OTTAWA – Canada’s railways recorded net profits of more than half a billion dollars last year, according to figures compiled by the Railway Association of Canada.
It was the most profitable year for the rail industry since 1988 – a 50 percent increase over 1993 profits and a sharp turn-around from 1992 losses of close to $1 billion.
According to rail association president Robert Ballantyne, things could get better for the industry if the government listens to the rail lobby as it rewrites transportation regulations.
“If improvements in government policy are forthcoming, the fortunes of the industry should continue to improve,” he wrote in the annual review of industry fortunes.
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Yet the industry still has complaints.
Profits must be higher
The $567 million in profits last year still is not a high enough return on investment to attract money into the industry, he said.
And government proposals to put a “competitive access” clause into the new Canada Transportation Act tilt the rules too much in favor of shippers, according to the association which represents 30 Canadian railways, including the two national railways and a host of small privately owned lines.
“The railways are not opposed to competitive access but to regulated competitive access,” said the association report.
It argued market pressures are enough protection for shippers such as farmers.
The government assumes “the need for protection of captive shippers where most are protected by competition.”
Branch lines abandoned
This will be a key issue of conflict this fall and winter as Parliament debates the government’s new transportation legislation which will deregulate the industry, make it easier to abandon branch lines and subject rail freight to more market forces.
Shippers, particularly from the farm sector, will be arguing for continued regulation to protect them while railways are expected to argue the government is leaving too much regulation in place.
The association said increased profits were possible last year because of a 10 percent increase in freight and continuing competitive gains.
For many rail employees, this “increased competitiveness” has meant job loss. Since 1988, more than 20,000 employee positions have been shaved from the workforce to get it down to 54,427 by last year.
It also has led to a cut of more than 10 percent in the rail system, from more than 81,000 kilometres of track in 1988 to less than 70,000 last year.
