Railway Association of Canada

Slide 1:Railway Association of Canada& Canadian Association of Railway Suppliers

“Rail Can Do More” Rail Background Briefing Session for Members of Parliament and Senators “On Track for the Future” November 1st, 2001

Slide 2:OUTLINE

1. September 11, 2001 2. Railway Security Issues 3. Rail Related Border Initiatives 4. The Resurgence of Canadian Railways 5. Rail’s Role in Today’s Economy 6. Blueprint Process 7. Rail Can Do More 8. Conclusion 1

Slide 3:56 members Represents virtually all Railways operating in Canada today Class 1s (CN and CPR) Short lines Inter-city Passenger (VIA) Commuter Tourist Together members carry 4.2 million carloads annually 1.7 million containers and trailers 51 million commuters, inter-city and tourist train travelers

ABOUT THE RAC 2

Slide 4:A tragic day for humanity Short term implications Economic slow-down will be exacerbated Direct impact on Canada due to reliance on exports to US … consumer confidence Significant negative impact on airline, tourism and financial sectors Delays at border points … could reduce productivity and efficiency Careful control and processing of individuals crossing borders Additional fiscal pressure on federal government

SEPTEMBER 11, 2001 3

Slide 5:SEPTEMBER 11, 2001

Long term trade implications Long-term economic performance closely tied to border efficiency Potential for a loss of investment from Canada through facility relocations south of the border Need for increased government spending on security, defense, other? 4

Slide 6:Dedicated, private and controlled corridors Large railways have their own police forces Increased vigilance at tunnels, bridges and other critical facilities Railways experienced and well-equipped to handle emergency situations (derailments, etc)

Railway Security Issues 5

Slide 7:RAILWAY SECURITY ISSUES

Already have established partnerships with first responders and communities Railway security measures in place as prescribed by Memorandum Of Understanding (MOU) between the railways and the Government of Canada Canada’s Class 1s are linked into the North American 24-hour security control centre The rail industry has advanced several innovative ideas to create a more secure, efficient and smarter border 6

Slide 8:Railways have been proactive in facilitating cross-border movements Electronic commerce Significant investment in information technology Automated customs transactions and pre-filing systems in place for the vast majority of rail traffic … improved customer service and reduced train throughput time Also investment in strategic infrastructure

RAIL RELATED BORDER INTIATIVES 7

Slide 9:Others ? Better alignment of customs policies Pre-qualify low risk freight and people for pre-processing Customs inspections of shipments at destination or origin, rather than at border points, where this practice is more efficient single inspections to the standards of both countries for domestic and off-shore shipments

RAIL RELATED BORDER INTIATIVES 8

Slide 10:RAIL RELATED BORDER INTIATIVES

Others ? (cont’d) Central database and common computer systems that all carriers, brokers, importers/exporters would use to file information pertinent to cross-border traffic (Access given to customs and other government agencies) 9

Slide 11:THE RESURGENCE OF CANADIAN RAILWAYS

New Members of Parliament may not be familiar with changes the industry has undergone over the past decade Returning MPs will find the next few slides a useful update on the sector’s current financial and operating profile 10

Slide 12:This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 13:We have the lowest rates in the world Canadian customers benefit from rail We have the lowest rates in the world Canadian customers benefit from rail

Slide 16:We have the lowest rates in the world Canadian customers benefit from rail We have the lowest rates in the world Canadian customers benefit from rail

Slide 17:We have two major trade challenges: Competing with the U.S. and soon with the Mexico on a continental basis Competing with the U.S. ports trade growth with Asia on the Pacific side and Europe on the AtlanticWe have two major trade challenges: Competing with the U.S. and soon with the Mexico on a continental basis Competing with the U.S. ports trade growth with Asia on the Pacific side and Europe on the Atlantic

Slide 18:Major investments made by Canadian carriers in locomotives, intermodal and bulk facilities and other equipment have improved rail competitiveness The introduction of new scheduled services have significantly improved customer service and are attracting new time-sensitive business from customers Along with autos, intermodal has been the fastest growing traffic segment over the past five years. Represents 16% (CN) and 23% (CPR) of traffic revenue Railways working hard to develop strategic trade corridors

RAIL’S ROLE IN TODAY’S ECONOMY 17

Slide 20:Encourages the most efficient transportation output through a combination of modes Greater use of existing rail capacity as an alternative to costly expansion of highways to deal with future growth Reduces shipping and travel costs Reduces the costs of goods transfer Addresses public objectives for environment, fuel conservation, safety and land use

