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Transportation in Canada 2000

Table of Contents

Report Highlights

Addendum

1. Introduction

2. Transportation and the Canadian Economy

3. Government Spending on Transportation

4. Transportation and Safety

5. Transportation - Energy & Environment

6. Transportation and Regional Economies

7. Transportation and Employment

8. Transportation and Trade

9. Transportation and Tourism

10. Transportation Infrastructure

11. Structure of the Transportation Industry

12. Freight Transportation

13. Passenger Transportation

14. Price, Productivity and Financial Performance in the Transportation Sector

Minister of Transport

List of Tables

List of Figures

List of Annexes

8 TRANSPORTATION AND TRADE

International Trade

Overview

Comparing east-west interprovincial trade flows with north-south international trade flows reveals the increasing importance of outside markets to provincial economies. From 1993 to 1999, international exports and imports grew at an average annual rate of 10.9 per cent and 9.5 per cent, respectively. These rates doubled the average growth of 5.4 per cent experienced in interprovincial trade during the same period.

In 1999, exports and imports, including goods and services, amounted to $391 billion and $362 billion, respectively, while interprovincial flows reached $189 billion.

Figure 8-6 indicates trends in interprovincial trade versus exports and imports from 1993 to 1999.

Composition of Exports and Imports

Goods were the main component of international trade from 1993 to 1999, with a share ranging from 82 to 84 per cent. Services accounted for the rest. In 1999, Canada traded an estimated $629 billion in goods and an estimated $124 billion in services at the international level.

From 1993 to 1999, 90 per cent of goods traded internationally were manufactured products and fabricated materials, with the share of primary goods and raw materials falling from 11 to eight per cent over the period. Services traded internationally were business and finance, transportation, trade wholesaling, and personal/miscellaneous services.

Figure 8-7 illustrates Canada's external trade by type from 1993 to 1999.

Trade Flows and Modal Choice

The following sections will examine the relation between trade flows and the choice of modes in two ways: trade of goods between Canada and the United States, and Canada's trade with other countries.

Canada-US Trade

Impact of Canada-US Trade

Canada's trade with the United States exerts a powerful influence over economic and trade activity performance in Canada. In the last 20 years, the share of exports to the United States has risen from 66 per cent of Canada's total exports in 1981 to 87 per cent in 1999. Preliminary figures for 2000 establish the share of exports to the United States at 87 per cent of total Canadian exports.

From 1993 to 1999, exports to the United States grew at an average annual rate of 12.9 per cent, more than three times the average growth rate of 4.2 per cent experienced in Canada's exports to other countries. Canada's exports to the United States went from $151 billion to $308 billion over the period, while exports to other countries levelled at $47 billion in 1999, compared with $37 billion in 1993. The modest performance in exports to other countries is partially explained by the Asian and Latin American currency crises in 1998, followed by the recession and slow recovery in 1999 that took a heavy toll on the economies in these regions. Preliminary figures in 2000 show a more robust growth rate for Canada's exports to these countries.

Figure 8-8 shows the importance of the United States in Canada's exports during the past two decades.

For the past 20 years, Canada's imports from the United States have been relatively stable, oscillating between 65 and 69 per cent of Canada's total imports. Preliminary figures for 2000 show that the share of imports from the United States has decreased to 64 per cent. From 1993 to 1999, both imports from the United States and other countries showed an average annual growth rate of 11 per cent.

Modal Split

In 1999, trucking dominated transborder trade, with 60 per cent of total exports moved to the United States, valued at $185 billion, and 81 per cent of all imports from the United States, valued at $175 billion. From 1993 to 1999, trucking's share increased from 58 to 60 per cent of exports, while remaining stable in imports at 79 to 82 per cent. Rail ranked second, with 22 to 24 per cent of exports over the period, but only eight to nine per cent of total imports. The pipeline mode, included in "Other" mode, ranked third in carrying exports to the United States, while air registered a slight increase in its share of both exports and imports, ranking second for imports over the period.Note 4

On a tonnage basis, the pipeline mode ranked first, moving between 41 and 45 per cent of the total tonnes exported to the United States. Trucking came next with 21 to 24 per cent, followed closely by rail at 18 to 19 per cent, and marine at 16 to 17 per cent. In 1999, nearly 308 million tonnes were moved to the United States. On the import side, the trucking and marine modes dominated, with 49 and 33 per cent of total tonnage imported from the United States respectively. In 1999, over 106 million tonnes were shipped to Canada from the United States.

