The Forest Products Association of Canada (FPAC) has welcomed the federal government’s move to address rail freight costs for domestic steel, while stressing that Canada’s forest products industry needs a separate, long-term approach suited to its own transportation challenges.

FPAC President and CEO Derek Nighbor said railways remain essential to moving Canadian forest products to domestic customers and export gateways, but current freight costs are placing significant pressure on industry competitiveness.

The association estimates that rail transportation can account for 20% to 25% of the delivered value of a typical forest products shipment.

Rail Remains Critical to Forest Products Supply Chains

Canada’s forest products industry depends heavily on rail because mills are often located far from major population centres, ports and export terminals.

According to FPAC, an average forest products shipment travels approximately 1,200 kilometres over land before reaching its destination.

The industry also has limited transportation alternatives.

Nearly 90% of FPAC member mills are served by only one railway, reducing competition and leaving many producers with few practical options for long-distance freight.

For pulp, paper, lumber and other forest products, reliable rail service is therefore not simply a logistics issue. It directly affects delivered costs, customer service and the ability of Canadian producers to compete in international markets.

Rail Costs Reach Billions of Dollars Annually

FPAC estimates that rail costs represent approximately $2 billion to $3 billion per year for Canada’s forest products sector.

The association said this amount is roughly equivalent to:

• 15% of the industry’s annual real GDP
• 50% of current annual capital and repair expenditures

These figures illustrate how transportation costs can influence investment decisions across the sector.

For mills facing weak market conditions, higher fibre costs or pressure on product pricing, freight expenses can make a meaningful difference to operating margins and competitiveness.

FPAC Supports Sector-Specific Approach

Nighbor welcomed the federal government’s recognition that forestry should not simply be treated the same way as steel or other major industrial sectors.

“We’re not looking for band-aid solutions here,” he said, arguing that policy should focus on improving rail efficiency and cost competitiveness over the long term.

Canada’s forest sector supports nearly 200,000 jobs across hundreds of communities, many of them located in regions where forestry and wood processing are major employers.

FPAC argues that transportation policy will be particularly important as Canadian producers work to diversify export markets and reduce dependence on individual trading partners.

International Markets Offer Policy Examples

FPAC also pointed to rail policy measures in the United States, United Kingdom, Netherlands and Australia, where governments have explored different mechanisms to encourage rail use and address freight costs.

Nighbor said Canada’s major industrial sectors share several common rail challenges, but individual industries operate under different market and geographic conditions.

For forestry, the combination of long shipping distances, limited rail competition and dependence on export infrastructure makes transportation policy especially important.

Competitiveness Depends on More Than Mill Costs

For pulp and paper producers, competitiveness is often discussed in terms of fibre, energy, chemicals and labour. Transportation can be just as important.

A mill may operate efficiently at the production level but still face a cost disadvantage if finished products must travel long distances through a rail network with limited alternatives.

This is particularly relevant for Canadian pulp, paper and packaging producers serving customers across North America or shipping through ports to overseas markets.

FPAC’s position highlights the need to view rail infrastructure and freight pricing as part of the wider competitiveness framework for Canada’s forest products industry.

Industry Outlook

As the federal government develops its transportation support policies, FPAC is pushing for measures that address structural rail challenges rather than temporary relief.

For the forest products sector, the key issues will be reliability, pricing, competition and the ability to move high volumes of pulp, paper, lumber and other products efficiently over long distances.

The association said it plans to continue working with the federal government and Canada’s railway companies to improve cost competitiveness while protecting and growing forestry employment.

Last Updated on 11/08/2026 by Jota Machinery