11

FREIGHT TRANSPORTATION

Marine Transportation

There are three categories of marine freight traffic in Canada: domestic flows,Note 4 transborder trade with the United States, and "other" international (deep-sea or overseas) traffic.Note 5 Marine freight traffic totalled 349 million tonnesNote 6 in 2000, a 4.7 per cent increase from 1999. Domestic (loading) flows accounted for about one sixth of this (55.5 million tonnes), a 6.3 per cent higher share than in 1999 (52.2 million tonnes). Of these domestic flows, Canadian-flag vessels carried an overwhelming 98.9 per cent (54.9 million tonnes), while foreign ships handled just 1.1 per cent.

In 2000, Canada-US traffic totalled 105.5 million tonnes, a 3.4 per cent increase over 1999. Of this, Canadian-flag vessels accounted for just over half, at 53.1 per cent, for a total of 56 million tonnes. Overseas traffic increased by five per cent in 2000, reaching 188 million tonnes. Canadian-flag vessels carried only 0.2 per cent of this traffic.

Between 1989 and 2000, total marine flows increased slightly overall. Domestic traffic flows, however, declined by 21 per cent, from a high of 70 million tonnes in 1988 to 55.5 million tonnes in 2000. A shift in grain traffic from Thunder Bay to west coast ports is the main reason for this decline.

Transborder traffic between Canada and the United States in 2000 exceeded the previous high recorded in 1999 by almost 3.4 per cent. Since 1988, marine transborder traffic has increased by 26 per cent. Between 1988 and 2000, overseas (other international) traffic also grew, increasing by 13 per cent. Overseas volumes were five per cent higher in 2000 than in 1999.

Table 11-16 shows trends in Canada's marine traffic statistics, by sector, from 1986 to 2000. Table 11-17 shows the share of Canadian waterborne trade carried by Canadian-flag vessels in 2000.

Domestic Freight Traffic

Because it is loaded and unloaded at Canadian ports, domestic cargo is handled twice within the Canadian port system. Domestic cargo rose 6.3 per cent to 110.9 million tonnes in 2000, when increased shipments of crude petroleum, pulpwood, logs and bolts offset a significant decline in shipments of iron ore, wheat, fuel oil and salt. Domestic marine cargo traffic peaked in 1988 at 139.9 million tonnes and has declined steadily since then. This decline has come partly from changes in the marketplace that have affected Canada's international trade for some commodities. It has also come partly from an improvement in rail's competitiveness with domestic marine services, and partly from the increased importance that shippers have placed on timely delivery.

Table 11-18 shows flows of domestic marine traffic by region in 2000.

Most domestic traffic passes through the Great Lakes-St. Lawrence Seaway system. In 2000, the ports serving the system handled 54.3 million tonnes (loadings and unloadings), or 49 per cent of the total domestic tonnage. In second place was the Pacific region with 33.4 million tonnes, or 30.1 per cent of the total. Pacific ports handled 3.9 million tonnes more domestic cargo in 2000 than in 1999, 99.9 per cent of which originated and terminated within that region. Atlantic region ports handled 23.3 million tonnes of domestic cargo in 2000, or 24 per cent more than in 1999. Crude petroleum shipments to the shore-based storage reservoir at Whiffenhead were behind this increase due to increased production at Hibernia, the oil field on the Grand Banks.

The increase in domestic marine freight traffic came mainly from crude petroleum, with 69.1 per cent of the increase, and pulpwood and chips, with 10.5 per cent.

In 2000, the primary commodities handled in the domestic trade across Canada were:

• iron ore and concentrates (13 million tonnes, down 8.4 per cent from 1999);
• crude petroleum (9.9 million tonnes, up 69.1 per cent);
• pulpwood and chips (15.6 million tonnes, up 10.5 per cent);
• fuel oil (9.2 million tonnes, down 6.8 per cent);
• stone, limestone, sand and gravel (14.8 million tonnes, up 3.7 per cent);
• wheat (8.2 million tonnes, down 9.2 per cent).

Together, these commodities represent close to two-thirds of all domestic tonnage handled at Canadian ports in 2000.

In 2000, just over one per cent of Canada's domestic marine traffic was handled by foreign-flag ships,Note 7 compared with 2.6 per cent in 1999. This level is consistent with historical levels of foreign-flag participation before the ratio increased slightly in the mid-1990s.

Canada Customs and Revenue Agency received 94 new applications for a coasting trade licence in 2001, down from 110 applications in 2000 and 117 in 1999. The Canadian Transportation Agency denied three of these applications, and one was withdrawn. The United States was the predominant foreign flag, with 38 requests (one oil products tanker made nine requests). Offshore oil and gas production and exploration continued to be the area of highest activity for licence requests in 2001, including 14 requests for seismic vessels, five for diving support, four for drill rigs and three for drilling vessels.

