Canadian Rails:  A new Global Look

By J.David Filman

The role played by our railways with respect the economic development of this country cannot be understated.  The railways of Canada are major players in the transportation of our natural resources and manufactured goods both for domestic consumption and export.  Our two major railways Canadian Pacific and Canadian National, both coast-to-coast operations, handle import and export goods through the major ports of Vancouver, Halifax and Montreal.

Perhaps you may live in one of many communities along our extensive rail network. For the most part trains pass through with little fanfare except perhaps for when those rails conflict with public roads.  There are thousands of public crossings at grade in this country; many of us have been delayed getting to work, taking our kids to music lessons or hockey practice by some slow moving train.  Just another inconvenience we must endure in our daily routines. 

These days, many of those two mile long trains move along at greater than mile a minute speeds.  Have you ever thought to actually take the time to observe the rail cars passing by; one might notice solid consists of specialized articulated flat cars carrying double stacked containers.  Closer examination of those colorful boxes will reveal bold looking names which stand out prominently.  Names like COSCO (China Overseas Shipping Co.), OOCL (Overseas Orient Container Line), Yang Ming, just a few of dozens of shipping companies that also maintain huge fleets of ships which handle those same containers between many ports of call around the globe.

Canada’s abundant supply of natural resources has always led to strong export demand particularly to feed the voracious appetites of those developing Asian economies.  For our railways the movement of bulk commodities to port for movement by ship has long been their bread and butter, service easily provided using specialized railcars in unit trains. The once ubiquitous boxcar was the railcar of choice for moving manufactured goods in days past as container/trailer on flat car (COFC/TOFC) is today.

The problem with boxcars particularly when handling import or export commodities was cost.  The process required a third party to facilitate the transfer from truck or ship to rail.  Freight housing complexes, where these activities occurred, dominated the landscape of rail yards and port facilities.  Clearly the process was time consuming and labor intensive, the additional handling required resulted significant loss and damage.  On the ocean side of things port processes made ship transit times unpredictable, adjacent rail yards were often plugged to capacity with outbound loads or inbound empties waiting for cargos off the ships.  Hence, for the railways international trade in manufactured goods was not significant until after the 1960’s.

Enter the shipping container; the invention of it in 1956 could be credited to Malcolm McLean, a US trucker, however that is debatable.  It is part of an automated system designed to transport almost anything from anywhere with a minimum of cost and complication.  Poor countries eager to develop economically were now in the position to become suppliers to others.  Traditionally manufactured goods in Canada and the US tended to be produced locally for relatively near markets.  After the 1960’s production costs for manufactured goods steadily increased which was naturally passed down to consumers?  The advent of containers meant the cost of shipping no longer sheltered local producers making far away suppliers in these poorer nations more competitive.  The combination of low production and shipping costs has made Asian markets particularly attractive.  

A practical and efficient concept, the shipping container plays a major role in today’s global economy.  Approximately 90 per cent of the world’s general merchandise is transported by this means.  The railways have become the perfect partners with overseas shipping companies.  Ports have a new look; those old freight houses have been replaced by new infrastructure, which facilitates direct off loading of containers to specialized rail cars.  Similarly inland container ports have sprung up along the rails for off loading to trucks for final delivery to the customer.

Of course competition between railways for moving freight is intense, perhaps never so much since the arrival of containers on the scene.  The two major Canadian Railroads in recent years have expanded operations into the US through takeovers or mergers.  They have been able to become more competitive with rivals for business destined for US markets, which is becoming quite evident with respect to container volumes through our major west coast port in Vancouver.  Both railways have been investing heavily on infrastructure improvements to expand rail capacity for this burgeoning traffic.  History has given CN an advantage over rival CP through its former Grand Trunk Pacific line, which accesses the Port of Prince Rupert.  CN has recently completed the first phase in development of a container facility there.  Steaming time to Prince Rupert, particularly from more northerly Asian ports, is perhaps a day shorter or more compared to Vancouver or rival US ports.  CN is poised to make major inroads with their competitors; recently they contracted with COSCO to move containers through that gateway.

Manufacturing in Asia and India has proliferated had a staggering pace, which has caused import to export imbalance, the so-called “China Effect”.  This has caused issues in the relationship between the railways and shipping companies.  How this phenomenon plays out probably won’t matter that much to the railways as no matter what direction general merchandise flows those containers will always be significant in the overall traffic mix.

Next time you head out to make a purchase be it at your local grocery, big box department or electronics store, check the label.  Chances are your item perhaps found its way in a container transported by ship and across Canada by train.

Just how did that Samsung Big Screen HD TV you are about to set up reach your living room from its factory in South Korea. Now there is a story for another time!