Rail 2030: Preparing Today for Tomorrow s Challenges
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1 Rail 2030: Preparing Today for Tomorrow s Challenges Robert McKinstry, Director, Policy, Economic & Environmental Affairs October 18, 2011 Calgary, Alberta
2 Outline 1. Who we are 2. The Context of Canada s Rail Industry 3. The Changing World 4. Public Policy Implications 5. Concluding Remarks 2
3 1. Who We Are Represent Canadian rail industry Some 50 freight, commuter, intercity andtourist railways An affiliation with more than 500 rail industry suppliers Growing Associate Membership Core rail representation from all sectors Class1s: CN, CPandUS carriers Short lines: Over 40 across Canada Passenger: Commuter, Intercity, Tourist RAC = One Industry Voice 3
4 The Context of Canada s Rail Industry 4
5 2. The Context of Canada s Rail Industry Coast to coast national carriers: vital to Canada s economy, supply chains and society Extension of Canada s industry and resource baseconnects regions, NAFTA and global markets Partners with other supply chain participants such as ports Capital expenditures: 20% of revenue, $2.5B in 2011 Road (national hwy. system) Network Size Rail Over 45,000 km of track, almost 20% larger than the National Highway System Kilometres (000) Contributes more than $12 billion annually to the Canadian economy Employs 35,000 and another 50,000 suppliers Handles more than 70% of nations surface freight on a tonne km basis Over 1,100 trains a day Short Lines carry 25% of originated carloads Enhance Canada s Mobility Rail to grow with expansion modernization of urban and intercity services; moves more than 70 million passengers annually Source: Transport Canada & Railway Association of Canada Rail Trends Data Source: Railway Ril Association i of Canada Number of Trains per day Freight Passenger Commuter 5
6 6 28/10/201 1 All Information Is Proprietary & Confidential Toute l'information est de propriété industrielle
7 2. The Context of Canada s Rail Industry 7 28/10/201 1 All Information Is Proprietary & Confidential Toute l'information est de propriété industrielle
8 2. The Context of Canada s Rail Industry Rail is a major facilitator of Canadian trade Over 75% of rail revenue is derived from imported/exported goods movement Over 20% of rail marine imports are destined to the U.S. Transborder & U.S. 47% Freight Mix % of 2009 freight revenues Domestic 23% International 30% Rail customers have access to national, North American and International markets The composition of freight exported greatly differs from goods imported (commodities exported and finished goods imported) Volume of Rail Marine Exports and Imports, 2008 Volume of Rail Cargo Shipped from/through Canadian ports (Thousands of tonnes) Source: Transport Canada Exports 86,754 Imports 11,345 8
9 2. The Context of Canada s Rail Industry Rail moves the Canadian economy: Rail moves a diverse range of commodities and finished goods Products moved by rail is a reflection ofthe composition of the Canadian economy Intermodal is the largest and fastest growing segment of rail freight traffic Thousands Carloads Originated by Commodity Gouping l Intermoda Agriculture s Fuels & Chemicals s Minerals l Coa Source: Railway Association of Canada Rail Trends Data Food Products 1% Manufactured & Misc. 2% Paper Products 5% Fuels & Chemicals 13% Machinery & Automotive 5% Metals 9% Forest Products 6% Metals Intermodal 23% Source: Railway Association of Canada Rail Trends Data s Forest Products Agriculture 15% Coal 9% Minerals 12% s Paper Products Machinery & Automotive Manufactured & s Food Products 9
10 The Changing World 10
11 3. The Changing World We will operate differently in the future Less manual inspection of work Predictive & condition based maintenance Real time data streams Processes that produce less service variance Processes that are fast & create capacity Continued focus on improving environmental performance and reducing community impacts 11
12 3. The Changing World Compelling reasons to innovate: Growth! Freight doubles over the next twenty years Global supply chains even more critical Passenger rail has similargrowth; especially inurban centres Intercity passenger rail also grows rapidly 12
13 3. The Changing World Compelling Reasons to Innovate Cumulative Rail Industry Retirements, ,000 12,250 12,000 10,000 10,000 7,750 8,000 6,000 5,500 4,000 2,250 2, Opportunities Demographics Service reliability Efficiency Capacity English Language 13 French Language
14 3. The Changing World Predictive technology will improve planning and reduce costs Less manual inspection work Real time data streams enable Transition from reactive to predictive maintenance Better planning New processes Improve safety Reduce service variances Create capacity WILD Site 14
15 3. The Changing World Targeted implementation of cost saving technologies Top of rail lubrication Reduce track and wheel wear Fuel savings Ultrasonic rail flaw detection Identify defects before failure Improve serviceandcapacity capacity Wheel impact load detectors Decrease stress on rail Predictable wheel change out Top of rail lubrication 15
16 3. The Changing World Smart adoption of technology will transform how we work (Human Resource Strategy) Testing new wayside technologies Collectingbetterinformation information on equipment health Enabling planned maintenance and redeployment of manpower 16
17 3. The Changing World Emerging Opportunity Infrastructure monitoring Testing continuous monitoring technology to create capacity 17
18 Public Policy Implications 18
19 4. Public Policy Implications Canadian rail industry is seeking partnership with government to advance and accelerate industry innovation What We Need for Rail to Reach its Full Potential Commercial Framework Innovation and regulation are interdependent; technology drives operational changes Bottom Line: In order to meet future demands, the rail industry needs a regulatory environment that allows for increased innovation Regulatory Balance Policy Alignment Public Support Level Playing Field 19
20 Concluding Remarks 20
21 5. Concluding Remarks The Rail industry recognizes that it must accelerate the implementation of new technologies and operating practices to meet the challenges of today and tomorrow The rail 2030 exercise provides an opportunity for the rail industry, including suppliers, to work with government in developing the appropriate research agenda to address a range of issues impacting the rail industry Regulation must support, not inhibit, the implementation of new technologies and operating practices Increasing the productivity and capacity of rail operations benefits the economy and society as a whole Questions? 21
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