Posts Tagged ‘United States’

Canadian PSR Success Stories Unlikely to be Replicated by U.S. Class 1 Railroads

June 16, 2021

U.S. railroads that have adopted the precision scheduled railroading operating model like to describe it as a two-step process.

The first step involves ruthless cost cutting as freight schedules and operations are revised to move more freight in fewer and longer trains.

Some shops and yards are closed or reduced in their scope of operation, and layoffs are widespread as the carriers seek to do more with less.

The second chapter is a so-called pivot to growth. Class 1 railroads CEOs like to tell investor conferences that the savings from slimming down and becoming more efficient and reliable operators will enable railroads to chase after volume growth.

But what if the second chapter of the story is actually a myth?

Railroads have an answer for that. They’ll point to the experience of Canadian National and Canadian Pacific, both of which implemented PSR and once it was in place began enjoying double digit traffic growth.

Between 2010 and 2019 Canadian rail traffic rose 47 percent while U.S. rail traffic fell 2 percent.

Yet an analysis published on the website of Trains magazine suggested that what happened in Canada is less likely to occur in the United States.

What drove growth in Canada were factors unique to that country with much of it being driven by international intermodal, petrochemicals and fuel, and agriculture.

Canadian international intermodal traffic grew at the expense of U.S. West Coast ports and a 40 percent rise in containers landing at Canadian ports that were forwarded to the U.S. Midwest.

CN and CP also are hoping that Eastern Canada ports can divert traffic away from U.S. East Coast ports.

The Canadian carriers have other advantages including how farmers in Canada are more dependent on rail than is the case with U.S. farmers.

While Canadian agriculture shipments rose 16 percent over the past decade, U.S. agricultural rail volume fell 22 percent. In the United States, railroads haul less than 50 percent of grain ton-miles.

Coal offers another contrast. Most Canadian coal is metallurgical coal and exports of it to Asia drove a 10 percent increase in coal volume over the past decade.

In the United States, most coal is thermal coal used by power plants, many of which have been shifting to lower cost natural gas. U.S. railroad coal volume in the past decade fell 44 percent.

The Trains analysis noted CN and CP also have some other built-in advantages, including networks that are largely east to west across the country and rely far less than U.S. railroads do on interchange traffic.

The Canadian economy is more reliant on rail transportation because the country has longer distances between urban centers and a highway system that is less developed than that of the U.S. Therefore competition from trucking companies is less intense.

The analysis said CN and CP deserve credit for taking advantage of their opportunities and being creative in generating, for example, traffic to fill containers from U.S. destinations that would otherwise return empty to Asia.

They’ve done this by offering good service and competitive rates to keep this traffic from returning to U.S. ports, the analysis said.

It remains to be seen, the analysis concluded, how successful U.S. carriers will become in growing traffic as they claim to be doing.

But the key point, the analysis said, is that the type of success stories by U.S. Class 1 carriers that CN and CP have enjoyed are not guaranteed because of significant differences in the environments in which the carriers operate.

Transborder Freight Value Down in February

May 8, 2021

The value of transborder freight moving by rail among the United States, Canada and Mexico in February was $12.8 billion, down 7.5 percent compared with January’s level and down 10.8 percent compared with February 2020, according to the U.S. Bureau of Transportation Statistics.

BTS said the decrease in rail between 2021 and 2020 was primarily due to a decline in motor vehicles and parts, the largest commodity moved across the border by rail.

The value of freight moved by all transportation modes among the three countries in February totaled $95.9 billion, up 1.7 percent compared to January, but down 0.1 percent compared to February 2020.

Freight moved by rail represented 13.4 percent of all transborder freight during February.

Between the United States and Canada freight moving by rail was worth $7.3 billion, down 1.2 percent from a year ago.

The value of freight moving by rail between the United States and Mexico in February was worth $5.6 billion, down 20.8 percent year over year.

Transborder Freight Fell in 2020

March 11, 2021

Freight moving among the United States, Canada and Mexico fell 13.3 percent in 2020  to $1.06 trillion the U.S. Bureau of Transportation Statistics said this week.

The comparison was with calendar year 2019. In a news release, BTS said total transborder freight in fell every month from the start of the COVID-19 pandemic until rising 0.4 percent in December.

Rail was the second-most used mode, handling $148 billion worth of freight in 2020, a 16.9 percent decrease compared with 2019’s level.

The value of freight moved by rail last year between the United States and Canada was $79 billion, down 18.3 percent, while the value of freight moved by rail between the United States and Mexico was $70 billion, down 15.3 percent.

The top three rail commodities in 2020, which represented 58.9 percent of transborder rail freight, were motor vehicles and parts, valued at $69 billion; mineral fuels, $10 billion; and plastics, $8 billion.

Transborder Freight Dropped 3.7% in November

January 30, 2021

The U.S. Bureau of Transportation Statistics said this week that the value of transborder freight moved by rail among the United States, Canada and Mexico decreased 3.7 percent to $13.9 billion worth of goods last November.

The comparison was with October 2020. On a year-over-year comparison, freight moved by rail in November 2020 was 0.8 percent less than in November 2012.

The value of freight moved by all modes of transportation among the three nations in November totaled $95.9 billion, down 6.1 percent compared with October and 3.2 percent compared with November 2019.

Rail was the second-most used mode in November as measured by value, making up 14.5 percent of all transborder freight.

In November, $7.2 billion worth of freight was moved by rail between the United States and Canada, down 5 percent compared with October but up 0.9 percent compared with the same month in 2019.

Between the U.S. and Mexico $6.7 billion worth of freight moved by rail, which was down 2.3 percent compared with October and down 2.5 percent compared with November 2019.

Trans-border Freight Fell in June

August 27, 2020

Trans-border freight the United States and Canada and Mexico fell 20.9 percent to $82.1 billion worth of goods in June compared with June 2019 levels the U.S. Bureau of Transportation Statistics said this week.

The figure represents freight moving by all modes of transportation.

Rail was the second-most used mode, handling $11.2 billion worth of goods during the month.

That figure was a decline of 29 percent on a year-over-year basis.

The bureau said rail represented 13.7 percent of all trans-border freight moved in June.

Compared with May, the $82.1 billion worth of goods moved by all modes rose 46.3 percent in June. For rail, the increase was 105 percent.

Year over year, freight moved by rail between the United States and Canada plunged 33.5 percent to $5.7 billion worth of goods in June.

Freight moved by rail between the United States and Mexico fell 23.6 percent to $5.6 billion worth of goods.

The top three rail commodities were motor vehicles and parts, worth $5.6 billion; computers and parts, worth $600 million; and plastics, worth $600 million.

Those top three commodities represented 60.7 percent of the total trans-border freight moved by rail.