Report Highlights

The transportation sector was marked in 1997 by a strong economic performance, new legislative initiatives, overall improved financial performance of transportation carriers, and additions to enhance Canada's transportation system.

Transportation and the Economy

• The transportation sector benefited again in 1997 from a robust economy, a performance fueled to a large extent by a strong external trade. Activity in transportation increased by 5.4 per cent in 1997.
• Total annual spending on transportation in Canada is around $125 billion, including $83 billion on private auto sales, maintenance and fuel, and $35 billion on commercial freight and passenger transportation.
• Annual investment in transportation averages over $17 billion, accounting for about 19 per cent of total investment in the economy. Some 87 per cent of that amount is in road transportation equipment (including automobiles) and road infrastructure.
• Forty per cent of Canada's domestic production is exported, linking our growth to our success in the global economy.
• With the US as our major trading partner, almost two-thirds of our exports move by road as opposed to 26 per cent by rail. There is even more dependence on roads for our imports.
• Transportation is also important for domestic trade, particularly for provinces such as Prince Edward Island, New Brunswick, Nova Scotia and Manitoba that import more than 30 per cent of their gross domestic product (GDP) from other provinces. All provinces, with the exception of British Columbia and Newfoundland, export more than 20 per cent of their GDP to other provinces.
• In 1997, some 470,000 persons were directly employed in the transportation sector in Canada. Since 1992, transportation employment has increased by almost three per cent a year.
• The average annual salary in transportation in 1997 reached $37,239, about 17 per cent higher than the average in the economy as a whole.
• In 1997, the average Canadian household spent $6,655 on transportation, roughly 14 per cent of its budget and more than it spent on food.

Transportation and Regional Economies

• Both Eastern and Western Canada make greater use of for-hire carrier transportation compared to Central Canada. This is primarily due to the greater distance to and from markets, lower population density, higher dependence on interprovincial trade, and higher shares of primary commodity production in Eastern and Western Canada.
• British Columbia, being a transport hub for trade with the Pacific rim countries, exhibits a higher proportion of for-hire carrier transport than other provincial economies.
• The province with the highest level of total transport spending as a proportion of total provincial spending is British Columbia (20.1 per cent), but the Territories, with 21.4 per cent, are the jurisdiction with the highest level.

Government Spending on Transportation

• In 1996/97, total government spending, net of revenues earmarked to transportation, amounted to $16 billion broken down as follows: $2.7 billion by the federal government, $7.1 billion by provincial/ territorial governments and $6.1 billion by municipal governments. The $16 billion total was down from the 1995/96 total of $17.2 billion. As a result of an overall reduction in subsidies, the federal portion dropped to $2.7 billion, from $3.3 billion in 1995/96.
• Transport Canada's cost-recovery initiatives amounted to $587 million in 1996/97 after peaking at almost $1.2 billion in 1995/96 when the Air Transportation Tax (ATT) was still credited to the departmental budget. In 1997/98, Transport Canada revenues are expected to drop to $224 million.
• Additional unassigned government revenues from transportation in 1996/97 amounted to $12.4 billion, including $4.0 billion in federal fuel taxes and $5.6 billion in provincial/territorial fuel taxes. Provincial/territorial licence fees amounted to $2.7 billion.

Infrastructure and Associated Services

Air Navigation System

• In its first year of operation in 1997, Nav Canada received approval for its proposed fee structure, which is being implemented in two stages: the first on March 1, 1998, and the second on November 1, 1998. The ATT is being eliminated to make way for these direct charges to users.

Airports

• Local airport authorities took over operations of local airports in Victoria, Winnipeg, Thunder Bay, Ottawa and Moncton in 1997. Currently more than 90 per cent of all passenger traffic in Canada passes through airports operated by local airport authorities.
• The Greater Toronto Airports Authority purchased Terminal 3 and selected a design consortium for the redevelopment of the other two terminals at Pearson airport. A new parallel north-south runway began operations in November.
• Vancouver International Airport Authority announced plans for a $114-million expansion.
• Ottawa's Macdonald-Cartier International Airport became the seventh Canadian airport with facilities for US customs and immigration pre-clearance for passengers on US-bound flights.
• The Calgary Airport Authority began a $28 million capital program, including improvements to vehicle parking, Canada customs space and aircraft parking.
• The Edmonton Regional Airport Authority began work on a terminal redevelopment program at the international airport.

