2 TRANSPORTATION AND THE ECONOMY

INTERNATIONAL TRADE¹ AND TRADE FLOWS

Bt the end of 2006, both exports and imports of merchandise had hit a record high since the 2000 peak, reaching $439 billion and $393 billion, respectively. Canada's trade surplus (customs) with the United States was strong at $142 billion, while Canada's trade deficit with other countries reached an all-time record of $96 billion. This resulted in a consolidated surplus of $46 billion (similar to the 2003 level).

TRADE WITH THE UNITED STATES

In 2006, the United States was by far Canada's most important trading partner, capturing 69 per cent (in value) of Canada's total trade with the world, after a peak of 78 per cent in 1999. Canada's exports to the United States declined slightly in 2006 to 82 per cent of Canada's total exports, after experiencing stable shares of 84 to 86 per cent since 1998. By contrast, Canada's imports share from the United States has continuously decreased from a peak of 68 per cent of total imports in 1998 to a record low of 55 per cent in 2006. As a result, Canada's annual surplus with the United States has enjoyed a lower annual average growth of eight per cent over the last 10 years (1996 – 2006), due mainly to the vitality of Canada's exports² to this country.

Figure 2-3 tracks the value of trade with the United States from 1988 to 2006.

Canada's trade with the United States totalled $575 billion in 2006, a decrease of one per cent from 2005. Canada–U.S. trade peaked at $589 billion in 2000. In terms of value, trucks carried 61 per cent of this trade, followed by rail (17 per cent), pipeline (13 per cent), air (5 per cent) and marine (4 per cent). Trucking was the dominant mode for exports (51 per cent) and imports (77 per cent). By volume,³ 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).

FIGURE 2-3: VALUE OF GOODS TRADED BETWEEN CANADA AND THE UNITED STATES, 1988 – 2006

Note: Customs-based trade data; Preliminary data for 2006.
Source: Transport Canada (adapted from Statistics Canada, International Trade Database)

The most important trade flows between Canada and the United States involved Ontario and the U.S. Central Region,⁴ totalling $161 billion. This included $75 billion from and to Michigan alone. Four of the top six Canada–U.S. trade flows involved Ontario. However, out of 14 trade flows, only six flows registered growth in 2006: four involved the Prairie provinces and U.S. regions, the other two being Quebec / U.S. South and Ontario / U.S. Northeast. Around 75 per cent of the Canada–U.S. trade carried by trucks (by value) was concentrated at six border crossing points: Windsor / Ambassador Bridge, Fort Erie and Sarnia in Ontario, Lacolle in Quebec, Emerson in Manitoba and Pacific Highway in British Columbia.

TRADE WITH OTHER COUNTRIES

In 2006, Canada's trade with other countries increased by 10 per cent to $257 billion. This increase was driven by imports valued at $177 billion. Canada's trade with other countries has registered increasing deficits especially since 1995, as imports from other countries (mainly Asian countries, led by People's Republic of China) generally exceeded Canada's exports to these countries. In 2006, around 44 per cent of Canada's trade deficit with other countries was linked to Asian countries, compared with 24 per cent in 1995. As Figure 2-4 shows, trade deficits have grown at an annual average rate of 15 per cent in last 10 years (1996 – 2006).

FIGURE 2-4: VALUE OF GOODS TRADED BETWEEN CANADA AND OTHER COUNTRIES, 1988 – 2006

Note: Customs-based trade data; Preliminary data for 2006.

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

In terms of both value and volume, marine and air were the dominant modes, capturing more than 90 per cent of the trade with the overseas countries. In 2006, four trade flows accounted for almost 80 per cent of Canada's total trade with countries other than the United States. Cargo exchanges between eastern provinces⁵ and Western Europe ranked first at $72 billion ($24 billion in exports, $48 billion in imports), followed by eastern provinces / Asia trade flows at $60.4 billion, western provinces / Asia trade flows at $40.3 billion and Eastern Canada / Latin America (mainly Brazil and Mexico) trade flows at $32.2 billion. All these flows were heavily import-driven.

