By rail

During the 1990s, the big Canadian railways were making dramatic reforms to their operations in an effort to increase productivity. Work force cuts were common: between 1989 and 1997, the number of workers in the rail transport industry dropped from 73,000 to 47,000. Since that time, there has been a gradual increase in employment in the rail industries, reaching 50,000 in 2002. Both Canadian National (CN) and Canadian Pacific (CP) have formed working alliances with American railways and made outright rail purchases to create a stronger, more cost-effective North American rail network.

At the end of 2001, Canada’s railways owned or leased 69,410 kilometres of track, with all but a small portion located in Canada. This was a 10% reduction in owned or leased track from 1996. While the major railways have given up a much larger amount of track, much of this deemed not to be economically viable track has been picked up by shortline rail carriers. Many of these companies have since continued to provide service on these lines and have even attracted new customers. As a result, the number of shortline rail carriers has increased from only a handful in 1990 to over 40 in 2001. Canada's entire railway network is the third largest among OECD countries, behind only the United States and Australia.

While freight service remains strong, the future of passenger rail service has been a subject of public concern in Canada. VIA Rail has long been the dominant passenger rail operator in Canada, carrying about 95% of Canadian traffic and providing transcontinental and local service to more than 450 communities across the country. As with passenger rail service in many other countries, VIA Rail depends on government support for its operation. This support, however, has been declining since the mid-1990s. Federal subsidies for VIA Rail were $208 million in 1996, falling to $159 million by 2001.