Corridor Initiative Brings Upside Risk

BMI believes that increasing investment by Canadian rail operators in developing intermodal terminals will bring upside risk not only to our rail freight forecasts for Canada, as volumes are moved off roads and onto tracks, but also our container throughput forecasts for major Canadian container facilities Metro Vancouver and Prince Rupert. The investment is in keeping with the federal government's aim to improve the speed of trade between Canadian and Midwest US heartlands with Asian markets.

A number of Canadian rail operators have been investing in new intermodal terminals and rail terminals across Canada and in the American Midwest. Canadian Pacific (CP) has recently announced the opening of a new intermodal facility at the Saskatchewan Global Transportation Hub (GTH), replacing a former facility located in downtown Regina. The facility has a handling capacity of 250,000 containers per annum - five times the size of the previous Regina facility. This takes CP's intermodal terminals to 11. Canadian National, another major rail operator, launched its new intermodal terminal at Calgary Logistics Park on January 10. The new facility has easy access to a number of major arteries including the Trans Canada Highway, in addition to being conveniently placed to send volumes by rail to either Port Metro Vancouver or Prince Rupert.

On Track For Growth
Canada Rail Freight Tonnes, 2008-20017 ('000 tonnes)

BMI has been following the trend of increasing interest in intermodal shipping for some time. Investing in rail links between ports and major industrial and agricultural centres such as Calgary brings manifold benefits; transport by train is greener than road haulage, faster, and reduces congestion on and damage to highways. The increased ease in transporting containers by investing in intermodal road, rail and port links are being pursued by the federal Canadian government through its Asia-Pacific Gateway and Corridor Initiative. This is a series of policy measures aimed at facilitating trade between Canada and Asian markets through developing transport links to the west coast ports.

Upside Risk
Port Metro Vancouver TEU Throughput, 2008-2017

We note here that it is not only Canadian trade that will benefit from the investment plan. Canadian National has teamed up with Indiana Rail Road Company to launch a rail service between Indianapolis and the west coast Canadian ports in June 2013, following the completion of an intermodal container terminal and yard currently under there. Shippers there had been requesting this direct link in order to bypass congested Chicago facilities. The increasing trend of agricultural produce being sent via container will support volumes on this line.

The investment in intermodal links between the Canadian ports and inland trade centres will bring upside risk to our throughput forecasts in the coming years. We currently project that growth in box volumes handled at Port Metro Vancouver will average 6.0% over our medium-term forecast period (2013-2017). At Prince Rupert our projection is an even stronger average of 12.4% over the same period, and these might need to be revised up in the coming years as the trade corridor improves further. In terms of rail freight our projection - an average growth rate in tonnes handled of 3.0% - could also be revised up as greater demand is placed on the network.

This article is tagged to:
Sector: Freight Transport, Shipping
Geography: Canada, Canada, United States, Canada, Canada

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