Big investment in rail, ports needed in the West
Pressure is on to meet growing demand for commodities.
Oil & Gas
oil and gas
MONTREAL — Big investments in both rail and marine infrastructure will be required to accommodate an acceleration in commodities shipments, particularly oil, over the next decade, says the Conference Board of Canada.
In a report, the agency said annual tonnage of commodities shipped by rail will grow more quickly than in the past, rising 30 per cent from 200 million tonnes in 2011 to 260 million tonnes by 2025.
The Conference Board said Canada’s shifting trading patterns are putting additional pressure on the country’s railways and ports to meet the growing demand for Canadian commodities.
Wheat, forest and energy products, especially crude oil, are expected to be the main growth drivers, with rising exports bound for Europe and Asia.
“Improving the performance of Canada’s transportation supply chain is essential to ensure that Canadian exports remain competitive in the global market place,” said the 135-page report which didn’t put an estimate on the cost of upgrades.
Rail corridors between the Prairies and the US and from the Prairies to BC are expected to feel the most pressure from rising shipments.
That will put pressure on Canadian National Railway and Canadian Pacific Railway to continue investing heavily in rail infrastructure to accommodate the increased demand, the Conference Board said.
The two railways spent, on average, more than $1.25 billion a year combined between 2005 and 2014 and appear to be focusing long-term spending in line with the report’s forecast, the board said.
The largest increase in rail volumes is expected to be for transporting energy products from Saskatchewan and Alberta to the United States. The Conference Board said the commodity – which includes crude oil and refined products – has grown sharply in recent years and should peak at almost 500,000 barrels per day, nearly double the 2014 level of about 300,000 barrels.
A large growth in shipments is also forecast between the two provinces and British Columbia.
The board said ports in Central and Eastern Canada have enough capacity, but that B.C. ports will need to be expanded to accommodate seven million more tonnes of agricultural products by 2025.
© 2016 The Canadian Press