Overview of Canada's Transportation Sector

Canada has one of the safest and most secure transportation systems in the world, and it is getting safer. However, as freight and passenger volumes grow and transportation networks become more interconnected and complex, the risks to the system continue to evolve, and new risks emerge. Ongoing efforts to modernize regulations, strengthen oversight and enforcement, and sustain vigilance are essential to ensure world-class safety and security for Canadians.

Most of the headline indicators of transportation safety are moving in the right direction. Looking at trends over the last decade, road accidents causing injury have declined significantly, as have aviation and marine accidents. There has also been progress in rail safety over this period, but it has been slower, and some indicators have plateaued recently. Human factors continue to be a primary contributing cause of transportation accidents in Canada. Additional work remains to improve safety in all modes (particularly in rail) in order to sustain continued progress in making transportation safer for all Canadians.

The Transportation Safety Board (TSB) is completely independent of Transport Canada (TC), and reports to Parliament through the President of the Queen’s Privy Council. It has a significant role in advancing transportation safety in Canada through its independent investigations of occurrences (either accidents or incidents) in the air, marine, rail and pipeline modes. The findings of the TSB’s investigations, along with its biennial Watchlist of issues posing the greatest risk to the safety of Canada’s transportation system, play an important part in informing TC’s work to address evolving risks to the transportation system.

Safety and security risks to the transportation system are becoming more complex and multi-faceted, with the time and costs to both government and industry to mitigate them continuing to rise. This underscores the importance of monitoring risks and responding to safety and security incidents in a timely and robust manner. High-profile accidents, such as the deadly July 2013 train derailment in Lac-Mégantic, Québec, along with the October 2018 Lion Air Flight 610 accident and March 2019 Ethiopian Airlines Flight 302 accident that subsequently led to the global grounding of Boeing 737 MAX 8 aircraft, have raised public awareness and interest in transportation safety. Security incidents in the aviation sector, in particular, generate significant international attention and have focused government regulators on enhancing global aviation security standards in recent years.

Advances in technology and the commercial application of innovative products, including biometrics, digital identification, Remotely Piloted Aircraft Systems (RPAS or “drones”), as well as connected and automated vehicles (CAVs), require modernization of safety and security frameworks that enable innovation and inspire public trust. Demonstrating to the public that regulators are actively working with developers to ensure that safety and security are of highest priority will be critical to sustaining the trust of Canadians when it comes to the successful adoption of new and emerging technologies in the transportation sector. An effective regulatory regime can also enable economic growth. For example, Canada’s $25 billion advanced aerospace manufacturing industry is heavily export-oriented, and it depends crucially on the fact that TC certification of their aerospace products is recognized in export markets around the world.

Upholding the confidence and high expectations of Canadians regarding the privacy of their personal data, whether collected by governments or industry, is critical to maintaining the safety of the transportation system, as new technologies come on stream. Modern vehicles have become highly complex digital and physical systems, and the combination of computers and connectivity has made vehicles more vulnerable to hacking and data theft. As manufacturers continue to work towards the testing and deployment of CAVs, governments, in collaboration with manufacturers, will need to address cyber-security vulnerabilities and threats given the potential implications for public safety and security.

Canadians rightfully expect that the system for transportation safety and security is world-class; the swift pace of innovation and technological change demands continued work and integrating approaches with other jurisdictions, at home and abroad. Ensuring world-class safety standards while minimizing regulatory burden and enabling innovation in transportation solutions is an ongoing challenge that requires constant work in modernizing the system.

Economic Growth and Better Travel Experience for Canadians

The performance of the transportation system underpins the success of Canada’s economy and its ability to grow. Any inefficiencies and bottlenecks in transportation infrastructure can have significant impacts on Canada’s global competitiveness by creating delays, uncertainty and risk, which, in turn, can result in higher costs for Canadian businesses and travellers. As a result, Canada’s overall economic prosperity and the quality of life for Canadians relies heavily on how efficiently and cost-effectively its transportation system can move goods and people, and, increasingly, how well that system can manage and share data among supply chain partners.