RAIL’S ROLE:A) INTERMODAL ADVANTAGES 19

Slide 21:RAIL’S ROLE:B) PASSENGER AND COMMUTER SECTOR

20 We have the lowest rates in the world Canadian customers benefit from rail We have the lowest rates in the world Canadian customers benefit from rail

Slide 22:TRANSPORT CANADA’S BLUEPRINT PROCESS

Rail welcomes the attempt to strengthen the link between the Canadian economy and the national transportation system. We endorse the views of the CTA Review Panel that the present regulatory regime for railways works effectively for the vast majority of shippers We urge the Government not to consider unnecessary reregulation…the system needs only minor revisions, not wholesale change The post September 11th environment suggests caution should be exercised within the context of Blueprint recommendations 21

Slide 23:BOTTOM LINE: PASSENGER SECTOR IS GROWING…ON THE FREIGHT SIDE, WE MUST PROTECT GAINS FROM DEREGULATION … RESIST TEMPTATION TO REREGULATE

This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 24:HOWEVER…RAIL CAN DO MORE

This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 25:RAIL CAN DO MORE

Surface transportation flows and modal balance are not optimal in Canada. Challenges: Environmental sustainability Ground transportation (principally road) is already the single largest contributor to GHG emissions in the overall transportation sector; GHG emissions are expected to double over the next 20 years; Politically, air quality is a real concern Quality of life is deteriorating Especially in major urban areas Transit times have increased considerably Competitiveness vis a vis the US Increased demand for scarce public funds for infrastructure Current highway infrastructure has deteriorated, unable to handle present and forecast rates of growth This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 26:RAIL CAN DO MORE

How rail can help ? Because it leaves a small environmental footprint Rail is 5 times more efficient than inter-city trucking. Rail is better for all types of emissions including smog creating emissions (NOx and VOC) Parallel network which can lessen highway congestion (truck and auto) and the consumption of land for use in highways Dedicated corridors into the US which can lessen congestion at the border and facilitate the most efficient moves for mid to long distance freight shipments Primarily privately funded and maintained network This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 27:RAIL CAN DO MORE (cont’d)

How can Canada achieve increased modal balance ? Tax harmonization/equity Eliminating the Federal Large Corporation Capital Tax Removal of federal excise fuel tax for transborder traffic Reduce the federal excise fuel tax to 1.7 cent/litre and match successive reductions in US fuel tax rates being proposed Increase the Capital Cost Allowance (CCA) rate for rail equipment to 30% (rail cars, locomotives, intermodal equipment) This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 28:RAIL CAN DO MORE (cont’d)

Introduce innovative transportation policies to promote environmental sustainability and efficiency Commercial road user fees Green taxes Incentives to use intermodal services Address jurisdictional issues related intra Provincial trucking and its regulation Promote passenger rail by Providing capital and regular operating funding for urban transit and passenger/commuter rail Make monthly transit/rail passes a tax deduction Selectively purchase discontinued urban rail corridors at fair market value and hold these assets for future commuter use as urban populations grow Develop an awareness/communications campaign to educate the public about environmental advantages of commuting by rail/transit This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 29:ONGOING GOVERNMENT INITIATIVES WITH TRANSPORTATION SECTOR IMPACTS

Budget process Need for tax harmonization / relief for optimal modal balance Blueprint Process Need a comprehensive surface transportation policy in Canada Canada Transportation Act Review Panel Report Must resist pressure to reregulate rail sector This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives. This is an exciting time to be in the rail industry. Fundamental changes over the past few years have been innovative, productive, and visionary. We have gone from losses to profits; from regulation to market-driven solutions. We are now a continental player of the first order. We have strategic partnerships with U.S. Class 1s, regional and short lines, ports, and suppliers. Our short line, regional, passenger, tourist, and commuter members are making a significant regional impact – in terms of economic development, service, local responsiveness, and employment. The Railway Association of Canada is poised to take a new leadership role in Canadian public policy development. Our 54 member railways are determined to participate in the prosperity and opportunity of the ‘new economy’ revolution in Canada today, advocating competition and investment as the corner stones of bold, new public policy initiatives.

Slide 30:Trade is critical to economic performance especially between Canada/US Rail is an important component but can do more Intermodal key to medium/long haul traffic, improved border efficiency and meeting environmental goals Must continue to work toward increased alignment of Canada-U.S. border policies Rail offers important public policy benefits Must keep goods moving … the Canadian economy depends on it

CONCLUSION