RAC: Canada Rail Rates ‘Among Lowest in World’

Written by Marybeth Luczak, Executive Editor
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Canada’s rail freight rates are among the lowest of the 10 countries surveyed, according to a recent report by CPCS conducted on behalf of the Railway Association of Canada (RAC).

The International Comparison of Rail Freight Rates report (download below) examined rates in Canada, China, France, Germany, India, Italy, Japan, Russia, Spain and the U.S. Freight rates were measured as annual freight revenues per revenue ton-mile (RTM) for 2021 in U.S. cents, with the conversion to U.S. currency made on the basis of purchasing power parity (PPP), according to CPCS, an independent global transportation consulting firm. “This is a credible basis for comparison at a highly aggregated national level,” the firm said. “Individual shippers may, of course, pay rates higher or lower than the average as rail rates can vary depending on many factors. Except for the average rail rate for Western Canadian grain, this study does not present rail rates at a commodity or subnational level.”

The figure below shows the results of the international comparison. Canada’s freight rates are among the lowest with an average freight revenue per RTM of 4.16 cents (U.S.). “While Russia and China show the lowest rates, the validity of a comparison with those countries may be limited as their railways are state-owned and operated entities,” according to CPCS. “India, where the railway is also government owned and operated, and Japan show the highest rates. Canada’s overall rate is 11% lower than that of the U.S., and significantly lower than those of the European countries examined. The lowest rate is that for the rail movement of Western Canadian grain, this being constrained by the statutory railway grain Maximum Revenue Entitlement (MRE). The implied MRE rate is 29% lower than the overall average Canadian freight rate.”

The report also found that Canadian rail freight rates have grown more slowly than U.S. rates over the past 33 years (see chart below) and at less than half the rate of commodity and general prices over that same period.

“We’ve known for a long time that Canada’s freight railways are the safest in North America,” said Marc Brazeau, President and CEO of RAC, which represents close to 60 railway companies and 60 associate members (suppliers, consultants, etc.). “They are also the most cost effective on the continent and have among the lowest rates in the world. Canada’s railways are providing world-leading value to their customers and all Canadians.”

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