Mobility of Goods

International trade is critical to the Canadian economy. Canada’s multi-modal supply chains and transportation corridors are fundamental enablers of trade and play a significant role in connecting Canadian products to global markets. While Canada has a broad and growing global trade network, opportunities exist to increase and diversify trade, particularly overseas, where the country has recently entered into trade agreements such as the Comprehensive Economic and Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Intensifying global competition is leading to increasing demand by shippers to have their goods move efficiently, reliably and securely to wherever their customers exist, making for complex needs and supply chains. While the United States (U.S.) remains Canada’s top trading partner, accounting for approximately 75% of all Canadian goods exports, growth opportunities are shifting to the Asia-Pacific market, with China, India and other Asian countries being potential drivers for Canada’s Gross Domestic Product growth in the coming years.

Over the past decade, overseas exports increased by an average of 5.6 per cent annually to a new high of $146 billion in 2018, with British Columbia (BC) being a key gateway of Canada’s trade, accounting for 38 per cent of overseas exports. While capacity has expanded significantly as a result of investments by governments, port terminal operators, and railways, these investments have not been able to keep pace with the increase in overseas trade. As a result, there is a continued need to extend the capacity of Canada’s trade corridors through strategic investments and data sharing in the transportation supply chain.

Capacity constraints in Canada’s Western supply chain, particularly in the Lower Mainland of BC, are creating challenges for the movement of key commodities, with heavy rail and road traffic servicing the Port of Vancouver, which is Canada’s largest and busiest port, handling approximately 43% of all traffic at Canada Port Authorities in 2018. Any congestion around the Port of Vancouver affects shippers far beyond BC, such as natural resource and agriculture developers in western Canada and risks undermining Canada’s reputation as a reliable and efficient exporter.

Amid increasing production of crude oil in western Canada and a shortage of pipeline capacity, the rail system is providing an alternative means of shipping Canadian oil to market. The volume of oil shipped by rail, which has fluctuated widely in recent years, has increased significantly in 2019, and is expected to continue to provide an important alternative means of reaching export markets until additional pipeline capacity becomes available.

As the transportation sector continues to grow in support of the Canadian economy, it is beginning to face greater challenges finding qualified workers in key positions, including trucking, marine shipping and aviation. Canada’s aging workforce is adding to the labour shortage challenge in transportation, which is also the case in other sectors.

Mobility of People

Strong international connectivity and efficient, modern transportation hubs that include major airports with seamless passenger connections to other modes of transportation are vital for Canadian cities to attract and retain talent and investment in support of long-term growth as they increasingly compete with other cities globally.

While Canada has a relatively small population spread over a vast area, the country is becoming increasingly more urbanized, with over 80% of Canadians living in urban areas in 2016. This is placing significant pressure on existing infrastructure and creating congestion, especially on corridors and infrastructure where passengers are competing with the transportation of freight. The Greater Toronto Area (GTA) provides a clear example of this phenomenon, as round trip commute times are already 20 percent longer than they were twenty years ago. The situation threatens to become even more problematic in the years to come: the population of the GTA is projected to increase from 6.9 million in 2017 to 9.7 million by 2041. Furthermore, recent trends such as growth in e-commerce and the use of smaller, courier-type operations to fulfill last-mile deliveries to end customers can be expected to create additional pressures beyond those associated with population growth.

With respect to air transportation, Canada is the world’s third-largest aviation market geographically, with 18 million square kilometres of airspace managed by NAV CANADA. Canada’s air sector has made advancements in managing demand and capacity, with 6.5 million aircraft movements that took place at Canadian airports in 2018. However, opportunities exist to improve the mobility of air travellers within airports, such as more effective and efficient screening of air travellers and their baggage, as well as greater connectivity to other modes of transportation through integrated, multimodal hubs.

