OTTAWA—The value, volume and share of Canadian exports are on the rise, adding pressure to Canada’s rail and marine transportation infrastructure.
A new Conference Board of Canada report forecasts rail volumes through 2025 to grow more quickly than they have since 2001. Commodities such as wheat, forest products and energy are expected to be the main drivers of growth in rail volumes.
“Canada’s trading patterns are shifting and putting additional pressure on Canada’s railways and ports to meet the growing demand for Canadian commodities,” said Len Coad, research director, public policy at The Conference Board of Canada.
Highlights from the report include:
- The tonnage of forecasted commodities shipped by rail is predicted to increase to 260 million tonnes annually by 2025, compared to 200 million tonnes in 2011.
- The rail corridors between the Prairie Provinces and the U.S. and from the Prairies to British Columbia are forecasted to experience the greatest growth.
- Ports in Central and Eastern Canada have sufficient capacity to accommodate the forecasted volumes, but British Columbia’s ports will require expansion to accommodate the projected increases.
The report estimates commodities shipped by rail will increase to 260 million tonnes annually by 2025, compared to 200 million tonnes in 2011. Railcar loadings are forecast to rise from 2.4 million in 2011 to 3.2 million by 2025.
The majority of this growth is forecast to take place within western Canada. The largest increases in rail volumes will occur in Saskatchewan and Alberta for transport to the U.S. Shipments bound for B.C. originating from these two Prairie provinces are also expected to see significant growth. As a result of increased rail volumes, British Columbian ports will need to contend with an additional seven million tonnes of agricultural products by 2025.
“Continued investment and performance improvements in Canada’s transportation supply chain will be essential to ensure that Canadian exports remain competitive in the global market place,” added Coad.
Given that commodities are generally similar no matter their country of origin, competition between producers is based on price and product availability. Canada’s commodity exports typically have low value density, meaning they are large in volume relative to their value and transportation costs account for a significant portion of the overall price.