Canadian Rail Industry SWOT

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Canadian Rail Industry SWOT

This report provides an overview of the Canadian rail system and its strengths, weaknesses, opportunities, and threats. The industry has many strengths bound to its role in moving freight, particularly retail and agriculture goods. It is vulnerable to worker strikes internally, and factor such as diesel prices externally. It has opportunities in the passenger and urban and metro sectors.

Strengths

  • The Canadian rail system enjoys strong support from the international freight industry with 2/5 of rail infrastructure traveling either across international borders or overseas.
  • A significant number of exports (1/6) travel across the Canadian rail system. Both import and export activity are anticipated to increase through 2025.
  • High retail markets and agricultural demand are a source of continued ongoing strength for the Canadian rail system. Retail sales are anticipated to continue to grow through 2025.
  • The Canadian rail system's approximate $10 billion industry gets 95 percent of its income from freight, which is based on consumer demand rather than consumer travel (meaning it will not be impacted negatively by reduced passenger travel).
  • From 2011-2016, the railways invested approximately 20 percent (or $1.8 billion) into track infrastructure.

Weaknesses

  • The Canadian rail system contends with internal labor issues that have produced strikes, including one in 2020 at the Canadian National Railway. In that strike, 3,200 workers went on strike in protest of working conditions and a lack of medical benefits.
  • Accidents (mainly related to non-main track derailments and crossing accidents) spiked in 2018 to 1,278 from the previous 10-year average of approximately 1,170. There is a need to maintain and revisit internal safety policies to lower the number of accidents and preserve public safety.
  • The rail system in Canada consists of a small number of larger buyers and a large number of small sellers, which gives the buyers the advantage in controlling what product they buy.

Opportunities

  • The Canadian public ranks environmental concerns and climate change as among their top priorities, and rail is positioned well to champion itself as an efficient form of freight and public transportation.
  • Commuter railways transported a record number of passengers in 2018 (82.8 million), up 4.2 percent from 2017 and up 7.7 percent from the average of the previous five years. Commuter rail is a rapidly opening segment.
  • The UK has identified a distinct opportunity in Canada's urban and metro rail systems. Declaring the freight sector to be "well serviced", it identifies the following as opportunities in the urban and metro sector: urban rail projects where the project exceeds local capacity for construction, developing or offering asset management technologies to support existing networks, consultancy services to assist with expansion, and the installation of electrification equipment.

Threats


Sources
Sources

Quotes
  • "The Rail Transportation industry in Canada is emerging as a mainstay in Canadian freight transportation. About two-fifths of Canada's rail traffic moves transborder and overseas, while one-sixth of Canada's exports rely on rail transportation, according to 2019 data from the Railway Association of Canada. Given this strong connection to trade volumes, the recovery of total trade value has resulted in industry expansion."
Quotes
  • "The rail transport industry is an important element of Canada's transportation system, which generates approximately $10 billion per year. The overwhelming majority of revenues, or 95%, comes from rail freight operations and approximately 5% from commuter, intercity and tourist passenger rail services in major urban centres, corridors and regions."
Quotes
  • "About 3,200 workers at CN Railway went on strike Tuesday over issues including working conditions and medical benefits, the Teamsters Canada Rail Conference union said. Shares of the company fell for a fourth day, taking this week’s loss to 3.7%."
Quotes
  • "The value of goods exports fell 1.4% in November, with seven of the 11 product categories posting declines, while imports fell by 2.4% to C$49.78 billion. In volume terms, exports declined by 2.7% from October while imports dropped by 1.3%."
Quotes
  • "Canada’s rail sector is made up of a large number of small, diversified sellers, and a small number of large buyers givingthe buyers significant leverage. But in many ways, this is deemed positive, forcing the market to be innovative and efficient. Ultimately this is reflected in our strong reputation in this field around the world for top quality products and services. "