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

From 1996 to 2006, the average annual growth rate for imports from non-U.S. countries reached 8.9 per cent, double the rate of exports from Canada to these countries at 4.3 per cent. Of Canada’s top 20 trade partners in 2006, six countries had a two-digit average annual growth rate over the 1996 – 2006 period: Algeria (21 per cent for Canada’s imports); People’s Republic of China (21 per cent and 10 per cent for Canada’s imports and exports, respectively); India (12 per cent and 17 per cent for Canada’s imports and exports, respectively); Brazil (12 per cent for Canada’s imports); Mexico (10 per cent and 13 per cent for Canada’s imports and exports, respectively); and Ireland (16 per cent for Canada’s imports). Addendum Table A2-10 lists Canada’s top 25 trade partners in 2006, with appropriate ranking and growth rate.

The People’s Republic of China increased trade with Canada and the United States has been a new driving force in North American business, putting more strain on transportation infrastructure and modal logistics. From 2001 to 2006, Canada’s exports and imports with China recorded an average annual growth of 12 per cent and 22 per cent, respectively. In 2006, China ranked second ($34.3 billion) and fourth ($7.7 billion), respectively, in Canada’s total imports and exports from/to the world. As a result, China has surpassed Japan and Mexico as a source of imports for both Canada and the United States. Figure 2-5 illustrates the evolution of Canada’s trade with China since 1990.

FIGURE 2-5: VALUE OF GOODS TRADED BETWEEN CANADA AND CHINA (PEOPLES REPUBLIC), 1990 – 2006

Note: Customs-based trade data; Preliminary data for 2006.

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

Between 1996 and 2006, marine exports to China almost tripled to reach $7 billion, while air exports were more than six times their 1996 level, totalling $830 million. The pattern is similar on the import side, as marine and air imports were four and 13 times their 1996 levels, respectively. As mentioned previously, in addition to China, Mexico, India, Brazil and other countries showed strong growth in a very short time span.

The impact of this increased trade on transportation infrastructure and the modes has been tremendous in recent years. This increased trade has also translated into more containerization, and container congestion has happened in such major west coast ports as Vancouver, Los Angeles and Long Beach. In 2006, Canada’s total commodity exports to other countries (excluding the United States) totalled $80.5 billion. This included $28 billion (35 per cent) shipped through British Columbia custom points (e.g., marine ports and airports) and $24.7 billion (31 per cent) moved through Quebec custom ports. Figure 2-6 shows Canada’s exports to countries other than the United States by province of origin versus province of export. It was not possible to derive a similar import perspective from the present trade data.

FIGURE 2-6: CANADA'S TOTAL EXPORTS TO COUNTRIES OTHER THAN THE U.S., BY PROVINCE OF ORIGIN AND EXPORT, 2006

Note: Customs-based trade data; Preliminary data for 2006.

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

Almost 75 per cent of Canada’s exports (by value) to Asian countries were shipped through B.C. custom ports, including most of Canada exports to Japan (84 per cent), China (77 per cent) and South Korea (73 per cent). Addendum Table A2-11 shows more details on Canada’s exports moved through B.C. custom ports.

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

² Another factor favouring Canada’s exports to the United States was the value of the Canadian dollar against the U.S. currency, which made the Canadian goods relatively less expensive to American consumers (especially over the 1994 – 2003 period). Return

³ 2004 modal rankings are applied as 2005/2006 volume trade data are unavailable (under revision). Return

⁴ The US Central Region includes states bordering the Great Lakes area i.e., states of Michigan, Ohio, Indiana, Illinois, Wisconsin; also the states of Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and Kansas. Return

⁵ Eastern provinces include Atlantic provinces, Quebec and Ontario; Western provinces include the Prairies, British Columbia and Territories. Return

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