Not all approved requests result in the applicant following through in obtaining a licence. As the offshore shifts to more production, the requirement for large-capacity crude oil tankers is increasing. Market conditions also drive where oil goes. In order to be in a position to respond to sudden changes in market conditions, companies often make a number of licence requests to be able to ship larger volumes of Canadian offshore oil to Canadian refineries.

Table 11-19 shows the actual tonnage and percentage of total domestic cargo tonnage carried by foreign registered ships from 1988 to 2000.

International Freight Traffic

Canadian ports handled 293.6 million tonnes of international cargo in 2000, up 4.4 per cent from 1999. Of that total, 63.9 per cent was export-oriented (including in-transit and re-export traffic). Japan, China, South Korea, the United Kingdom and other western European nations accounted for over 60 per cent of Canada's total international marine traffic (exports and imports) in 2000.

Conference/Non-conference Market Shares

Shipping lines offering scheduled liner services can operate either as a member line of a shipping conference or as an independent (non-conference) line. Non-conference traffic has grown consistently in recent years, both in absolute terms and as a percentage of total liner traffic. Conference traffic remained relatively static from 1994 to 1997 but was down somewhat in 1998 and more noticeably in 1999. In 2000, conference traffic reversed this trend, with imports up substantially over 1999. This increase was due to the Canada Transpacific Stabilization Agreement (an inbound conference) now being included as a tariff-filing conference.

Non-conference liner traffic was also up in 2000, with independent lines moving nearly twice the amount of tonnage compared with conference carriers. If non-conference US origin/destination transshipped traffic was taken into account, the non-conference share would be even more dominant.Note 8

Table 11-20 illustrates the conference and non-conference shares of Canadian liner trade from 1994 to 2000.

The breakdown of liner traffic by foreign region of origin/destination is also useful to illustrate the relative shares of conference and non-conference operators on different routes. Table 11-21 compares conference and non-conference liner traffic by region for 2000. The increase in conference traffic in 2000 is due largely to an increase in conference carryings in the Asian trades.

In 2000, conference operators tended to concentrate almost exclusively on containerized traffic in terms of the type of cargo carried, which is consistent with the pattern in past years. In fact, 10.5 million tonnes out of the total of 10.7 million tonnes carried moved in containers. Non-conference traffic is also characterized by a large percentage of cargo in containers (63 per cent in 2000), but includes significant amounts of general cargo and neobulk traffic as well.

Canada-US Transborder Freight Traffic

Canada's marine traffic to and from the United States has increased by over 25 per cent between 1988 and 2000. Transborder traffic reached 105.5 million tonnes in 2000, up 3.4 per cent from 1999. Compared with the previous year, exports (loadings to US destinations)Note 9 grew by four per cent in 2000, while imports (unloadings) increased by 2.6 per cent.

Table 11-22 shows Canada's maritime trade with the United States from 1986 to 2000.

Exports

In 2000, loadings at Canadian ports destined to the United States totalled 62.1 million tonnes. Seven commodities accounted for 78 per cent of this volume, including 12.4 million tonnes of crude petroleum; 9.6 million tonnes of iron ore; nine million tonnes of stone, limestone, sand and gravel; 5.3 million tonnes of fuel oil; 4.5 million tonnes of gasoline; 4.1 million tonnes of gypsum; and 3.4 million tonnes of salt.

Compared with 1999, there were some significant changes in the volumes of major commodities exported in 2000 to the United States. Crude petroleum exports jumped by 36 per cent, while iron ore exports, and stone, sand and gravel exports increased by 15.3 and 19.7 per cent, respectively. In contrast, gypsum exports decreased by 40.7 per cent, while salt exports decreased by 6.7 per cent.

In 2000, there were two main flow corridors: the Canadian Atlantic to the US Atlantic route, and the Canadian Great Lakes to the US Great Lakes route. The Atlantic route carried 28.8 million tonnes, or 46 per cent of total loadings to the United States, while the Great Lakes route carried 12.5 million tonnes, or 20 per cent of total loadings. These two routes accounted for two thirds of Canada's commodities traffic volumes shipped to the United States using marine transport services.

Table 11-23 shows traffic flows from Canada to the United States in 2000.

Imports

US marine shipments destined for Canada increased by 2.6 per cent from 42.3 million tonnes in 1999 to 43.4 million tonnes in 2000. Seven commodities accounted for more than four fifths of this volume, including: 20 million tonnes of coal; 6.4 million tonnes of iron ore; 3.4 million tonnes of stone, limestone, sand and gravel; 2.1 million tonnes of other petroleum products; 1.9 million tonnes of fuel oil; 1.2 million tonnes of soybeans; and 0.9 million tonnes of corn.

As was the case with exports, there were some significant differences at the commodity level in the volumes of marine imports from the United States between 1999 and 2000. Imports of coal and other petroleum products went up 8.3 and 20.4 per cent, respectively; while shipments of fuel oil, soybeans and corn dropped by 11.6, 15.3 and 49.8 per cent, respectively.

