Home Month and Year May 2022 The Rail Boom

The Rail Boom

The Edmonton connection

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Photo by Tim Stevens.

There’s been a lot of buzz, often contentious and problematic, about North American supply chains, while business continues to rely on the sophisticated science of logistics: the movement of goods from Point A to Point B and the two key logistics function of transportation and warehousing.

The emphasis, particularly on the busy west coast and landlocked western Canada, is invariably four primary modes of transportation: truck, ship, train and plane, also known as road, maritime, rail and air shipments. It may not be in the glaring focus or in the news as much as trucking and cargo ships but, according to stats and revenues and shares of GDP, rail is the linchpin of Canada’s vital logistics sector.

The transportation bottom line is, Canada’s economic growth and standard of living depend on the export and import of goods. Freight railways ensure that those goods make it to market as efficiently and cost-effectively as possible. Canada’s railways helped deliver more than $205 billion worth of Canadian exports to markets across North America and around the globe.

“Together, CN and CPR represent more than 95 per cent of Canada’s annual rail tonne-kilometres, more than 75 per cent of the industry’s tracks, and three-quarters of overall tonnage carried by the rail sector,” explains Stéphanie Montreuil, Senior Director of Communications with the Railway Association of Canada (RAC), “and they are important supply chain links for Canada’s key trade corridors and gateways.” She adds that, with more than 46,000 kilometres of tracks, the rail transport industry is an important element of Canada’s transportation system, generating approximately $10 billion per year – 95 per cent from rail freight operations and approximately 5 per cent from commuter, intercity and tourist passenger rail services.

There’s no doubt about it. Rail is key component of the logistics sector in Alberta, and particularly the Edmonton area. According to CN spokesman Mathieu Gaudreault, “Alberta generates substantial volumes of agricultural and energy products. CN also handles growing amounts of intermodal container traffic through our Edmonton and Calgary terminals. In Edmonton, where over 2,000 CN railroaders live and work, we have automotive distribution and CargoFlo bulk handling facilities as well as metals and forest products distribution centres. CN also maintains large railcar and locomotive repair shops at Edmonton’s Walker Yard.”

RAC has research and documented facts and figures about the vital role of rail in Canada’s economy and volumes of detailed proof about the undisputed advantages of rail in Canada’s logistics sector. Although transportation of goods by railway is somewhat below the capacities offered by trucks, rail freight still accounts for a fairly substantial portion of supply chain movement. RAC underscores the many good reasons to send freight by rail. It is cost-effective and up to four times more fuel-efficient than sending freight by truck, which is better for the environment. RAC stats show that a rail freight shipment company transports can move nearly double the quantity of goods they could in ‘80s, for about the same price.

Montreuil points out that “Rail is one of Canada’s most capital-intensive industries. Canadian railways are vertically integrated, including ownership of the track, real estate and rolling stock, which illustrates the need for significant investments. On average, Canadian railways invest between 20 and 25 per cent of their revenues back into their networks each year – more than $20 billion in Canada over the past decade.”

According to Edy Wong, Associate Dean at the International School of Business at UAlberta in Edmonton, “Rail is vitally important to the Alberta economy. Rail is important to Canada’s exports, particularly agriculture exports and sometimes the rail bottleneck is known to have caused problems in our exports. Rail is also a cheaper way to transport goods than trucks.”

He notes that COVID disruptions and last year’s supply chain problems negatively impacted the logistics sector, with broadsides like shortage of truckers, lack of containers, rise in container costs, port congestion, etc. “Some of these may recover post-COVID,” he says, “but a better rail system can take some pressure off the logistics sector caused by shortages of driver and capacity.

“If Edmonton is to become a distribution hub and manufacturing centre, better logistics are absolutely crucial. In Alberta and throughout Canada, we need better supply chain management to support our exports and future aspirations. Links to markets, trans-shipment and distribution capabilities are all important. This would include a viable airport and better management and capacity at the West coast ports too.”

A dynamic example of harnessing the importance of rail to business and the economy is Parkland County, the booming logistics hub just outside Edmonton. The county has created a thriving business community supported by a robust transportation ecosystem, centered around Edmonton International Airport, Canadian National and Canadian Pacific railroads, intermodal facilities and Highways 43 and 16.

“Acheson is the beating, industrial heart of our county, with more than 400 businesses residing at the intersection of these major logistics routes,” says the enthusiastic Allan Gamble, Mayor of Parkland County. “To support Acheson as one of the largest and fastest-growing industrial areas in western Canada, Parkland County helps optimize supply chain efficiency and reduce operating costs for the diversity of businesses that have made Acheson home.

“Parkland County also uses a major business attraction program, which contributes to Acheson’s attractiveness. This includes a dedicated team, a hands-on approach to planning and permitting, and potential realignment of infrastructure priorities to support development.”

The mayor underscores that railroad connectivity is one of Parkland’s greatest assets. “Both Canadian National and Canadian Pacific, Canada’s largest rail providers, have a presence in the county. A Canadian National main line directly intersects Parkland, with many industrial sites having direct spurs on their property. Both companies also have intermodal facilities nearby. These rail lines link Parkland County to eight Canadian provinces, 16 U.S. States and Mexico.

“Intermodal is a very integral element in the logistics and supply chains of companies in the Edmonton region,” the Mayor emphasizes. “There are high-level plans being given consideration regarding the expansion of intermodal capacity in the industrial park.”

Logistics experts point out that, at the present, trucking rates are increasing due to driver shortages and regulatory changes, opening the door even further to a modal shift in favour of rail. They also urge that this will happen only if all parties involved enhance their collaboration, leverage digital technology and utilize data-driven analytics to make decisions. Railroads are capable of delivering at the right cost and competing successfully against truck freight, but it is necessary to forge tighter relationships based on open communication and collaboration, data visibility and long-term value creation.

“Supply chain management is more than logistics,” cautions Wong. “Information systems, distribution management and trade relations are all part of the larger supply chain picture for Edmonton and for Canada. If we want to develop new markets or new exports, we need to ensure that the supply chain or logistics to support these products are there.”

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