Transcript Document 7595728

Railway Association of Canada
Border Rail Challenges: Improved
Integration to Foster North American
Security and Trade
Presentation to the Canada – U.S. Transportation Border
Working Group Meeting
Vancouver, BC
December 5th , 2002
www.railcan.ca
OUTLINE
• About the RAC
• Trade and Rail
• The Border: Policy Context
• The Border: Markets and Challenges
• What Rail Offers
• Rail Solutions: Intermodal and Border Initiatives
• Rail Can Do More : 20/20 Vision
• Conlusions for the Border
2
ABOUT THE RAC
• We are the Canadian Rail Industry: 57 members
• Represents virtually all Railways operating in Canada today
– Class 1s (CN and CPR)
– Short lines
– Inter-city Passenger (VIA)
– Commuter
– Tourist
• Together members carry
– 4.2 million carloads annually
– 1.7 million containers and trailers
– 51 million commuters, inter-city and tourist train travelers
3
ABOUT THE RAC - CANADA
• The industry operates close to 50,000 kilometres of track and
employs 41,000 people…another 50,000 employed in supply
industry in many communities
• $10 billion contribution to the economy
• Over 60% of Canada`s goods moving by surface (ton-kms)
depend on rail to reach their market
• 300 million tonnes of rail freight are originated every year –
equivalent to over 18 million truckloads
• Considerable deregulation since 1987 with very positive
results
4
CANADA - A TRADE DEPENDENT
NATION
• Over 40% of GDP comes from exports. Highest in G-8. Rail moves
about half.
• NAFTA volumes, now massive, were growing at 10% per year until
2001
• Ports of Vancouver, Montreal and Halifax key for international trade
(vital to North American economy) in Canada
• Numerous Canadian industries are consolidating and integrating into a
continental structure under NAFTA
• Canada is a convenient entry point for others looking to access the
growing NAFTA marketplace
5
THE BORDER : POLICY CONTEXT
cont’d
• Transportation Systems are becoming globally seamless
and logistics and new e-technologies, are changing
conduct of business
• Customers look at overall efficiency, cost and reliability of
transparent integrated supply chains; increasing
importance of “J-I-T” and intermodal deliveries
• Efficient and cost-effective border is critical
6
THE BORDER: MARKETS AND RAIL
ROLE
• Canada is leading export market for 38 US states, and with
NAFTA, a North American rail industry is emerging.
• Over $1.5 billion of goods traded daily with the US
• From 1992 to 1999, exports to the US rose from 77% to 86% of
Canadian total
• Rail handles a significant share of surface traffic across the
border; Ontario Corridors handle 65% of all Canada/US trade by
value, and 80% of US-destined rail traffic moves through Ontario
gateways
7
CANADIAN EXPORT CARRIERS
Truck – Rail Surface Export Share to the US
Volume 1999
Truck
56 %
Source: Transport Canada
Rail
44 %
CN AND CPR ARE TRULY
NORTH AMERICAN
COMPANIES
8
THE BORDER: CHALLENGES
Outcomes
• Events of “September 11th” have underlined security and impact
of U.S. response on Canada
• Economic slow-down was exacerbated, but Canadian domestic
economy has rebounded
• Canadian exports to U.S. declined $ 7.8 Billion in 2001; most
decline was by truck and air
• Careful control and processing of individuals crossing borders
• Need for new spending by governments (Federal Budget and 30
Point Border Accord)
9
THE BORDER: CHALLENGES
Competitive implications:
• With US/Cda trade barriers having fallen, competition faced by
railways intensified through the ’90s:
- Modal and product sourcing competition has
intensified
- Transport regulations in Canada have given shippers
wider access to competing railways
- While Canadian railways have dramatically
improved their productivity, U.S. gains even better
• U.S. Budget proposing more for transport security while cutting
highways (-26%); intent is better use of existing road and rail
integration (TEA-21 reauthorization) in U.S.
10
THE BORDER: CHALLENGES
Additional, emerging implications
• Risk of significant tightening of US security posture at Canadian
border; U.S. Customs threatening to step up rail inspections at
border (vs. secure, inland terminals where service delays would
be minimal)
• Long term Canadian economic performance closely tied to
border efficiency; potential for disinvestment
• Tremendous pressures on key corridors; massive spending on
roads required (infrastructure costs to governments)
• Commensurate congestion, land use, gas consumption and
emission concerns growing
• Business as Usual not sustainable
11
WHAT RAIL OFFERS
• Dedicated, private and controlled corridors, own police service
• Small, professional and stable workforce for volumes handled
• User pay; mini reliance on publicly funded highways
• Environmental sustainability
• Most cost effective mode over longer distance/rail is also moving
into shorter haul movements
• Safe mode of transport for people and goods
• New scheduled ‘just-in-time’ service
12
WHAT RAIL OFFERS (Cont’d)
• “Transborder rail operations were not affected by
interruptions and/or long delays at the border after
the September 11 attacks on the United States.
Streamlined, electronic exchange of rail traffic
information occurs before arrival at border locations.
Such a comparative advantage may explain the
uninterrupted flow of transborder traffic and, also, the
slight increase in Canada’s rail trade with the United
States observed from October to November of 2001
compared with 2000.”
– (Transport Canada annual report 2001, p.119)
13
millions tonnes
CANADIAN TRADE WITH U.S. BY RAIL
CONTINUED TO GROW IN 2001
90
80
70
60
50
40
30
20
10
0
Ra il Exports
Ra il Imports
Ra il Tra de
1999
2000
2001
Data source: Transport Canada annual report
14
A RAIL NETWORK PARALLEL TO HIGHWAY SYSTEM
Blaine
Vancouver
Huntingdon
Calgary
Kingsgate
Moose Jaw
Coutts
Winnipeg
Emerson
Portal
5
Duluth Jct.
Montreal
Portland
Massena
CN (WC)
25
15
29
Sarnia
5
Salt Lake
City
Sacramento
90
81
Denver
Niagara
Falls
87
Buffalo
Detroit/
Windsor
New York
Chicago
55
78
Washington DC
83
Kansas City
15
5
Rouses
Point / East
Alburgh
CN
Minneapolis
25
CN
Sault.Ste-Marie
CP
15
81
Colton
44
Barstow
69
Oklahoma
City
40
25
Memphis
8
Mexicali
35
19
Nogales
40
Dallas
El Paso
Eagle
Pass
New
Orleans
35
10
10
95
Legend
Railroad
Highway
Laredo
Miami
* Railroad lines represented here are examples of major railway connections; other routes may also offer similar connecting service
15
RAIL SOLUTIONS: INTERMODAL
• Railways have made major investments in infrastructure and
intermodal systems
• New technology and market-based innovations being tested and
introduced to shift over truck traffic
• New fuel-efficient locomotives and innovative rolling stock (e.g.
double stack container cars; constructed Sarnia tunnel,
proposed tunnels in Detroit and Vancouver)
• Short line railways have attracted traffic off the roads for short
hauls and as feeders/distributors to the main line and
transborder rail systems
• Trucks have short haul service advantage, but face driver
turnover/shortage and road congestion
16
RAIL SOLUTIONS : INTERMODAL
(cont’d)
Benefits
• Promote greater use of existing rail capacity as an alternative to
costly expansion of highways
– A train can take up to 280 trucks or 1000 cars off the roads
• Address public objectives for environment, fuel conservation,
safety and land use
– Railways are up to 5 times more fuel efficient than trucks and
generate significantly less pollution
• Encourage the most efficient transportation output through a
combination of modes: help truckers address their challenges
• Bottom line: reduced, travel time, shipping and goods transfer
costs
17
RAIL SOLUTIONS: BORDER INTIATIVES
•
Electronic commerce
– Significant investment in information technology
– Automated customs transactions and pre-filing systems in place for the
vast majority of rail traffic … improved customer service
•
What else can be done? Better alignment of customs policies needed,
including:
1) Canada – U.S. external border for uniform
inspection and security clearance of containers
2) Customs inspections of shipments at destination or
origin terminals away from border
3) Integrate systems to link Cdn and U.S. customs
computer and data systems
4) Pre-qualify low risk customers and their
commodities
Customs needs to adhere to Border Accord approach of separating high
risk traffic from low – consistent with equitable treatment across all modes
•
18
BORDER INTIATIVES - INLAND

