Location: National
Summary of Issue/Background
- The cumulative effects of multiple trade disruptions in 2020 and 2021 have stressed global and domestic goods transportation and logistics systems, severely affecting importers and exporters in Canada and other countries.
- Recent global disruptions, such as COVID-19 pandemic, environmental disasters, global demand imbalances, labour disruptions, rail blockades, and Suez Canal blockage generated change in demand patterns, decline in Gross Domestic Product (GDP), congestion at ports, and high container rates which exacerbated the uncertainty in supply chain environment and upended economic life everywhere.
- In addition, the pandemic altered consumer behavior, which caused demand for imported containerized goods (such as electronics, furniture, and home exercise equipment) to rise. This has translated into an imbalance of export and import volumes and increased pressure on port and rail capacity.
- The combination of supply chain disruptions and high container import demand has two main negative effects. First, freight rates are soaring as ocean carriers prioritize the return of empty containers to Asia, to be re-filled with imports, chiefly destined for the United States. As a result, Canadian exporters are struggling to secure containers necessary for their business at affordable prices. Second, Canada’s largest port, the Port of Vancouver, is experiencing serious container congestion, which is threatening economic growth across the country.
- As a small, open economy that is reliant on trade, Canada is vulnerable to these global events and trends. Although the Canadian transportation system has demonstrated great resiliency during the COVID-19 pandemic, it has a limited capacity to absorb additional shocks and interruptions, such as COVID-19 outbreaks among essential workers in the freight and logistics system. While the economy and the freight transportation system partially recovered from the initial impact of the pandemic, global and domestic public health measures continue to hamper a full rebound.
- In response, Transport Canada is closely monitoring the supply chain system; and continues to work closely with transportation supply chain partners to seek opportunities to improve efficiency and resiliency in the context of these unprecedented disruptions, including leveraging the National Trade Corridors Fund (NTCF) to improve efficiency in the transportation system and encouraging information sharing between ports, carriers, and rail lines.
- To date, Transport Canada has invested $1.9 billion in trade-enabling infrastructure projects across Canada, leveraging $4.3 billion in total investments, through the NTCF.
- Budget 2021 provided an additional $1.9 billion to support investments under the NTCF that improve Canada’s roads, rail, air, and marine shipping routes, and build long-term resilience for the Canadian economy.
- With the passage of the Transportation Modernization Act in 2017, Canadian National and Canadian Pacific railways must provide annual Grain Reports and Winter Contingency Plans, which describe their plans to adequately transport the harvest and other traffic throughout the year and when faced with winter weather conditions. Class 1 railways are also required to publicly report weekly service and performance indicators, with increased reporting requirements anticipated to be introduced in 2022, including new details for containerized shipments.
- Further, extreme weather is an emerging issue affecting Canada’s rail network and Canadians. The extreme heat and wildfires are examples of incidents disrupting communities and supply chains across the country. In response to the changing climate, Transport Canada issued Ministerial orders requiring fire risk mitigation measures and other extreme weather risk management practices to address this evolving risk.
- Within this context and the need to consider the resiliency of key transportation corridors, Transport Canada announced in August 2021 that the Vancouver Fraser Port Authority is working with partners to design a collaborative system to actively manage marine vessel traffic, strengthen marine safety, reduce negative social and environmental impacts, and optimize the supply chain flow for the Asia-Pacific gateway. The system, which will help reduce freight rates and congestion, is expected to be implemented by March 31, 2022.
Messages
- As travel and transportation evolves, Canada must stay ahead of new developments to support the economic well-being of Canadians.
- Recognizing the impacts the pandemic has had on global supply chains, the Government is committed, to work with supply chain partners to improve the fluidity and resiliency of our transportation corridors to support Canada’s economic recovery and long-term competitiveness.