In the North, there remains a need for basic transportation infrastructure that is resilient in a rapidly changing environment in order to improve the quality of life for Northerners and enable economic development. Challenges also exist in maintaining and providing access to affordable and reliable transportation services for rural and remote areas, particularly as opportunities to apply traditional business models are limited and consumer choice is reduced. For instance, the availability of surface passenger transportation services to a number of rural and remote communities has seen a decline in recent years.

Environmental Sustainability

Improving the economic and social prosperity of Canadians also means reducing the environmental impacts of transportation, building resiliency, and adapting to a changing climate.

Mitigating the Transportation Sector’s Impact on the Environment

Growth in transportation activities will continue to exert pressure on key corridors and congestion in urban areas, exacerbating environmental issues and public expectations for sustainable development. Risks and potential harm as a result of accidents can also have significant implications on both safety and the environment. The transportation sector poses direct, indirect and cumulative environmental impacts for which mitigation is complex and multidimensional. Therefore, coordination across federal departments, jurisdictions, stakeholders and other sectors is an important element of any mitigation approach.

While shipping in general, and oil tankers in particular, are subject to very high levels of safety, there is concern that increasing movement of oil and other hazardous products pose a threat to the environment. Transport Canada (TC) has engaged, along with other departments, in extensive efforts to raise the level of safety in shipping to even higher levels, and mitigate any possible impacts.

The transportation sector is the second largest source of Canada’s GHG emissions after the oil and gas sector, accounting for about a quarter of total GHG emissions in 2016, with most (over 80%) from on-road vehicles carrying people and goods. As a result, the transportation sector plays a critical part in contributing towards Canada’s overall emissions reductions commitments under the Paris Agreement, notably to reduce GHG emissions by 30% below 2005 levels by 2030.

Transportation sector decarbonization will remain a challenge as the economy and population grow, transportation equipment and assets remain in operation for many years, new technologies and alternative fuels take time and resources to implement. Significant efforts have been made in addressing transportation related emissions, through incentives for the purchase of zero emission vehicles and energy efficiency requirements for new vehicles and heavy trucks, and also through operational improvements. Continued collaboration, investment and government policy will be required to support the scale-up of new low-carbon technologies and alternative fuels from early adopters to the mainstream market, and enable and accelerate the shift needed to transition the sector away from fossil fuels and support Canada’s long-term decarbonization objectives.

Future shipping trends will increase pressure on biodiversity, as the degradation of some sensitive ecosystems are unfolding. Canadian waters are home to several species of marine mammals (e.g., Southern Resident killer whales, North Atlantic right whales, beluga whales, etc.) that are vulnerable to vessel disturbance and ship strikes. Furthermore, risks from invasive aquatic species (e.g., ballast water, biofouling) and the costs to address their impacts, will rise as trade grows and oceans warm. TC works closely with other government departments, such as the Department of Fisheries and Oceans and the Canadian Coast Guard, to mitigate the impacts of shipping trends on marine mammals.

International and domestic demands to protect marine ecosystems are putting increased pressure on governments to reduce transportation impacts on wildlife (e.g., whales) and better manage waste (e.g., plastics) and spill risks (e.g., oil, marine fuel). For its part, while Canadian ship-based sources of marine plastics represent only a fraction of the larger global issue, TC’s focus has centered on waste associated with the shipping sector, such as abandoned and wrecked vessels and the Department continues to play a role in the advancement of the International Maritime Organization’s Action Plan to Address Marine Plastic Litter from Ships.

Modern safeguards have been put in place to protect coastal communities and the right to navigate on Canada’s waterways while respecting our partnerships with Indigenous peoples, stakeholders, and other provincial jurisdictions. Accordingly, legislation is in place to help keep Canada’s navigable waters open for transport and recreation and to allow the Department to address vessels of concern which may appear on Canada’s waterways.