Table 8-5 examines the value of Canada's exports to and imports from the United States by mode and sector from 1993 to 1999, and looks at the number of tonnes during the same period.

Canada-US Trade by Region

Ontario captured nearly 66 per cent of Canada's trade with the United States in 1999, accounting for $183 billion in exports and $161 billion in imports. Quebec came next at 14 per cent, followed by Alberta at seven per cent and British Columbia at six per cent. These four provinces accounted for more than 90 per cent of all trade with the United States in 1999, a scenario that was constant from 1993 to 1999. All Canadian provinces, except Manitoba and the Yukon territory, registered a positive trade balance with the United States, with their exports exceeding their imports. Table 8-6 shows Canada's trade with the United States by province.

On the US side, all regionsNote 5 recorded a negative balance with Canada, except the South, which shipped more goods to Canada than it received. This pattern has been prevalent for the last 10 years. In 1999, the US Central region dominated US trade with Canada, with $222 billion, or 42 per cent of the trade ($127 billion from Canada and $95 billion to Canada). The North East region ranked second with $117 billion, or 22 per cent of the trade, followed by the South at $102 billion and the West at $75 billion.

From 1989 to 1999, two US regions increased their shares of trade with Canada: The South moved from 17 per cent to 20 per cent, and the West moved from 12 per cent to 14 per cent. Canada's increased trade with the US South was largely carried by trucking, whose share rose from 64 per cent to 69 per cent of total trade over the period. The rising trade with the US West was still dominated by the trucking mode, increasing its share from 52 per cent to 55 per cent; followed by air, increasing from 14 to 18 per cent; and rail, increasing from 14 to 16 per cent.

Table 8-7 shows transborder trade by US region for 1989 and 1999.

Preferred Mode and Commodity Mix

As noted previously, trucking dominated Canada-US trade in 1999, carrying 60 per cent of exports in value and 24 per cent in tonnage, and over 80 per cent of imports in value and near 50 per cent in tonnage. In addition, Canada-based for-hire trucking carriers have been carrying goods over greater distances. From 1989 to 1999, the average distance by tonne carried kept rising by an annual average rate of 2.4 per cent for exports (from 825 to 1,047 kilometres) and at an average rate of 1.6 per cent for importsNote 6 (from 948 to 1,240 kilometres).

The number of trucks crossing Canada-US border points has also continued to rise. From 1991 to 2000, trucks moving across the border increased at an average annual rate of 7.4 per cent, increasing from 19,680 vehicles to 37,360 vehicles on a daily basis.Note 7 The share of daily crossings for trucks belonging to Canadian firms rose from 57 per cent to 68 per cent over the same period.

In 1999, exports to the United States moved by trucks totalled $185 billion. Trucks dominated the carriage of all product categories except mineral fuels, petroleum products and metallic ores. They carried 54 per cent of all automobile products (valued at $45 billion) shipped to the US, 80 per cent of all machinery and equipment products ($22 billion), 88 per cent of all food products ($13.6 billion), 74 per cent of all electrical/electronic material and equipment ($13.4 billion) and more than 60 per cent of all paper products ($12.8 billion). Canada's imports trucked from the United States amounted to $175 billion in 1999.

Major Canada-US Trade Flows

In 1999, Canada's trade with the United States included 17 two-way trade flows worth at least $10 billion each, representing over 80 per cent of all Canada-US trade. The trucking mode was dominant, capturing a 50 per cent share or more in 14 of them. Ontario was involved in eight of these trade flows, including the largest four flows, which totalled $272 billion, or 52 per cent of total transborder trade.