A rail pre-screening system is needed for inland processing to
complement external border

100% VACIS screening (a tool with some limitations) at border will
create serious safety, service delays and local disruption risks

Vast majority of domestic rail traffic includes BIG THREE auto
companies, petro-chemicals, forest products and some other bulk:
these are C-TPAT companies with low risk cargo

Targeting and examination of high-risk shipments should be performed
at key rail hub sites; plan incorporates risk targeting, VACIS screening
and comprehensive supply chain security (CSI principles)

Rail industry recently commended by U.S. agencies for being one of
first to develop a detailed security management plan: CN and CPR are
C-TPAT and PIP registered
19
RAIL CAN DO MORE : 20/20 VISION
•
Leave a smaller environmental footprint
•
Use parallel network to lessen highway congestion and land use
consumption; expand system of hub and spoke transfer
terminals
•
Facilitate N/S trade through dedicated corridors into the US
which can lessen bottlenecks at border crossings
•
Trade advantage of primarily privately funded and maintained
networks with complementary government funding
20
RAIL CAN DO MORE : 20/20 VISION
• What are other ways for Canada to achieve increased
modal balance? Policy changes include:
– Tax harmonization/equity
– Introduce innovative approaches to promote
environmental sustainability and efficiency, such as
incentives to use intermodal
– Develop and implement a comprehensive national
Surface Transportation Policy: think transportation
solutions not just road-building
21
CONCLUSIONS FOR THE BORDER
•
Trade is critical to Canada’s economic performance – especially
Canada/U.S. – and harmonization more important than ever
•
Trade success with the US requires:
- pro-competitive investments
- elimination of economic distortions
- streamlined regulation
- overall efficiency in transportation networks
•
Border security must be enhanced yet trade must continue to flow, more
smoothly if possible (increase alignment of customs policies)
•
Intermodal key to medium/long haul traffic, improved border efficiency and
congestion, and meeting environmental goals
•
Rail can help solve some challenges facing other transport sectors
and can help governments to reduce their public costs and liabilities
•
Canada needs 20/20 Vision to promote, invest in, and build a competitive
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system