There are opportunities to advance research and innovation to support the development of solutions to mitigate environmental impacts of transportation, such as testing and deploying alternative fuel technologies and enhancing the safe transportation of dangerous goods. Moreover, programs and initiatives that support the electrification of passenger vehicles, on-road freight and public transit (including rail) should be prioritized, where possible.

Resiliency and Adapting to the Impacts of a Changing Climate

The World Economic Forum’s 2019 Global Risks Report identifies the “failure of climate mitigation and adaptation” and “extreme weather events” as two of the top rated global risks. A 2019 Canadian Council of Academies report on “Canada’s Top Climate Change Risks” found that climate risks to Canada are most acute in six areas, three of which relate directly to transportation – physical infrastructure, coastal regions and northern communities. The climate is changing, and will continue to do so, even as mitigation measures are put in place. Canada is warming twice as fast as the global rate, while the Arctic is warming three times as fast. For Canada, this involves a range of changes, such as rising temperatures, more frequent extreme weather events, permafrost thaw, sea level rise, and increased wildfires and flooding. As such, there is also an important need to build resiliency and redundancy into Canada’s transportation system across all regions, including adapting our operations, practices and infrastructure. The transportation sector is at various stages of readiness to address these growing needs.

Climate change vulnerabilities are putting additional pressures on transportation supply chain capacity and reliability. For instance, the Chignecto Isthmus of Nova Scotia, a narrow land corridor between Nova Scotia and New Brunswick, is a critical connection from the eastern gateway to production centres and markets in central Canada as it supports the movement of $50 million per day in trade. However, the corridor is increasingly vulnerable to flooding.

Canada’s North faces unique realities, such as increasingly harsh and unpredictable weather conditions, small and dispersed populations, supply chain complexities, and infrastructure limitations. Rapid warming also represents an immediate and considerable threat to transportation reliability, as well as safety and food security in the North, including through deteriorating surface conditions from permafrost degradation, shorter winter operating seasons, and unpredictable marine navigation due to unanticipated ice conditions.

Harnessing Innovation: The Digital Revolution and Disruptive Technologies

The way that people and goods travel, particularly in urban areas, is approaching an inflection point, driven by a series of converging technological and social trends. Harnessing technological improvements is increasingly a means of achieving competitive advantage. The pace of technological change is increasing. Appropriate adoption of new and emerging technologies and business models, such as artificial intelligence (AI), automation and ride sharing, have potentially broad applications across the wider economy and could be key enablers to optimizing supply chain efficiency and the mobility of people and goods.

These new technologies and models can help address the mobility needs of Canadians, and change how and where goods are produced, which could potentially have significant implications for trade flows and transportation demand. Legislative and regulatory regimes will need to be agile and smart in balancing technological advancement with the high standards of transportation safety and privacy expected by Canadians.

An example of the significant potential that technologies can bring to the transportation sector is the advancement of connected and automated vehicles (CAVs), which could have far-reaching social, economic and safety benefits. This opportunity has led to intense global competition for leadership in CAV design, development and deployment. In addition, Remotely Piloted Aircraft Systems (RPAS or “drones”) are another innovation that could have widespread benefits, with the technology offering a broad scope of potential uses, ranging from last mile commercial deliveries (e.g., Amazon’s Prime Air) to supporting public safety and law enforcement operations (e.g., border surveillance), including inspections and other oversight activities by Transport Canada (TC) and other federal organizations.

Digitalization is expected to be a key driver over the coming years; there are increasingly sophisticated applications being created through the development of technologies such as AI and the Internet of Things. These technologies and applications have shown promise to enable greater optimization and responsiveness, enhance productivity, and lower costs in logistics, transportation, borders and information transfers – generating higher throughput capacity and yielding better end-to-end visibility across the value chain.

