Freight of Refined Petroleum & Coal Products

2020-2025 Compound Growth: 2.5%

Forecast Value for 2030: 81.9 million metric tons

2025-2030 Compound Growth: 2.4%

This freight driver measures non-intermodal traffic for coal, gasoline and aviation turbine fuel, gaseous hydrocarbons, coal and petroleum coke, fuel oils and crude petroleum, in addition to other refined petroleum and coal products. Data is sourced from Statistics Canada.

Analysis

Coal, fuel oils, crude petroleum and liquid petroleum gas are the primary freight transport products. These commodities have exhibited considerable volatility as the factors that drive demand for these products are both domestic and global in nature. For instance, Canada is a significant net exporter of crude petroleum, so global demand dynamics like growth in the United States and emerging markets, changes this figure.

In 2020, freight of refined petroleum and coal products fell 17.4%, reaching 64.3 million metric tons. This incline resulted from provincial policy measures and substantially reduced demand from the COVID-19 (coronavirus) pandemic. In early 2019, the government of Alberta imposed production limits on petroleum and other liquids to prevent Canadian crude prices from increasing. This policy measure significantly affected refined petroleum freight transportation since Alberta accounts for more than 80.0% of Canadian oil production. Production limits were lifted in December 2020, leading to expectations of demand recovery and growth. Coupled with rebounding consumer demand as coronavirus restrictions eased, the freight of petroleum and coal products grew in 2021 by 3.4% to help supply downstream industries that have also reopened in the same period.

As economic activity rebounded more strongly in the year, rail carrying activity grew in response to these pressures, which added pressure to their operations to grow again faster to respond effectively to aid supply chains. However, despite growth, pressures continue to mount, resulting in an inflationary environment in 2022 where many supply chains have more activity in the market but insufficient supply. In turn, freight carriers for coal, gasoline and petroleum increased substantially by 8.0% in the year to fuel markets that became stressed during that period. The war in Ukraine early in the year also shocks the global market. Russia faced sanctions because of its invasion, which resulted in Canada increasing its energy production accordingly in response to this news, which helped expand its energy market. Nevertheless, pressures continued to add stress onto freight carriers carrying these energy sources, especially as not only did domestic demand go up in Canada because of the economic conditions at the time, but also international demand went up, which kept freight activity growing more in the year. With the continuation of these trends with no sign of an immediate recovery in sight because of the freshness of the war and the expected continuation of inflationary trends, freight activity continued to grow during 2023, though at a slower rate. While energy resources like Liquid Natural Gases (LNGs) continue to be significant, the market, especially in Europe, has transformed with the Institute for Energy Economics and Financial Analysis reporting a notable 18.0% boost in reliance on Russian LNGs in 2024. Meanwhile, the freight shipments of LNG goods will expand by 1.5% by 2025, propelled by the launch of the LNG Canada Project. This development will boost LNG exports and production in the country, requiring larger freight capacities for transporting these energy products.