7

TRANSPORTATION AND TRADE

Domestic Trade

Overview

From 1997 to 1999, the value of domestic trade in goods and services rose from $1,355 billion to an estimated $1,459 billion in current dollars. This represents an average annual growth of four per cent. In terms of constant (1997) dollars, however, this average growth was 2.4 per cent. As explained later in this chapter, growth in domestic trade was moderate compared with growth in international trade over the same period.

Table 7-1 shows total domestic and international goods traded in Canada by value and volume in 1999 and 2000.

Transactions in services dominated domestic trade, with a 67 per cent average share from 1997 to 1999, leaving the remaining third of domestic trade to goods. From 1997 to 1999, the value of services traded rose from $897 billion to an estimated $964 billion.

Intraprovincial trade of goods and services accounted for most of domestic trade, averaging 87 per cent over the period 1997 to 1999. The value of interprovincial trade increased at an average annual rate of four per cent, rising from $175 billion in 1997 to $189 billion in 1999.

Figures 7-1 and 7-2 show Canada's domestic trade by type and sector from 1997 to 2000.

Composition of Trade and Modal Choice

As mentioned, services dominated domestic trade from 1997 to 1999. The main types of services contributing to this trade activity were business and finance, wholesale and retail trade, the government sector, construction and transportation. Goods traded domestically registered an annual increase of close to four per cent over the same period, rising from $457 billion to almost $500 billion. Fabricated materials and manufactured products represented about 80 per cent of total domestic trade, while primary goods and crude materials accounted for the remaining 20 per cent.

In terms of volume, the flow of goods within national borders rose from 427 million tonnes in 1997 to 471 million tonnes in 2000, an average increase of almost 3.5 per cent a year. Approximately 55 per cent of the volume shipped was primary and crude materials, such as grains, iron ore, lumber, logs, potash, bauxite, coal and other non-metallic minerals. More than 70 per cent of rail and marine activity was related to transportation of primary goods in 2000. Not surprisingly, around 70 per cent of for-hire trucking business was related to the transportation of manufactured and fabricated products and materials.

Table 7-3 summarizes the modal distribution of domestic freight flows in 2000 in terms of volume. Rail ranked first, with a 45 per cent share (210 million tonnes). It was followed closely by for-hire truckingNote 3 with 43 per cent (205 million tonnes) and marine with 12 per cent (55 million tonnes). The share of trucking does not take into account trucking activities of small for-hire trucking firms, private trucking and small owner-operators. In 2000, containerized freight accounted for seven per cent of domestic rail tonnage, but only one per cent of domestic marine tonnage. The importance of containerization in domestic truck traffic activity cannot be measured because there is no relevant data.

Intraprovincial Trade

Intraprovincial trade remained the backbone of domestic trade with 87 per cent of all domestic trade from 1997 to 1999. Trade in services was dominant, with a 70 per cent share, leaving trade in goods with a 30 per cent share. In 1999, the value of services traded reached $882 billion, while the value of goods traded was $388 billion.

In 1999, Ontario ranked first for traded goods as well as for services, with a 40 per cent share ($149 billion for goods and $355 billion for services). Quebec came second at 22 per cent, followed by British Columbia and the territories at 14 per cent, and Alberta at 13 per cent. Manitoba, Saskatchewan and the Atlantic Provinces accounted for 12 per cent. In terms of goods traded, Alberta ranked third after Ontario and Quebec.

In 2000, for-hire trucking made up more than 55 per cent of total intraprovincial traffic, estimated at 280 million tonnes. Rail traffic was second at 32 per cent, followed by marine traffic at 13 per cent.

Table 7-4 shows intraprovincial trade for 1999 by type. Table 7-5 shows the modal distribution of domestic trade by sector for 2000.

The quantity of shipments of manufactured products is generally a good indicator of trucking activity. From 1997 to 2000, the value of shipments of manufactured products registered a strong performance, growing at an average annual rate of eight per cent, rising from $426 billion to $537 billion. Unfilled orders -- usually regarded as an indicator of future shipments -- grew at an average rate of 12 per cent over the same period.

Year 2001 marked a pause in economic growth, as the shipments of manufactured products dropped off by five per cent, the first annual decline in a decade. Unfilled orders also declined by one per cent.Note 4 Despite the economic slowdown, service-producing industries continued to do better than goods industries, growing by almost one per cent in 2001, while the growth of goods industries fell by two per cent in the third quarter of 2001.Note 5

Interprovincial Trade

Trade between provinces represented a relatively small share (13 per cent) of total domestic trade from 1997 to 1999. Interprovincial trade grew by four per cent, from $175 billion to $189 billion in 1999. Trade in goods was dominant, with $108 billion in 1999, and accounting for nearly 60 per cent of interprovincial trade. Major goods traded were food products, machinery and equipment, and mineral fuels.

As Table 7-5 shows, rail and for-hire trucking carried nearly 90 per cent of total interprovincial freight.

Although small in numbers, interprovincial trade supports important economic interactions among provinces. The following section examines westward and eastward trade flows to illustrate main provincial trade routes.

Main East-West Routes

In 1999, westward and eastward flows were nearly balanced, the former totalling $95.3 billion and the latter $93.8 billion. Six trade flows, each with more than $10 billion in trade, accounted for $100 billion of interprovincial trade and more than 50 per cent of total interprovincial trade. Of these six, three were westward flows: Quebec to Ontario, Ontario to Alberta, and Ontario to British Columbia. The other three were eastward: Ontario to Quebec, Ontario to the Atlantic provinces, and Alberta to Ontario. Figures 7-3 and 7-4 illustrate the top five westward and eastward flows among provinces and show that the linkages between neighbouring provinces are strong. As these figures also show, Ontario was present in eight of the ten top interprovincial flows.

When interprovincial trade is examined by provincial pairs in both directions, Quebec/Ontario flows ranked first, capturing $54 billion, or nearly 29 per cent of total interprovincial trade. Ontario/Alberta flows were second with $24 billion (13 per cent), followed by Ontario/British Columbia flows at $16 billion (eight per cent). These three pairs represented nearly 50 per cent of total trade among provinces.

Table 7-6 shows the main interprovincial trade flows by direction. Ontario was the only province that registered a positive trade balance with other provinces in recent years.

TRANSPORTATION AND TRADE

Domestic Trade

International Trade

NOTES

3. For-hire trucking includes Canada-domiciled Class I and II carriers earning annual intercity revenues of $1 million or more, as defined by Statistics Canada in the "Quarterly For-Hire Trucking (Commodity Origin/Destination) Survey." Courier and messenger service, private carrier, small for-hire and owner-operator activities are excluded from the survey.

4. Statistics Canada, CANSIM series, Table 304-0014.

5. Statistics Canada, Infomat, Cat. 11-002, February 2002.