12

FREIGHT
TRANSPORTATION

Maritime Transportation

Canada's maritime freight traffic has three components: domestic flows,Note 1 transborder trade with the US, and "other" international (deep-sea, or overseas) traffic.Note 2 Marine freight traffic totalled 327.9 million tonnesNote 3 in 1998, a 0.5 per cent decrease from 1997. Domestic flows, also called coasting trade, accounted for 48.3 million tonnes, 3.4 per cent more than the 46.7 million tonnes moved in 1997. Canadian-flag vessels carried 47.3 million tonnes, or 98 per cent, of this total, which means that in 1998, foreign ships handled only two per cent of Canada's domestic marine shipping activities.

Transborder traffic between Canada and the US totalled 100.1 million tonnes, a 6.2 per cent increase over 1997 volumes. Canadian-flag vessels were active in the transborder trade, carrying 56.4 million tonnes, or 56.3 per cent of the total traffic. Overseas traffic decreased by five per cent in 1998, to 179.5 million tonnes. Canadian-flag vessels carried only 0.2 per cent of this traffic. Lower shipments of bulk cargo to Asian ports resulting from the Asian financial crisis were only partially offset by an increase in cargo received from these ports.

From 1988 to 1998, total marine flows fluctuated from year to year but showed a slightly increasing trend overall. Domestic traffic flows declined from a peak of 70 million tonnes in 1988 to 48.3 million tonnes in 1998, a 31 per cent decline.Note 4 Transborder (Canada-US) traffic in 1998 exceeded the previous high recorded in 1997 by almost six per cent. Since 1988, transborder tonnage increased by 19 per cent. Overseas (other international) traffic grew eight per cent between 1988 and 1998. Overseas volumes were five per cent lower in 1998 than in 1997.

Figure 12-8 and Table 12-9 show Canada's marine traffic statistics, by sector, from 1986 to 1998.

Table 12-10 shows Canada's flag share of Canadian waterborne trade in 1998.

Domestic Freight Traffic

Domestic cargo is loaded and unloaded at Canadian ports and therefore handled twice by the port system. Domestic cargo rebounded from last year's record low, rising 3.4 per cent to 96.6 million tonnes. Increased shipments of iron ore, crude petroleum and fuel oil offset a significant decline in wheat shipments. Domestic marine cargo has been steadily decreasing since its peak in 1988, when ports handled 139.9 million tonnes. This decline is due partly to a change in the direction of Canada's international trade. In the 1980s, many commodities, such as grain, were carried as domestic cargo via the Great Lakes-St. Lawrence Seaway system and then transferred at Canada's eastern ports for shipment overseas. These commodities are increasingly being carried by rail to Canada's western ports for shipment overseas.

Preliminary data for domestic tonnage handled over the first two quarters of 1999 indicate an eight per cent increase over the same period in 1998, from 18.4 million tonnes to 19.9 million tonnes.

Table 12-11 shows flows of domestic marine traffic by region in 1998.

The bulk of domestic traffic is concentrated in the Great Lakes-St. Lawrence Seaway system. These ports handled 58.6 million tonnes (loadings and unloadings) in 1998, or 60.7 per cent of the total domestic tonnage. The Pacific region ranked second, handling 24.7 million tonnes, or 25.5 per cent of the total. All domestic cargo handled by Pacific ports stayed within that region. In 1998, Pacific coast ports handled 0.6 million tonnes more cargo than in 1997. Ports in the Atlantic region handled 13.3 million tonnes of domestic cargo in 1998, 21 per cent more than in 1997. Crude petroleum shipments drove the increase, with the first full year of production of the oil field on the Grand Banks.

Increasing volumes of petroleum products (26.5 per cent) and iron ore (22.2 per cent) were the significant contributors to the increase in domestic traffic within Canada. The decline in grain shipments, however, resulted in a 32 per cent drop in cargo, down to 5.2 million tonnes in 1998.

Across Canada, the primary commodities handled in the domestic trade in 1998 were:

• iron ore and concentrates (14.0 million tonnes, up 22.2 per cent from 1997)
• pulpwood and chips (12.4 million tonnes, up 4.3 per cent)
• fuel oil (9.7 million tonnes, up 9.5 per cent)
• stone and limestone (9.3 million tonnes, up 2.7 per cent)
• wheat (9.0 million tonnes, down 36.6 per cent).

