forced access Rate regulation only in exceptional circumstances Use safety systems not a prescriptive approach Tax equity Reduce railway fuel tax Reduce property tax on the rail corridor Capital cost allowance on par with US rail/Can trucking Capital tax should be eliminated Full cost highway accounting and road pricing (a requirement for federal highway spending) HR Cooperation

YOU CAN HELP US HELP YOU: 

YOU CAN HELP US HELP YOU Other options: Support selected railway infrastructure projects Explore tax incentives