Rail 2030: Preparing Today for Tomorrow s Challenges

(1)

Robert McKinstry, Director, Policy, Economic & Environmental Affairs

O t b 18 2011

Rail 2030: Preparing Today for Tomorrow’s Challenges

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

(3)

1. Who We Are



Represent Canadian rail industry

–

Some 50 freight commuter intercity and tourist railways

Some 50 freight, commuter, intercity and tourist railways

–

An affiliation with more than 500 rail industry suppliers

–

Growing Associate Membership



Core rail representation from all sectors

Class 1s: CN CP and US carriers

–

Class 1s: CN, CP and US 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



Coast to coast national carriers: vital to Canada s

economy, supply chains and society

–

Extension of Canada’s industry and resource base‐

connects regions, NAFTA and global markets

–

Partners with other supply chain participants such

Road (national hwy. system)

Network Size

Partners with other supply chain participants such

as ports

–

Capital expenditures: 20% of revenue, $2.5B in

2011

–

Over 45,000 km of track, almost 20% larger than

34

36

38

40

42

44

46 Rail

the National Highway System



Contributes more than $12 billion annually to the

Canadian economy

Source: Transport Canada & Railway Association of Canada Rail Trends Data

Kilometres (000)

Number of Trains per day

–

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

300

400

500

600

700

800 –

Short Lines carry 25% of originated carloads



Enhance Canada’s Mobility

–

Rail to grow with expansion modernization of

S

R il

A

i i

f C

d

0

100

200

300 Freight

Passenger

Commuter

5 g

p

urban and intercity services; moves more than 70

million passengers annually

(6)

1 All Information Is Proprietary & Confidential | Toute l'information est de propriété industrielle 6

(7)

2. The Context of Canada’s Rail Industry

1 All Information Is Proprietary & Confidential | Toute l'information est de propriété industrielle 7

(8)

2. The Context of Canada’s Rail Industry

Rail is a major facilitator of

Canadian trade

International

30%

Freight Mix

% of 2009 freight revenues



Over 75% of rail revenue is

derived from imported/exported

goods movement

30%

Transborder

& U.S.

47%



Over 20% of rail marine imports

are destined to the U.S.

Domestic

23%

Volume of Rail Marine Exports and Imports 2008



Rail customers have access to

national, North American and

International markets

Imports

Volume of Rail Marine Exports and Imports, 2008

Volume of Rail Cargo Shipped from/through Canadian

ports (Thousands of tonnes)



The composition of freight

exported greatly differs from

goods imported (commodities

Exports

86,754

11,345

8 exported and finished goods

(9)

2. The Context of Canada’s Rail Industry

600

700

800 Carloads Originated by Commodity Gouping

Rail moves the Canadian

economy:

l

_e

_s

l

s

_&

d

_s

0

100

200

300

400

500 Thousands



Rail moves a diverse range

of commodities and

finished goods

Intermoda

Agricultur

e

Fuels

&

Chemical

s

Mineral

s

Coa

Metal

s

Forest

Product

s

Pape

r

Product

s

Machine

ry

&

Automotive

Manufacture

d

&

…

Food

Product

s

Source: Railway Association of Canada Rail Trends Data

finished goods



Products moved by rail is a

reflection of the

Agriculture

Paper Products

5%

Food Products

1%

Manufactured &

Misc.

2%

Intermodal

23%

reflection of the

composition of the

Canadian economy

Agriculture

15%

Coal

9%

Minerals

12%

Metals

9%

Machinery &

Automotive

5%

Fuels &

Chemicals

13%



Intermodal is the largest

and fastest growing

segment of rail freight

9 Forest Products

6%

5%

Source: Railway Association of Canada Rail Trends Data

segment of rail freight

traffic

(10)

The Changing World

(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

i

p

variance



Processes that are fast & create

capacity



Continued focus on improving

environmental performance and

reducing community impacts

(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 similar growth; especially in urban centres



Intercity passenger rail also grows rapidly

(13)

3. The Changing World

12,250

12 000

14,000

Cumulative Rail Industry Retirements, 2011‐2015

Compelling Reasons to Innovate

Opportunities

5,500

7,750

10,000

6,000

8,000

10,000

12,000



Demographics



Service reliability

2,250

0 2,000

4,000

2011

2012

2013

2014

2015

y



Efficiency



Capacity

13 English Language

(14)

3. The Changing World

Predictive technology will improve

planning and reduce costs



Less manual inspection work



Real time data streams enable



Real time data streams enable

–

Transition from reactive to predictive

maintenance

–

Better planning

p

g



New processes

–

Improve safety

p

y

–

Reduce service variances

–

Create capacity

WILD Site

(15)

3. The Changing World

Targeted implementation of cost

saving technologies

T

f

il l b i ti



Top of rail lubrication

–

Reduce track and wheel wear

–

Fuel savings



Ultrasonic rail flaw detection

–

Identify defects before failure

–

Improve service and capacity



Wheel impact load detectors

–

Decrease stress on rail

–

Predictable wheel change out

Top of rail lubrication

(16)

3. The Changing World

Smart adoption of technology

will transform how we work

(Human Resource Strategy)



Testing new wayside technologies



Collecting better information on

equipment health



Enabling planned maintenance and

d

l

t f

redeployment of manpower

(17)

3. The Changing World

Emerging Opportunity‐Infrastructure monitoring‐Testing continuous

monitoring technology to create capacity

(18)

Public Policy Implications

(19)

4. Public Policy Implications



Canadian rail industry is seeking

partnership with government to

What We Need for Rail to Reach its Full Potential

advance and accelerate industry

innovation

Commercial Framework



Innovation and regulation are

interdependent; technology

drives operational changes

Regulatory Balance

Bottom Line: In order to meet future

demands, the rail industry needs a

Policy Alignment

P bli S

t

,

y

regulatory environment that allows for

increased innovation

Public Support

Level Playing Field

(20)

Concluding Remarks

(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

i d t

i l di g

li

t

k ith g

t i

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?