Ottawa -- Coming off a banner year in 2007, Canada’s railways were optimistic that 2008 would prove equally successful.

Instead, they were hit with the double economic whammy that pushed the world into a recession—soaring fuel prices followed by the international credit squeeze that slashed imports and softened international demand for Canadian resources.

In September, 2008, Statistics Canada says both intermodal and other freight traffic was down 1.4 per cent from the same month of 2007. Hardest hit were loadings of grains, potash, coal, iron ore and concentrates, and lumber which represent about 40 per cent of the total non-intermodal loadings.

Not all the business news was gloomy, however. Freight shipments from the United States increased by 11 per cent from the same period of 2007.The new container terminal in Prince Rupert attracted a second weekly ship calling. Work continued in the Vancouver area on improving railway infrastructure on the line to the intermodal and coal terminals at Robert Banks.

On the expansion front, CP won approval for its $1.5 billion takeover of the Dakota, Minnesota & Eastern Railroad Corp and its subsidiaries, the Iowa, Chicago & Eastern Railroad and Cedar American Rail Holdings. As the year closed, CN announced agreements with communities in Illinois which will help complete its takeover of the Elgin, Joliet and Eastern Railroad from U.S. Steel.

In the Fall, CN acquired the lines of the Quebec Railway Corp. that it spun off a decade ago. It took control of the Ottawa Central Railway, the Chemin de fer de la Matapédia et du Golfe in Quebec and the New Brunswick East Coast Railway, as well as a rail-freight ferry operation across the St. Lawrence River for $49.8 million.

To meet its growing ridership, VIA awarded a $100 million contract to CAD Railway Industries Ltd. of Montreal to completely rebuild 52 of its F40 locomotives. The contract will be complete in 2012. VIA is also planning a separate contract for the renewal of 98 of its LRC (light, rapid and comfortable) passenger coaches that are used throughout the Ontario-Quebec corridor.

The number of passengers on VIA trains, especially in the Ontario-Quebec corridor, grew sharply during 2008 and the passenger railway hopes the improvements will bring it even more business.

Commuter ridership continued to grow briskly in Ontario, Quebec and British Columbia throughout the year, in the face of higher fuel prices and road congestion. VIA and the commuter lines’ traffic was up to 67.9 million passengers by year-end 2007.

Tourist business was down in general across Canada but Rocky Mountaineer Vacations has grown to become the largest privately-owned passenger rail service in North America and has welcomed more than a million guests on board since 1990.