These five commodities accounted for 56.3 per cent of all domestic tonnage handled at Canadian ports in 1998.

In 1998, just over two per cent of Canada's domestic marine traffic was handled by foreign-flag ships, down from 2.6 per cent in 1997. Historically, foreign-flag vessels have accounted for less than two per cent of the total domestic traffic. During 1999, Revenue Canada received 117 applications for coasting trade licences, up from 99 in 1998. Of these, 108 have been granted. The greatest proportion of licences was granted to US-flag ships, while the Panamanian-flag ships were second.

A significant number of coasting trade applications in 1999 were again related to Canada's offshore oil and gas activity: the movement of products from the Hibernia and Cahasset oil development fields, as well as activities associated with the exploration and development of the Sable Island gas fields. In 1999, 17 licences were granted for seismic research ships, operating mainly on the east coast.

Table 12-12 shows both the percentage and actual total cargo tonnage carried by foreign-registered ships involved in Canadian domestic shipping between 1988 and 1998.

Figure 12-9 indicates the percentage of total cargo carried by foreign-flag ships involved in Canadian domestic shipping from 1988 to 1998.

International Freight Traffic

The 279.6 million tonnes of international cargo volume handled in 1998 was 1.1 per cent less than the record quantity handled during 1997. Of all the international tonnage handled at Canadian ports, 64.1 per cent is export-oriented (including in-transit and re-export traffic). Canada's main deep-sea trading partners -- Japan, China, South Korea, the United Kingdom and other western European nations -- together accounted for over 60 per cent of total Canadian international marine traffic (exports and imports) in 1998.

According to international trade data, the value of Canadian international marine trade in 1998 was in the order of $79.7 billion (excluding shipments via US ports), 5.2 per cent less than in 1997. Marine exports were valued at $40.9 billion and imports at $38.8 billion. The value of exports decreased by 10.9 per cent, notably with reduced cargoes bound for Asia and Oceania, the Middle East, and South America, while the value of imports increased by two per cent.

Table 12-13 shows the value of the marine share of Canada's international trade in 1998.

For more detailed information on Canada's trade, see Chapter 8, Transportation and Trade.

Conference/Non-conference Market Shares

Shipping lines offering scheduled liner services can operate either as a member line of a shipping conference or as an independent (non-conference) line. Non-conference traffic has grown consistently in recent years, both in absolute terms and as a percentage of total liner traffic. Conference traffic was relatively static between 1994 and 1997, but was down somewhat in 1998. The Asia North America Eastbound Rate Agreement (ANERA) dissolved late in 1996. Several other conferences have been dissolved during 1999, including the Canada Westbound Rate Agreement. The decline in conference power on many routes has resulted in a substantial increase in market share for independent lines, particularly in 1998. If non-conference US origin/destination transshipped traffic were taken into account, the non-conference share would be even more dominant.Note 5

Table 12-14 compares the conference and non-conference shares of the Canadian liner trade between 1994 and 1998.

The breakdown of liner traffic by foreign region of origin/destination is also helpful to illustrate the relative shares of conference and non-conference operators on different routes. Table 12-15 compares conference and non-conference liner traffic by region for 1998.

Marine Traffic by Commodity

According to a recent Organization for Economic Co-operation and Development (OECD) document,Note 6 total seaborne trade in the main bulk commodities (coal, iron ore, grain, bauxite, alumina and phosphate) increased continuously during the last decade and reached a peak of 1.2 billion tonnes in 1997, up by 33 per cent over the 1987 total. Nevertheless, over the same period, dry bulk carrier freight rates exhibited volatility and rates in many trade lanes were lower at the end of the period. For 1998, a United Nations reportNote 7 indicates that the dry bulk market freight rates were at significantly lower rates than the year before. This is mainly attributed to the Asian financial crisis.

As in past years, in terms of the type of cargo carried, conference operators tend to concentrate almost exclusively on containerized traffic, with 9.5 million tonnes out of the total 9.7 million tonnes they carried moving in containers. Non-conference traffic is also characterized by a large percentage of cargo in containers (69 per cent), but includes significant amounts of general cargo and neo-bulk traffic as well.

