Please, not the same old railway half-truths and misinformation on the environment
June 1, 2011
Recently, Claude Mongeau, the relatively new CEO at Canadian National Railway was speaking in the media about his company's enviable financial results and outlook. Mr. Mongeau is clearly a very capable man.
Recently, Claude Mongeau, the relatively new CEO at Canadian National Railway was speaking in the media about his company’s enviable financial results and outlook. Mr. Mongeau is clearly a very capable man.
He has also signaled that he intends and will continue to inject a new way of thinking into the business. That is all good; especially for shareholders of CN, including Bill Gates, who we now know is the company’s largest single stockholder.
Unfortunately, it seems that rail CEOs like Mongeau, as much as they talk about a more progressive change in approach, just can’t seem to help but resort to some of the same old anti-truck half-truths and misinformation that has been spun by railroaders for decades. According to a recent story arising out of CN’s annual meeting that appeared in the Globe and Mail, Mongeau suggests that shipping by rail is more environmentally friendly than by truck and credits this in part for his firm’s solid financial performance and for a growing competitive advantage over trucking.
In reality, it is more likely that any market advantages CN may have reflect its oligopolistic status in the marketplace and the ongoing benefit it continues to derive from having had its massive debts forgiven by the federal government (ie., Canadian taxpayers) at the time of its privatization, than anything to do with environmental considerations.
In terms of which mode is the ‘greenest,’ obviously in comparing rail linehaul and long-haul trucking, rail will be more fuel efficient on a per load basis. It’s no surprise then that rail dominates in the long distance delivery of bulky loads. Trucks, on the other hand, dominate in the shipment of smaller, time-sensitive loads, over shorter distances. The overlap between the two is small. But, this is just part of the energy equation.
One must look at the entire supply chain, including the shorter haul and pick-up and delivery function (railways cannot provide door-to-door service) for which trucks are far more efficient. When all factors are considered, most freight currently moving by truck consumes less energy than if it was moved by rail. No doubt that is part of the reason why CN has gotten into trucking in a very big way over the past few years. Its trucking fleet is now one of the largest in the country, so trucking must have some advantages.
Moreover, truckers in this country face far more stringent regulation of fuel and engine emissions than the railways do. For example, the emission of nitrogen oxide (NOx) – a precursor to smog and a major contributor to global warming – has been virtually eliminated from new truck engines since the inception of the 2010 model year engine. That’s the law. (In fact, the progressive tightening of emissions standards has been occurring over at least the last decade). Currently, there are no regulations governing NOx emissions from locomotives. Governments have indicated we should expect regulation of locomotive emissions later this decade; but we’ll see. And even then, the new locomotives will still emit over six times more NOx per horsepower hour than the current generation of heavy trucks.
In addition, both the US and Canadian governments are currently developing fuel economy/GHG reduction standards for heavy truck engines – and only heavy truck engines.
The trucking industry welcomes these initiatives and in fact wishes to complement them with other measures aimed at reducing its carbon footprint.
The truth is, it makes business sense for all modes to improve their environmental performance. Escalating fuel prices are a concern in all modes. They all need to do more to reduce their contribution to air pollution and climate change. No one mode is better than the other in that regard, although I defy anyone to find a sector subject to more stringent emission controls than trucking.
When it comes to competitive advantages between one mode and another, the hallmark of the trucking industry’s success – why it is the dominant mode of freight transportation in North America and why all forecasts point to its continued growth – eventually boils down to service.
Rail is already cheaper than trucking in the long-haul market, but many shippers still rely on trucks for their superior service. As indicated above, that is not to say that escalating fuel prices are not a concern to truckers; they are. (For that matter, so are rising equipment and labour costs, too). But, there is no shipper coalition forced to seek government intervention to improve truck service.
If the railways really want more truck freight (and I am not convinced they really do), then they should concentrate more on enhancing their service standards than trying to paint themselves as being better for the environment.