Ports

• The Port of Vancouver officially opened its Deltaport Container Terminal in 1997, doubling the port's container handling capacity to 1.2 million Twenty-Foot Equivalent Units. The new facility can handle the largest container vessels currently in service and transfer containers to double-stack rail cars for immediate dispatch to Central Canada and the US Midwest.
• The federal government transferred the Port of Churchill to the Hudson Bay Port Company, an affiliate of OmniTRAX Inc., in September 1997. OmniTRAX also owns the Hudson Bay Railway, which acquired 1,300 kilometres of rail line between The Pas and Churchill previously owned by Canadian National.

Canadian Coast Guard

• The Canadian Coast Guard (CCG) continued its efforts to reduce its expenditures and improve efficiency; it introduced in 1997 the Maintenance Dredging Services Tonnage Fee for the
• St. Lawrence Ship Canal.

Rail

• o In 1997, five shortline corporations which dominate Canada's shortline rail industry
• - Railtex, Iron Road, OmniTRAX, RaiLink, Genessee Rail-One - added over 3,000 kilometres of track to their networks, primarily as a result of transfers or leasing agreements with CN and CP Rail.

Roads

• The Confederation Bridge between Prince Edward Island and New Brunswick was officially opened in June 1997. Also notable was the transfer of some segments of provincial roads to municipal responsibility in Alberta and Ontario.
• The first completely electronic toll highway - Highway 407 - opened for traffic in Ontario.

Safety

• The general level of safety in all modes improved considerably in 1997. The number of accidents, accident rates and the number of fatalities were generally lower than the previous year and/or the average of the previous five years.
• There were 352 aviation accidents in 1997, up slightly (three per cent) from 1996 but 11 per cent below the 1992-96 average. The rate of nine accidents per 100,000 hours flown represents a two per cent increase over 1996, but a decrease of 17 per cent from the 1992-96 average. The 76 fatalities indicated an eight per cent increase from 1996, but a 14 per cent reduction over the 1992-96 average.
• There were 528 shipping accidents in 1997, a 19-year low, down 12.5 per cent from 1996 and 27 per cent from the 1992-96 average; the number of fatalities was also 27 per cent lower than the 1992-96 average; and the accident rate at 3.9 per 1,000 vessel movements has remained relatively stable since 1994.
• There were 1,125 railway accidents in 1997, down 14 per cent from 1996 and three per cent below the 1992-96 average; nine accidents per million train-kilometres, down 17 per cent from 1996 and three per cent from the 1992-96 average; and 107 fatalities, the lowest since 1990, and 11 per cent below 1996 and the 1992-96 average.
• There were 661,000 road accidents in 1995, seven per cent below the 1990-94 average; 159,000 motor vehicle casualty collisions in 1996, five per cent below 1995 and seven per cent below the 1991-95 average; 3,082 persons were killed in road accidents in 1996, eight per cent below 1995 and 11 per cent below that of 1991-95 average; and the fatality rate in 1995 was 1.96 per 10,000 registered motor vehicles, compared to 2.17 in the United States.
• The annual cost of transportation fatalities, injuries and property damages (to road motor vehicles only) was estimated to be in the order of $15 billion, a figure that does not reflect damages to property from transportation accidents.
• The federal government expenditures were in the order of $315 million for implementation of various safety measures. The provincial government safety-related expenditures in 1997 were also in excess of $300 million. Expenditures by municipal governments toward railway/highway grade crossing improvements were $20 million annually. Their contributions for road safety improvements, while significant, are not captured in this report.

Environment

• The sustainability of the transportation sector received greater focus in 1997 with the consultative process of developing, and ultimately tabling in Parliament, Transport Canada's Sustainable Development Strategy.
• Another significant event was the Kyoto Protocol to the Framework Convention on Climate Change. Meeting Canada's target to reduce greenhouse gas emissions will require a broad-based response by all stakeholders in Canada's transportation system - by governments, by the private sector and by individuals - if sustainable reductions in transport emissions are to be achieved.
• In 1990, the transportation sector contributed about 26.5 per cent of total greenhouse gas emissions in Canada as measured in megatonnes of carbon dioxide equivalents. In 1995, transportation's portion was 26.4 per cent.
• Precursors to low level ozone (smog) such as nitrogen oxides and volatile organic compounds have declined substantially per vehicle-kilometre since the introduction of emission standards in the 1970s. Stricter vehicle emission standards will apply to 1998 model year vehicles. However, traffic growth since 1991 has caused total emissions to increase slightly. Transportation is responsible for between 40 and 50 per cent of smog.

