Canadian rail freight volume drops 10.4 percent in June

Canadian rail freight volume drops 10.4 percent in June

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According to Statistics Canada, although most jurisdictions had reopened their economies by June, Canadian railways reported the third consecutive month of declines of at least 10 percent, year over year, in the volume of freight transported by rail.

In June, Canadian railways carried 29.8 million tons of freight, down 10.4 percent from June 2019. This followed the 12.9 percent year-over-year decrease reported in May. The decline in June was primarily attributable to weak demand for some key export commodities, despite increases in exports and imports—largely driven by parts and accessories for motor vehicles—reported in the June data on Canadian international merchandise trade.

Fuel oils and crude petroleum loadings accounted for over one-third of the total tonnage decline in June, falling 69.4 percent (-1.3 million tons) from the same month in 2019. This decrease was likely due to lower demand for crude oil, despite many jurisdictions gradually resuming economic activities. Coal loadings were down 11.9 percent (-364,000 tons) over the same period.

Even with the onset of vacations and the summer driving season, the lingering effect of border closures and travel restrictions continued to weaken the demand for gasoline and aviation turbine fuel loadings, which experienced a 55.3 percent (-166,000 tons) year-over-year decline in June.

Although automobile and mini-van loadings were down 54.2 percent (-105,000 tons) in June, year-over-year gains were reported for parts and accessories for motor vehicles (+27.7 percent, or +4,000 tons) and other transportation equipment (+71.3 percent, or +11,000 tons) for the first time since February. These increases were attributable to the reopening of automobile manufacturing plants in North America, and point to further recovery in the coming months.

There was strong demand in June for certain commodities moved by rail, especially agricultural products. For example, on the heels of year-over-year increases in May, gains were reported in loadings of wheat (+24.5 percent, or +539,000 tons), animal feed and products (+14.9 percent, or +53,000 tons), fresh, chilled or dried vegetables (+6.7 percent, or +30,000 tons), and canola (+2.8 percent, or +26,000 tons). In June, after declines in May, year-over-year increases were reported in loadings of iron ores and concentrates (+4.0 percent, or +198,000 tons) and potash (+3.0 percent, or +58,000 tons).

According to the July 2020 weekly performance indicators of grain transportation by rail, the number of cars loaded and billed for July was 52,079, up from 38,899 in the same month last year. Similarly, the July 2020 weekly rail system performance by type of rail car showed that the average number of intermodal rail cars on line was more or less the same as in July 2019, which indicates a resurgence in traffic volume. Overall, as lockdown measures ease, the volume of freight carried by rail is likely to increase in the coming months as trade recovers. However, weak export demand for some key commodities moved by rail may hamper growth if the impact of the pandemic lingers.

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