The largest trade flow was between Ontario and the US states bordering the Great Lakes, accounting for a 30 per cent share, with exports of $85 billion and imports of $73 billion.

The automobile products trade dominated Ontario's exports, which went mostly to Michigan and were valued at $53 billion. Of these, 57 per cent were carried by trucks, while 43 per cent were carried by rail. Likewise, Ontario's imports consisted mainly of automobile products, valued at $29 billion, and machinery or equipment products, valued at $17 billion. In both cases, trucking moved over 90 per cent of these commodities.

Table 8-8 indicates major trade flows between Canada and the United States in 1999, showing the modal breakdown for each.

Figures 8-9 and 8-10 illustrate the major Canada-US trade flows involving Ontario and other provinces.

Many internal and external factors affect the growth of Canada's trade with the United States. Among these are the gradual reduction of tariffs on goods as a result of trade agreements and dollar exchange rate fluctuations. From 1988 to 1999, the share of duties collected on total goods imported from the USdecreased steadily, from 2.6 per cent to 0.1 per cent.Note 8 As for exchange rate fluctuations, these have made Canadian goods relatively less expensive to American consumers for the last 10 years.

Table 8-9 shows exchange rates for Canadian dollars for selected years between 1989 and 2000.

Canada's Trade With Other Countries

Overview

Although less significant than trade with the United States, Canada's trade with countries other than the United States is still worthy of discussion. From 1993 to 1999, imports from countries other than the United States represented 32 to 33 per cent of Canada's total imports. Exports to those same countries accounted for only 13 per cent of Canada's total exports in 1999, down from 20 per cent in 1993. The export situation is partially explained by the financial crisis and recessions that hit the Asian and Latin American economies in 1998 and their sluggish recovery in 1999. Canada's exports to countries other than the United States grew by an average annual rate of only 4.2 per cent over the period. Canada's imports from these countries were more robust with an average annual growth of 11 per cent from 1993 to 1999.

Figures 8-11 and 8-12 illustrate Canada's trade with countries other than the United States from 1993 to 1999.

Trade by Mode

As in previous years, marine and air were the primary modes to carry Canada's trade with countries other than the United States. From 1993 to 1999, the marine share of total exports to these countries decreased slightly from 73 per cent to 71 per cent, while the air share rose from 17 to 21 per cent. Air exports to these countries grew at an average annual rate of 7.6 per cent over the period, increasing from $6 billion in 1993 to almost $10 billion in 1999.

The modal picture on imports might be somewhat more confusing.Note 9 For example, marine dominated Canada's imports from countries other than the United States although apparently lost its strong share. Trucking ranked second, while air imports were third with a share that soared from 17 per cent to 23 per cent from 1993 to 1999. The trucking figure is probably overestimatedNote 10 because part of it covers transshipment via the United States, with the rest distributed between the marine and air modes.

The air mode's increasing share indicates a growing trend toward moving high-valued trade commodities, such as electronic and telecommunications equipment, by air. From 1993 to 1999, machinery and equipment products moved from other countries by air increased at an average annual rate of 16 per cent, while electric/electronic machinery or equipment increased by 29 per cent.

In terms of tonnage, modal breakdown of Canada's trade with countries other than the United States is completely marine-oriented. In 1999, 182 million tonnes were shipped from Canada to non-US countries, including 98 per cent using the marine mode. Approximately 70 million tonnes were shipped to Canada from those other countries, 84 per cent of which involved water.

Table 8-10 shows the value and tonnage of Canada's trade with countries other than the United States by mode and sector between 1993 and 1999.

Direction of Trade Flows

From 1993 to 1997, exports to countries other than the United States originated almost equally from eastern and western provinces, at 51 per cent and 49 per cent, respectively. Beginning in 1998, however, eastern provinces accounted for a larger proportion of exports with 54 per cent. This change reflects decreased exports to Pacific Rim countries, which were primarily shipped from the western provinces. Ontario, Quebec and British Columbia were the main provinces of origin for exports shipped to overseas countries. In 1999, over 80 per cent of total exports to overseas countries originating from western provinces were shipped through British Columbia gateway ($17.3 billion), mainly Vancouver which captured 86 per cent of this total.

