Estimate of the Impacts of the February 2020
Rail Disruption
Publication date:

2020-03-13

Description:

This note provides PBO’s estimate of the economic and financial impacts of the
February 2020 disruption of rail transportation due to blockades of rail lines and
other protests. The estimate includes both the direct and indirect impacts from rail
transportation, transportation support activities (port disruptions) and urban transit
system industries, as well as macroeconomic feedback.

Data sources:

Estimation and projection
method:

Variable

Source

Revenue ton-miles (RTMs)

Canadian National; Canadian Pacific

VIA Rail employee compensation

VIA Rail financial statements

Passenger transit trips

Metrolinx; Translink; exo

Real GDP by industry

Statistics Canada (historical); PBO (projected)

GDP income and expenditure
series

PBO November 2019 Economic and Fiscal
Outlook (EFO)

The direct impact on rail transportation in February was estimated using real-time
data for revenue ton-miles and VIA Rail employee layoffs. Disruptions to port
activity in Vancouver, Montreal and Halifax were estimated based on observed
number of days impacted and assumed diversion of ships (based on historical
experience, such as the 2014 Port of Vancouver trucker strike). Urban transit system
disruptions in Ontario, Quebec and British Columbia were estimated based on the
observed number of days impacted and historical experience (that is, the 2001
Vancouver and 2008-2009 Ottawa transit strikes).
Based on past disruptions in these industries, we assumed that lost rail
transportation activity (except for VIA Rail) in February would be fully recouped by
May. Support activity for transportation and urban transit system activity were
assumed to return normal operation in March and not recoup lost activity in
February. The following table presents our estimates/assumptions of the direct
impacts on affected industries, which were mapped into GDP by industry.

Estimates and assumed direct
impacts on affected industries:

RP-1920-032-S_e

February
March
April
May
June
Revenue ton-miles lost
924
0
-426
-426
0
(in millions)
VIA Rail layoffs
875
0
0
0
0
(number of employees)
Port activity disruptions
16
0
0
0
0
(number of days)
Transit passenger trips lost
273,000
0
0
0
0
(number of trips)
Note: The direct impacts represent the difference between the realized scenario and a counterfactual
scenario in which the rail disruption did not occur.

1

 The indirect GDP impact of the disruptions to the affected industries (that is, rail
transportation, support activity for transportation and urban transit systems) was
estimated by using Statistics Canada’s Supply and Use Tables at the detailed level.
The indirect impacts capture the spillover of the disruption to other industries, as
well as those industries directly affected, based on their linkages to activity in the
transportation sector. Direct and indirect GDP impacts were estimated for 2020Q1
and 2020Q2.
To estimate the overall economic impact including macroeconomic feedback, we
simulated PBO’s macroeconometric model—the same model used to produce
PBO’s EFO projections—with the combined direct and indirect GDP impacts from
the Supply and Use Tables that were mapped into GDP expenditure components.
Given the supply-side nature of the economic shock, our model was simulated
under the assumption that monetary and fiscal policy would not respond to these
disruptions.
Sources of Uncertainty:

The real-time data used in constructing estimates of the direct GDP impact on rail
transportation are of good quality. However, due to data limitations, the
uncertainty surrounding our direct impact estimates of port disruptions is higher.
Using past disruptions in port activity also introduces another source of
uncertainty. Moreover, there is inherent uncertainty surrounding the counterfactual
scenarios on which these impact estimates are based, as well as the assumed
recovery from March through May.
Estimates of the indirect impacts based on the Supply and Use Tables assume no
substitution across intermediate inputs and do not capture (potential) plant
shutdowns.
PBO’s macroeconometric model is estimated using historical data. The
macroeconomic feedback from the responses of households and firms to the rail
disruptions could differ from historical experience.

RP-1920-032-S_e

2

 Estimate of the Impacts of the February 2020 Rail Disruption
Indicator

2020Q1

2020Q2

2020Q3

2020Q4

2020

Nominal GDP level ($ millions)

-283

41

-21

-11

-275

Nominal GDP level (per cent)

-0.05

0.01

0.00

0.00

-0.01

Real GDP level (per cent)

-0.05

0.01

0.00

0.00

-0.01

Real GDP growth (percentage points)

-0.20

0.22

-0.04

0.01

0.00

Pre-tax corporate profits ($ millions)

-236

78

12

14

-132

-28

-35

-27

-20

-110

-1,010

-840

-700

-540

-772

-481

-290

-229

-170

-1,170

Compensation of employees ($ millions)
Employment (number of people)
Full-time equivalents (number of work years)

Notes:
The impact estimates represent the difference between the realized scenario and a counterfactual scenario in which the rail disruption did not occur.
The real GDP (quarter/quarter) growth impacts are expressed at annual rates.

RP-1920-032-S_e

3