Canada-US Transborder Freight Traffic

Canada's marine traffic with the US increased by 19 per cent between 1988 and 1998, fuelled by both exports and imports. In 1998, transborder traffic reached a peak of 100.1 million tonnes, up 6.2 per cent from 1997. In 1998, exports (loadings to US destinations)Note 8 led the slight growth (3.5 per cent) in marine traffic between the two nations. Also in 1998, imports (unloadings) were the most dynamic, increasing 10.2 percent to 41.2 million tonnes, compared with 37.4 million tonnes recorded over the same period in 1997.

Preliminary data for the first two quarters of 1999 indicate that this upward trend continued. Transborder tonnage of 42.3 million tonnes was slightly higher (1.3 per cent) than the 41.8 million tonnes shipped over the same period in 1998.

Table 12-16 shows Canada's maritime trade with the US from 1986 to 1998. Figure 12-10 shows Canada's Maritime traffic with the US from 1986 to 1998.

Marine traffic with the US was valued at $9.4 billion in 1998, driven by exports of $6.2 billion. This value, however, represented only two per cent of total Canada-US trade. The bulk of the traffic was handled by surface transport modes, such as trucking and rail. For further details on the value of Canada's traffic with the US, see Chapter 8, Transportation and Trade.

Exports

In 1998, loadings at Canadian ports destined to the US amounted to 59 million tonnes, up 3.5 per cent from 1997. Seven commodities accounted for 80 per cent of marine export volumes. They were (in million tonnes) iron ore (9.8), crude petroleum (8.6), gypsum (6.2), stone and limestone (6.0), fuel oil (5.5), salt (4.2) and gasoline (3.9).

The amounts of major commodities exported to the US in 1998 differed significantly from those exported in 1997. Volumes of salt exports jumped by 19 per cent, while crude petroleum and stone and limestone increased by 6.7 and 15.6 per cent, respectively. Gypsum shipments were stable, while exports of iron ore and gasoline decreased by 8.8 and 2.7 per cent, respectively.

There were two main flow corridors in 1998: from the Canadian Atlantic to the US Atlantic, with 24.6 million tonnes (42 per cent of total loadings to the US), and from the Canadian Great Lakes to US Great Lakes ports, with 13.3 million tonnes (23 per cent of total loadings).

Table 12-17 details traffic flows from Canada to the US in 1998.

Imports

Unloadings at Canadian ports of shipments originating in the US rose from 37.4 million tonnes in 1997 to 41.2 million tonnes in 1998, a ten per cent increase. Significant commodities, in terms of volume, included (in million tonnes) coal (17.7), iron ore (6.4), stone and limestone (3.0), fuel oil (2.4), other petroleum products (1.4) and alumina and bauxite (1.2). Together, these six commodities accounted for 78 per cent of all marine imports from the US.

As with exports, there was considerable instability in the volumes of marine imports from the US compared with 1997 volumes. Imports of coal and alumina and bauxite were up 29.4 and 14.1 per cent, respectively. Other petroleum products showed a 9.0 per cent drop. Volumes of stone and limestone and iron ore decreased by 5.2 and 1.3 per cent, respectively.

The bulk of marine imports from the United States, 76.2 per cent of the total volume, originated at ports on the Great Lakes. Ports along the US Atlantic and Gulf accounted for 15.5 per cent, with US Pacific ports making up the remainder of 8.3 per cent.

Table 12-18 shows the traffic flow from the US to Canadian ports in 1998.

Overseas Freight Traffic

In 1998, Canadian maritime trade with overseas countries (excluding the US) totalled 179.5 million tonnes, down 4.7 per cent from the 1997 volume of 188.4 million tonnes. This trade has been strongly export-oriented, with the loading share oscillating between 67 and 79 per cent over the last ten years. About 62 per cent of total loadings to overseas countries took place at west coast ports. In contrast, 89 per cent of overseas imports were unloaded at Canada's east coast ports.

Table 12-19 shows Canada's maritime overseas trade from 1986 to 1998.

