Market Snapshot: Rail transportation of energy commodities has decreased because of lower demand from COVID-19

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Release date: 2020-05-27

Rail transportation of goods, including energy, on Canada’s two major rail networks, Canadian National Railway (CN) and Canadian Pacific Railway (CP) decreased in line with slower economic activity and lower demand for energy due to COVID-19. These rail networks transport significant amounts of finished goods and commodities across the country, including products related to energy like crude oil, gasoline, diesel, propane and butane, and plastics and petro-chemicals.

The movement of goods and commodities by rail in Canada changed since the World Health Organization declared a pandemic on 11 March 2020. The demand for energy significantly dropped because of reduced travel and refineries in Canada and the United States (U.S.) are processing much less crude oil. Global prices for crude oil and other energy commodities decreased significantly in 2020, signaling an oversupply of crude oil in the near term and a reduced need for crude transportation by rail.

Figure 1. Weekly railcar loadings of all commodity groups,
and railcar loadings of energy products (2016 - May 2020)

Source and Description

Source: CN, CP

Description: The line graph displays weekly railcar loadings of all commodity groups, and railcar loadings of energy products over time from 2016 until the third week of May 2020. Total carloads remain relatively consistent, but fell by 17% from 173 951 to 143 598 from the last week of January to the third week of May, a four month period. Carloads of energy and related products fell faster, down 37% over the same period, and are at the lowest level since 2016.

From 2016 to early 2020, railcar loadings of energy and related products, excluding coal, increased faster than other categories on the CN and CP networks, from 11% of to 14% of total carloads. However, from the end of January to the third week of May 2020, rail loadings of energy products decreased by 37% from 23 172 weekly carloads to 14 678 carloads while total carloads decreased by only 17% from 173 951 to 143 598. The automotive category fell faster than energy, down 92%.

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