Rail transportation offers the advantage of cost effectiveness, fuel efficiency and transportation flexibility.
New York, NY (PRWEB) May 19, 2014
The Rail Transportation industry is emerging as the mainstay in Canadian freight transportation. When the recession occurred in 2009 and fuel prices declined, revenue tonne kilometres (RTK), a metric used to gauge the total amount of freight transported by a company, dropped 13.1% as a result of slowing demand for transporting goods. “This decline was short lived, however, as revenue recovered in 2010 and continued growing in the subsequent years,” according to IBISWorld Industry Analyst Edward Rivera. Since the industry is strongly connected to trade volumes (two-thirds of Canada's rail traffic moves transborder and overseas while 70.0% of Canada's exports rely on rail transportation), the recovery of total trade value boosted industry revenue. Consequently, revenue is expected to grow 3.6% in 2014. Given that 2009 was the industry's weakest year, revenue growth since has been relatively strong. In the five years to 2014, total revenue is estimated to increase at an annualized 5.9% to reach $14.0 billion.
“In Canada, rail operators build, maintain and upgrade over 43,000 kilometres of track using private funds,” says Rivera. In 2012, the industry's collective investments for terminals and fuel stations soared172.0% while intermodal equipment investment climbed 95.3%, both significant increases. With mounting capital investments, employee productivity, measured as RTK per employee, increased 3.3% in 2012. Additionally, growing capital expenditure has also resulted in reduced fuel consumption per locomotive and boosted profit margins for the industry over the period.
Rail transportation offers cost effectiveness, fuel efficiency and transportation flexibility relative to road, air or sea transportation, giving the industry an advantage when fuel prices increase. When oil prices rise, industry operators generate revenue through fuel surcharges. When oil prices remain unchanged, competition for freight transportation will intensify. Moreover, the industry may benefit from upcoming capital programs such as Rail 2030, which can become revenue-generating segments in the future. However, these ventures have yet to be confirmed and their effects may not be felt until the next five years.
For more information, visit IBISWorld’s Rail Transportation in Canada industry report page.
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IBISWorld industry Report Key Topics
Industry operators primarily manage railways, including long-haul or mainline railways, short-haul railways and passenger railways. This industry excludes the operation of street railways and urban rapid transit, tourist and scenic trains, or switching and terminal railways.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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