Air

• The financial health of the domestic air services market continued to improve in 1997, although marked by the cessation of jet aircraft operations by Kelowna Flightcraft on behalf of Greyhound Transportation Canada Ltd., and by Vistajet.
• 1997 marked the end of the two-year transition period for new US services to Vancouver and Montreal under the 1995 Canada-US Air Agreement, and the number of new services initiated since its signing has now reached 107.
• International services continued to expand and were marked by a more frequent use of code-sharing with foreign alliance partners, which allows Canadian carriers to have a presence in a vastly increased number of markets without having to provide their own aircraft.
• Pilot projects under way at Vancouver with "intransit pre-clearance" and "transit without visa" are designed to test procedures which will allow foreign passengers flying via Canada to the United States to bypass Canadian Customs and proceed directly to US inspection authorities, frequently with no need for a Canadian visa.
• International scheduled services to and from Montreal were for the most part relocated to Dorval, with charter and all-cargo services being assigned to Mirabel as a result of a decision by Les Aéroports de Montréal, which took effect in the fall of 1997.

Marine

• The Canada Marine Act was re-introduced in Parliament during the fall session. The Bill will make it easier for major ports to operate in a commercial manner, allow the Minister to transfer the day-to-day management of Seaway operations to a users group, and provide for a review of pilotage.
• Amendments to the Canada Shipping Act (Bill S-4) will increase the amount of compensation available to claimants for maritime claims, including oil pollution damage.
• Marine Atlantic has seen a drastic reduction in the ferry services under its sphere of responsibility. The Confederation Bridge replaced the Borden, PEI - Cape Tormentine, N.B. ferry service; the Bay of Fundy and Yarmouth - Bar Harbour services were transferred to a private operator, Bay Ferries Ltd.; and control over Labrador's coastal marine service passed to the Government of Newfoundland.
• Canadian Pacific Ltd. moved into the ranks of the major international liner operators through the acquisition of US-based Lykes Bros. Steamship Co. and UK-headquartered Contship Containerlines Ltd.
• Despite a significant decline in both vessel numbers and capacity over the past decade, the Canadian registered merchant fleet continued to dominate Canada's domestic trade, carrying 98 per cent of the traffic. The Canadian fleet was also active in the transborder trades between Canada and the US, carrying 55 per cent of this traffic. However, on the deep-sea trade, the Canadian flag fleet carried less than one per cent of the traffic, with Canadian shippers relying on foreign-based carriers for most deep-sea movements.

Rail

• In aggregate, rail freight traffic levels increased by about seven per cent during 1997, making the past year the strongest in railway history.
• 1997 saw a record number of lines transferred and new railways created.
• Severe weather conditions led to disruptions in rail transportation services to the West Coast in the early part of the year.
• These disruptions resulted in reduced volumes of grain and coal in particular during the first quarter as compared with previous years; however, volumes of these, and other commodities, rebounded quickly, exceeding previous years' levels - in some cases significantly - by the year-end.
• The disruptions to the grain handling system are currently under investigation by the Canadian Transportation Agency.

Trucking

• A review of the Motor Vehicle Transport Act, 1987 (MVTA), is under way in conjunction with the provinces and stakeholders.
• Customs rules governing equipment usage were liberalized in both Canada and the US, improving the efficiency of carrier operations in both countries.
• Truck traffic and revenues continued to increase, particularly in transborder operations.
• 1997 was another year of structural changes for the trucking industries. Alliances between carriers, mergers and acquisitions of carriers were observed, all with the objective to expand or rationalize services. Partnerships between firms on each side of the Canadian border were again reported.
• The financial performance of the trucking industry in 1997 was positive, showing strong growth in revenues coupled with improved operating margins.

Bus

• The regulatory regime governing extra-provincial bus services is being examined as part of an overall legislative review of the MVTA.
• Structural changes in the industry included acquisition of Canada's largest bus company - Greyhound - by Laidlaw Inc.
• Scheduled intercity bus ridership continued to decline, while charter saw increased passenger traffic over the past year.