More than three quarters of the total volume of all marine imports from the United States originated at ports on the Great Lakes. Ports along the US Atlantic and the Gulf of Mexico accounted for 15.2 per cent, and US Pacific ports made up the remaining 6.7 per cent.

Table 11-24 shows the traffic flow from US to Canadian ports in 2000.

Overseas Freight Traffic

Canada's marine trade with overseas countries (excluding the United States) totalled 188 million tonnes in 2000, a five per cent increase from 1999. More of this volume moved as exports than imports. Approximately 61 per cent of overseas exports were loaded at west coast ports, while 89 per cent of overseas imports were unloaded at east coast ports.

Table 11-25 shows Canada's maritime overseas trade from 1986 to 2000.

Exports

In 2000, 125.6 million tonnes of cargo were loaded at Canadian ports to be shipped to non-US countries, 4.8 per cent more than in 1999. The major commodities shipped from Canada included: 30.3 million tonnes of coal; 20.2 million tonnes of iron ore; 16.7 million tonnes of wheat; 13.5 million tonnes of containerized freight; 6.3 million tonnes of woodpulp; 5.5 million tonnes of sulphur; and 4.7 million tonnes of potash. Slightly more than one tenth of this traffic was containerized.

Wheat, potash and iron ore shipments showed significant increases in 2000 over 1999. Wheat shipments increased by 20.6 per cent, potash by 8.5 per cent, and iron ore by 2.8 per cent. Coal shipments, however, decreased by 4.6 per cent.

Three fifths of Canada's total marine exports to overseas destinations in 2000 were loaded at ports in western Canada. The ports along the St. Lawrence Seaway system handled most of the loading for ports in eastern Canada. Western ports dominated the tonnage shipped on the Asia and Oceania trade routes with 67 per cent, while the eastern ports handled 61 per cent of the tonnage shipped to Europe.

Table 11-26 shows Canada's marine traffic to overseas destinations in 2000.

Imports

Canadian ports unloaded 62.5 million tonnes of marine shipments from overseas origins in 2000, 5.4 per cent more than in 1999. Crude petroleumNote 10 imports totalled 29 million tonnes, or 47 per cent of all marine traffic unloaded from offshore origins. Other major commodities unloaded included: 10.2 million tonnes of containerized freight; 4.6 million tonnes of iron and steel; 2.8 million tonnes of alumina and bauxite; 2.6 million tonnes of coal; and two million tonnes of fuel oil. More than 16 per cent of this inbound traffic was containerized.

In addition, more than 88 per cent of overseas shipments were unloaded at ports in eastern Canada. Overseas cargo originated mainly from Europe, the Middle East and Africa.

Table 11-27 shows Canada's marine traffic from overseas markets in 2000.

FREIGHT TRANSPORTATION

Rail Transportation

Trucking Transportation

Marine Transportation

Air Transportation

NOTES

4. Maritime traffic that originates from and is destined for a Canadian port. Flows count traffic volume only once, in contrast to port loadings and unloadings, for which, in the case of domestic traffic, approximately the same volumes get counted twice.

5. "Other" international traffic includes shipments to and from foreign countries other than the United States.

6. Based on traffic flows rather than tonnage handled at Canadian ports (domestic volumes are not double counted).

7. The Coasting Trade Act governs foreign-registered ship activity in Canada's domestic marine shipping. The Act reserves the transportation of passengers, cargoes and marine-related activities in Canadian waters to Canadian-registered duty-paid ships. It also extends this reservation to Canada's continental shelf for activities related to the exploration and exploitation of non-living natural resources. Waivers are permitted to foreign-registered ships to enter Canada's coasting trade when no Canadian ship is available or capable of providing a particular service. Canada Customs and Revenue Agency, through its regional custom's offices, carries out the administration and collection of duties associated with obtaining a coasting trade licence. Duty is payable each month at the rate of 1/120th of 25 per cent of the declared fair market value of the foreign ship while it is involved in a coasting trade activity. There is one exception: as of January 1998, in accordance with the Canada-US Free Trade Agreement, duty is not payable on US-registered ships. The Canadian Transportation Agency determines whether or not a Canadian-registered duty-paid ship is available to perform a particular service. Enforcing the Act remains the responsibility of the Minister of Transport.

8. It is important to note that the data in the tables are not adjusted for US transshipments moving through Canadian ports. Much of this traffic moves on conference vessels but at non-conference rates. The route between Europe and Canada is most likely affected by these transshipments. Montreal estimates that approximately 50 per cent of its liner traffic originates in or is destined for the United States. In addition, Halifax is handling growing amounts of US Midwest traffic. These transshipments affect the balance between conference/non-conference traffic further in favour of the independent operators.

9. Including in-transit and transshipment cargo.

10. Including transshipment of North Sea crude petroleum.