In terms of the import of goods, more than 80 per cent of commodities shipped to Canada by overseas countries came through the eastern provinces, mainly Ontario at 50.8 per cent. This trend was constant from 1993 to 1999. Canada had a negative trade balance with most countries other than the United States. In 1999, exports to these countries totalled $47 billion, while imports totalled $105 billion. Preliminary figures for 2000 show the same imbalance, with exports valued at $50 billion and imports valued at $127 billion.

Table 8-11 shows the provinces' shares of Canada's trade with countries other than the United States in 1999.

Major Trade Flows

In 1999, five major trade flows worth at least $10 billion each represented 68 per cent of all trade between Canada and countries other than the United States. Three of these flows involved eastern provinces and three were import movements. For export movements, major flows were from the eastern provinces to European countries, with $13.7 billion, and from the western provinces to Pacific Rim countries, with $12.8 billion. For import movements, major flows were from European countries to the eastern provinces, with $33.9 billion; Pacific Rim countries to the eastern provinces, with $28.9 billion; and Pacific Rim countries to the western provinces, with $13.2 billion.

The largest trade flow involved goods moving from European countries to the eastern provinces, with a total value of $34 billion. Marine captured 49 per cent of this flow with an approximate value of $17 billion, made up mainly of mineral fuels and petroleum products worth $4.2 billion, machinery and equipment worth $2.6 billion, automobile products with $2 billion and food products at $1.9 billion. Imports by air amounted to $11 billion, or 33 per cent of the trade flow. End manufactured products, with a total value of $4.2 billion, and machinery/equipment products including electronic components, with a value of $4.1 billion, were the main shipments by air.

The second largest flow was goods shipped from Pacific Rim countries to the eastern provinces, which amounted to $29 billion. Three modes were the major carriers on this route: trucking at $11.4 billion, or 39 per cent of total shipments; marine at $8.8 billion, or 30 per cent; and air at $7.6 billion, or 26 per cent. Three commodity groupings represented the bulk of this trade flow: machinery/ equipment products valued at $7.5 billion, electrical and electronic material equipment valued at $7.3 billion and manufactured end-products valued at $7.2 billion. Electronic materials were shipped mainly by air, while manufactured products were shipped by marine. As mentioned previously, the road share is overestimated,Note 11 as part of it covers transshipment via the United States, with the rest feeding the marine and air modes.

Tables 8-12 and 8-13 show the major trade flows between Canada and countries other than the United States in 1999.

Figures 8-13 and 8-14 illustrate Canada's main trade flows with overseas countries in 1999.

Recent Trends

In 1998, the world economy and trade were affected by financial crises and recessions that started in Japan and then spread to neighbouring Asian countries and Latin America. In 1999, the economies of these Asian and Latin American countries did not fully recover and remained sluggish. As a result, Canadian exports to Japan and Asian countries were significantly affected, declining by 23 per cent in 1998 and three per cent in 1999. Likewise, Canadian exports to South American countries registered two consecutive decreases, dropping 16 per cent and 27 per cent from their 1997 levels.

In 2000, the world economic climate was more optimistic. Canada's domestic exports to countries other than the United States registered a healthy increase of 12.5 per cent to reach $50.4 billion, close to the high 1997 level of $52 billion. Over the same time, domestic exports to the United States increased by 16.5 per cent.

On the import side, the situation reverses as Canada's imports from other countries increased faster than imports from the United States. In 1999, Canada's imports from countries other than the United States were strong, growing over 10 per cent compared with 1998, while imports from the United States rose by only 5.8 per cent. In 2000, the growth rate for imports from other countries soared to 21 per cent, while the rate for imports from the United States stayed at the 1999 level of 6.4 per cent. Consequently, Canada's imports from the United States accounted for 64 per cent of total Canadian imports, compared with 68 per cent two years before.

Tables 8-14 and 8-15 show Canada's exports and imports by major country groupings in 1999 and 2000.