However, while these promising technologies and business models are likely to have many benefits, without strong government leadership, some associated risks may reduce their effectiveness or even worsen existing trends. For example:

• As cities evolve and adapt to the rising use of CAVs, shared mobility services (e.g., Uber, Lyft), and micro-freight deliveries (e.g., Amazon), these improved transportation and delivery services also present a risk of negative impacts, such as increased congestion that could result without adequate federal, provincial and municipal planning. There are also challenges associated with meeting the increased demands on both physical infrastructure (e.g., machine-readable lane markings, traffic signs) and digital infrastructure (e.g., 5G, infrastructure-to-vehicle communication technologies), needed to deploy advanced transportation technologies like CAVs.
• Upholding the privacy of data. Addressing this risk will be a critical element to the successful adoption of new and emerging technologies (e.g., 5G) in an increasingly connected transportation environment, as Canadians and businesses have high expectations that personal and commercial data, whether collected by governments or industry, will be kept safe and secure. In its role as a regulator, TC has a key responsibility to maintain a strong cyber resilience posture within its own operations and establish itself at the forefront of developing expertise, guidance and advancing policies to support the transportation industry.

To remain competitive in the global economy while optimizing security that would support the “Aviation System for the Future,” there would be a need to harness innovation, data analytics, information sharing, and to strengthen partnerships to respond to increasing passenger and cargo volumes (e.g., TC has started using an AI tool to analyze all data available from the new Pre-Load Air Cargo program to better target security risks), the evolving threat and risk environment, and escalating passenger expectations. Technological advancements, such as biometrics, support identity verification and present an opportunity to strengthen transportation security to better facilitate the efficient movement of people, particularly at airports and other major transportation hubs. Using advanced technologies will also allow TC to respond and keep pace with international partners and heightened traveller expectations for fast, seamless and paperless service – while protecting privacy.

Legislation and Regulations

In exercising the federal government’s jurisdiction over transportation, the Minister of Transport is responsible for 50 Acts of Parliament, such as the Canada Transportation Act, Aeronautics Act, and Canada Marine Act, and Railway Safety Act. Legislative authorities provide the federal government with jurisdiction to regulate safety, security, economic activity, and the environment related to a wide-range of issues pertaining to air, marine, rail, international bridges and tunnels; strategic federal assets such as major airports and ports; and standards for motor vehicles, child seats, and tires.

Transport Canada (TC) is the second largest federal regulator after Health Canada. With responsibility for the administration of 236 sets of regulations, TC has a significant role in overseeing and modernizing the transportation system to the benefit of Canadians. Oversight and enforcement activities carried out by TC’s inspectors and regulatory experts across the country are central to the Department’s mission of ensuring world-class safety of the transportation system for Canadians.

TC, similar to other federal departments, has legal obligations anchored in Section 35 of the Constitution Act, 1982, that recognizes and affirms existing Indigenous and treaty rights. Negotiated agreements, including modern treaties, and Court decisions interpreting Section 35 inform TC’s legal obligations, notably including the legal duty to consult Indigenous peoples.

Jurisdictional Landscape

Transportation in Canada is a shared jurisdiction with provinces and territories (PTs), and varies by mode. TC develops the legislative and policy framework concerning air (e.g., airlines, airports, air navigation services), significant aspects of marine (e.g., shipping lines, ferries, ports, pilotage, St. Lawrence Seaway), interprovincial and international rail, and international bridges and tunnels, along with some aspects of interprovincial trucking and bus. PTs generally have legislative jurisdiction over intra-provincial transportation undertakings, public transit systems, and local roads and bridges.

TC exercises a key national and international mandate for the components of the transportation system within federal jurisdiction, particularly in air (exclusively federal) and marine (shared but mostly within federal jurisdiction). Transportation assets are owned, maintained and operated by a mix of public (municipal, PT, and federal) and private sector partners and agencies.

• List of Acts
• Regulatory Process

Governance

Transport Canada's (TC’s) mandate is to serve Canadians everyday by ensuring the transportation system is safe and secure, efficient and environmentally responsible.