Figure 12-11 shows Canada's maritime overseas trade from 1986 to 1998.

Preliminary data for the first two quarters of 1999 indicate 4.6 per cent less tonnage handled in the Canada-overseas maritime trades than in the same period of 1998. Loadings show a 7.8 per cent decline in volumes, largely due to the economic crisis that unfolded in many Pacific Rim and other Asian countries. This crisis resulted in depressed demand in Asia for Canadian bulk commodities such as grain, coal, iron ore and potash. Data indicate a two per cent increase in unloadings over 1998 volumes.

In 1998, Canadian marine trade with overseas countries (excluding the US) was valued at $70.3 billion, with exports estimated at $34.7 billion and imports at $35.6 billion. In terms of value, marine transport accounted for 49 per cent of all overseas trade and was the dominant mode for shipping overseas freight.

For more detailed information on Canada's offshore trade, see Chapter 8, Transportation and Trade.

Exports

In 1998, Canadian marine loadings destined for countries other than the US generated 120.2 million tonnes of traffic, down more than eight per cent from 1997 levels. The major commodities shipped from Canada were (in million tonnes) coal (32.7), iron ore (21.0), wheat (14.1), containerized freight (11.4), woodpulp (5.7), sulphur (5.2) and potash (4.3). Nine per cent of outbound loadings were containerized.

Most of the major commodities loaded in 1998 declined significantly from 1997 levels. Wheat and potash were both down by more than 20 per cent. Coal, iron ore and sulphur shipments were down by 8.4, 5.1, and 5.8 per cent, respectively. Only containerized freight volumes showed an increase, of 7.3 per cent.

In 1998, over 61 per cent of Canadian loadings for overseas destinations came from western Canadian ports, while ports along the Great Lakes-St. Lawrence Seaway system handled most of the eastern share. Predictably, the direction of trade was highly polarized, with the western ports dominating the Asia and Oceania trade routes, while the eastern ports handled a high proportion of tonnage shipped to Europe.

Table 12-20 shows Canada's maritime traffic to overseas in 1998.

Imports

In 1998, marine shipments from overseas points unloaded at Canadian ports reached 59.3 million tonnes, a 3.5 per cent increase over the 57.3 million tonnes recorded in 1997. At 27.4 million tonnes (46 per cent of all tonnage unloaded from offshore origins), crude petroleumNote 9 dominated imports. Other major commodities unloaded included (in million tonnes) alumina and bauxite (5.4), containerized freight (8.2), iron and steel (4.3), fuel oil (2.7), iron ore (1.3) and gasoline (1.3). Well over 13 per cent of the inbound traffic was containerized.

Over 89 per cent of inbound overseas shipments was unloaded at eastern Canadian ports. The principal origins of overseas cargo were Europe, the Middle East and Africa.

Table 12-21 shows Canada's maritime traffic from overseas markets in 1998.

FREIGHT TRANSPORTATION

Rail Transportation

Trucking Transportation

Maritime Transportation

Air Transportation Industry

NOTES

1 Maritime traffic that originates from and is destined to a Canadian port; flows count traffic volume only once, in contrast to port loadings and unloadings, for which, in the case of domestic traffic, the same volumes get counted twice.

2 Traffic to and from foreign countries other than the US.

3 Based on traffic flows rather than tonnage handled at Canadian ports (domestic volumes are not double counted).

4 Primarily reflecting a shift in grain traffic from Thunder Bay to West Coast ports.

5 It is important to note that the data in Tables 12-15 and 12-16 are not adjusted for US transshipments moving through Canadian ports. Much of this traffic moves on conference vessels but at non-conference rates. The route that is likely most affected is between Europe and Canada. The Port of Montreal estimates that approximately 50 per cent of its liner traffic originates in, or is destined for, the US. This would, of course, affect the balance between conference/non-conference traffic further in favour of independent operators.

6 Discussion Document on Regulatory Reform in International Maritime Transport, Maritime Transport Committee of the OECD, May 1999.

7 Review of Maritime Transport 1999, United Nations Conference on Trade and Development, 1999.

8 Including in-transit and transshipment cargo.

9 Including transshipment of North Sea crude petroleum.