2 TRANSPORTATION AND THE ECONOMY

INTERNATIONAL TRADE ¹ AND TRADE FLOWS

By the end of 2004, Canada's trade surplus with the rest of the world had increased by over 25 per cent returning to its high 2000 level of $57 billion, as both exports and imports increased.

TRADE WITH THE U.S.

The United States was by far Canada's most important trading partner in 2004, accounting for 73 per cent (in value) of Canada's total trade with the world (69 per cent in 1988). Canada's exports to the United States represented 85 per cent of Canada's total exports to the world. This share has been stable at 85-86 per cent since 1998. In contrast, Canada's imports from the United States fluctuated between 64 and 68 per cent of total imports from the world during the period 1988 – 1998 before reaching a low of 59 per cent in 2004. As a result, Canada's annual surplus with the United States has enjoyed an annual average growth of 12 per cent over the last 10 years.

Figure 2-3 tracks the value of trade with the United States from 1988 to 2004.

FIGURE 2-3: VALUE OF GOODS TRADED BETWEEN CANADA AND THE UNITED STATES, 1988 – 2004

Note: Customs-based trade data; preliminary data for 2004.

Source: Transport Canada, adapted from Statistics Canada, International Trade Database

After peaking at $589 billion in 2000, Canada’s trade with the United States totalled $556 billion in 2004, an increase of five per cent over 2003. In terms of value, trucks carried 62 percent of this trade, followed by rail (18 per cent), pipeline (11 per cent), air (six per cent) and marine (three per cent). Trucking was the dominant mode for both exports (53 per cent) and imports (78 per cent). By volume, pipelines ranked first, at 33 per cent (mainly in exports), followed by trucks (31 per cent), rail (18 per cent) and marine (17 per cent).

Between Canada and the United States, the most important trade flows involved Ontario and the U.S. Central Region, ² totalling $171 billion. This included $86 billion from and to Michigan alone. Four of the top six Canada-U.S. trade flows involved Ontario. Almost 76 per cent (in value) of the Canada-U.S. trade carried by trucks was concentrated at six border crossing points: Windsor/Ambassador Bridge, Fort Erie, Sarnia and Lansdowne in Ontario, Lacolle in Quebec and Pacific Highway in British Columbia.

TRADE WITH OTHER COUNTRIES

Canada's trade with other countries totalled $209 billion in 2004, driven by imports valued at $145 billion. This trade has registered deficits since 1988, as imports from other countries generally exceeded Canada's exports to these countries. As Figure 2-4 shows, trade deficits have grown at an annual average rate of 14 per cent in the last 10 years.

FIGURE 2-4: VALUE OF GOODS TRADED BETWEEN CANADA AND OTHER COUNTRIES, 1988 – 2004

Note: Customs-based trade data; preliminary data for 2004.

Source: Transport Canada, adapted from Statistics Canada, International Trade Database

In terms of value and volume, marine and air were the dominant modes, capturing more than 90 per cent of the trade with overseas countries. In 2004, six trade flows accounted for almost 75 per cent of Canada's total trade with countries other than the United States. Four of these were two-way flows between eastern provinces and west Europe ($18 billion in exports, $43 billion in imports) and between western provinces and Asian countries ($16 billion in exports, $18 billion in imports). The other two-way flows were import-oriented, moving to eastern provinces from Asian countries ($40 billion) and Latin American countries ($20 billion), mainly Mexico.

For more detailed information on Canada's trade with the United States and other countries, see tables A2-1 to A2-9 in the Addendum.

NEW TRENDS AND PORT CONGESTION

From 1994 to 2004, the average growth rate for imports from non-U.S. countries reached 8.3 per cent — twice the rate of exports from Canada to these countries at 4.1 per cent. Out of Canada's top 20 trade partners in 2004, five countries had a two-digit average annual growth rate over the 1994 – 2004 period: People's Republic of China (20 per cent for imports, 11 per cent for exports); Mexico (12 per cent for imports, 11 per cent for exports); India (13 per cent for imports, 12 per cent for exports); Algeria (28 per cent for imports); and Norway (11 per cent for imports). Addendum Table A2-10 shows a list of Canada's top 25 trade partners in 2004 with appropriate ranking and growth rate.

China's (People's Republic) increased trade with Canada and the U.S. has been a new driving force in North American business, putting more strain on transportation infrastructure and modal logistics. In the last five years (1999 – 2004), China's exports and imports to and from Canada recorded an average annual growth of 22 per cent and 20 per cent, respectively. In 2004, China ranked 2nd ($24.1 billion) and 4th ($6.6 billion), respectively, in Canada's total imports and exports from and to the world. As a result, China has surpassed Japan and Mexico as a source of imports for both Canada and the U.S. Figure 2-5 illustrates the evolution of Canada's trade with China since 1988.

FIGURE 2-5: VALUE OF GOODS TRADED BETWEEN CANADA AND CHINA (PEOPLE'S REPUBLIC), 1988 – 2004

Note: Customs-based trade data; preliminary data for 2004.

Source: Transport Canada, adapted from Statistics Canada, International Trade Database

Between 1994 and 2004, marine exports to China almost quadrupled to reach $5.8 billion, while air exports were eight times their 1994 level totalling $687 million. On the import side, the pattern is similar. Marine imports quadrupled and air imports are10 times their 1994 level. In addition to China, Mexico, India, Brazil and other Asian countries showed strong growth in a very short span of time.

In recent years, the impact of increased trade on transportation infrastructure and the modes has been tremendous. It has translated into more containerization, which has resulted in container congestion at major west coast ports, such as Vancouver, Los Angeles, Long Beach. Already, after only two months (January and February) of activity in 2005, the Port of Vancouver reported an 11 per cent increase in containers handled (imports in TEU) when compared to the 2004 record period. The pressure on transportation infrastructure and modes may also be measured in terms of heavier loads, shortage of intermodal railroad cars, road and border congestion, environment (pollution) and security. Longer waiting periods put a strain on the 'just-in-time' concept as post-September, 2001 security measures and increased trade logistics must interrelate more closely.

Measures to support the transport infrastructure are already in place. These measures include, expansion plans by major ports and carriers to keep up with the growth of container traffic, and customs measures to facilitate cargo movements (FAST system). The efficient flow of traffic across the border with the U.S. is essential to maintain the Canadian route as a key corridor for container traffic between Asia and U.S. markets. The Port of Vancouver, in some ways, is the leader in North America's gateways for Asia-Pacific trade.

¹ Customs-based trade statistics are being used in this report as detailed information on commodity, modes of transport and geographic region is presented on a Customs basis only. Back to text

² The US Central Region includes states bordering the Great Lakes area (i.e., Michigan, Ohio, Indiana, Illinois, Wisconsin) and the states of Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and Kansas. Back to text

Canadian Economic Performance

International Trade and Trade Flows

Areas of Importance to Transportation

Productivity and Price Performance of Transport

Importance of Transportation to the Canadian Economy