The Department was created by the Department of Transport Act in 1936. Until the mid-1990s, TC’s mandate included owning and operating key transportation infrastructure assets, including CN Railway and numerous airports and ports. Over the past 30 years, Canadian governments have taken a number of concerted actions affecting the transportation sector, including: the deregulation of markets; divestiture of assets; and liberalization of international trade and investment. The current structure and mandate of the Department reflects these changes. The decentralization of operational responsibilities and resulting fundamental reinvention of TC has allowed the Department to focus on its core function as a leading regulator, as well as the development and promulgation of federal policies and programming. Shared-governance organizations, particularly airport and port authorities, have been established to take on responsibilities that are more operational in nature, as these authorities are better placed to make operational decisions in consideration of local realities. The Department continues to build and deliver on its transformation by modernizing its authorities and by leveraging new digital technologies so that its legislative, policy, and service delivery frameworks are agile, smart and trusted in order to meet the rapidly evolving needs of the transportation sector and Canadians.

• Corporate Structure
• Portfolio Appointments

Funding

The federal government can achieve key priorities with respect to the transportation program through funding certain activities and agreements, such as securing strategic investments in transportation infrastructure in order to advance national objectives related to economic growth and trade. For instance, the National Trade Corridors Fund (NTCF) is a merit-based competitive program to make strategic transportation infrastructure investments that reduce bottlenecks and build more efficient and fluid trade corridors to global markets. The NTCF was launched in 2017 with a plan to invest $1.9 billion over 11 years, although an additional $400 million was provided for the North in Budget 2019, increasing the total program funding to $2.3 billion. Through three calls for proposals to date, 81 projects have been funded, representing a federal contribution of $1.7 billion. In addition to the NTCF, Transport Canada also administers targeted funding programs that support economic, safety, security and environmental objectives, such as the Airports Capital Assistance Program, Rail Safety Improvement Program, and Abandoned Boats Program.

Convening Power

There are opportunities for Transport Canada to carry out its mandate and provide national leadership on key issues by exercising its convening power through engagement and partnerships with governments, Indigenous peoples, experts and stakeholders. For instance, Transport Canada chairs a Commodity Supply Chain Table to facilitate collaboration and information sharing amongst supply chain stakeholders (e.g., producers, shippers, railways, ports, etc.) with the objective of improving the efficiency and reliability of transportation corridors in moving Canadian commodities to market. The Minister of Transport is also a permanent co-chair of the Council of Ministers Responsible for Transportation and Highway Safety, which is the principal intergovernmental forum in Canada for discussion and coordination of multi-jurisdictional transportation issues.

With an increasingly interconnected transportation system and growing stakeholder and public interest in transportation issues, particularly in urban areas, along with expanded federal commitments regarding partnerships with Indigenous groups, collaborative and integrated planning is important to enable economic growth and enhance the efficiency and reliability of Canada’s trade and transportation corridors.

Information Broker

With increasing global competition and the rapid pace of technological change, significant importance and industry interest is being placed on greater and more timely data and information, notably real-time data, to support planning and decision-making, particularly to promote and help facilitate the fluid and reliable mobility of people and goods. While Transport Canada has legal authorities to collect and disseminate third party data, it often works in close collaboration with federal partners, other levels of government, and the transportation industry to improve access to authoritative sources of information on multi-modal transportation and performance measures. For instance, Transport Canada worked closely with Statistics Canada to create the Canadian Centre on Transportation Data in order to make transportation data and information more accessible to support policy and decision makers, industry players and transportation users.

International Engagement

While Global Affairs Canada is the overall lead federal department for international relations, TC represents Canada’s interests, as primarily related to the safety, security and efficiency of transport elements of trade agreements, and at multilateral transportation institutions such as the ICAO, IMO, and International Transport Forum (ITF), among other multilateral organizations.