7 ROAD TRANSPORTATION

PRICE, PRODUCTIVITY, FINANCIAL PERFORMANCE

Trucking Industry

From 1996 to 2001, revenues for the trucking industry grew at an average annual rate of 8.6 per cent. From 1996 to 1999, trucking rates stayed basically the same. Following the 2000 fuel price hike, trucking rates increased by about 2.5 per cent each year in 2000 and 2001. Output rose at a robust annual rate of seven per cent between 1996 and 2001. The growth of transborder traffic in 2001 dropped to 4.6 per cent, much less than the double digit growth in previous years and reflective of the effects of the U.S. economic slowdown in 2001. Preliminary figures for 2002 indicate a softening of freight rates as a result of slower demand.

Total factor productivity in the trucking industry declined slightly (0.5 per cent) in 2001. Positive labour productivity gains were offset by increased capitalization, which could, however, be indicative of future productivity gains. Between 1996 and 2001, overall productivity growth reached 1.0 per cent per year, the same average annual increase observed in unit costs.

In 2001, as prices continued to increase more rapidly than unit costs, the average industry operating ratio improved, reaching 94 per cent — 95 per cent is indicative of viability. Large trucking carriers maintained their profitability in the first three quarters of 2002.

Urban Transit Systems

In 2001, carriers' revenues (excluding subsidies) for urban transit services rose by 2.6 per cent, despite a drop in ridership. The decrease in ridership followed four consecutive years of growth. Transit prices increased by three per cent in 2001, or 1.8 per cent in real terms, a pace similar to long-term trends. The output of transit systems declined by 0.3 per cent. Between 1996 and 2001, prices increased by 2.3 per cent a year, while output grew by 2.5 per cent a year.

Transit systems remain the most labour- and capital-intensive of all transport industries, with a respective share of 50 and 30 per cent of total costs. The cost structure of the industry remained stable.

In 2001, total factor productivity of transit systems fell by 1.2 per cent. Only fuel efficiency increased. The 2.3 per cent decrease in labour productivity erased much of the gains made in previous years. The decrease of capital productivity, 0.8 per cent per year since 1996, corresponds to increased capital intensity. Transit costs per unit of output rose by 4.8 per cent. Unit cost increases were limited to 0.8 per cent a year, on average, from 1996 to 2001.

The total cost of transit systems was estimated at $4.5 billion in 2001. After decreasing steadily since 1996, to 48 per cent in 2000, cost recovery decreased marginally in 2001. Annual operating subsidies rose to $1.6 billion, $100 million more than the average of the previous years. Capital subsidies were in line with the average levels of the mid-1990s.

Ontario continued to achieve the highest cost recovery, but only because it charged the highest fares (per kilometre) in Canada. Alberta and British Columbia had the lowest cost recovery, the former due to the lowest fares of all regions, the latter due to the highest unit costs in the country. In Quebec, the revenue shortfalls were smaller than the Canadian average, in spite of lower fares. Table 7-8 provides details on the performance of transit systems by region.

Source: Transport Canada, based on Statistics Canada and CUTA information

For more information on the price, productivity and financial performance of the trucking industry and transit systems, see tables A2-61 to A2-64 in the Addendum.

Major Events in 2002

Infrastructure

Industry Structure

Passenger Transportation

Freight Transportation

Price, Productivity and Financial Performance