Transportation in Canada 2021

The role of transportation

Image - bridge with cars and railcars

 

Supporting the economy

Using traditional measures of Gross Domestic Product (GDP), a monetary measure for the total value of goods and services across a time period within a country or region, the sector made up 3.6% of GDP ($72 billion) in 2021. In the past year, the sector grew by 1.3% after a 20.5% decline in 2020 due to the COVID-19 pandemic. The effects of the pandemic on transportation sector GDP have largely been seen in passenger services (air travel and urban transit) in 2021 as those two sub-sectors combined are down 72.7% from their 2019 level. Conversely, freight sub-sectors combined (trucking, rail and marine) in 2021 were down 6.5% compared to 2019.

The sector’s labour market recovered considerably from COVID-19; the unemployment rate dropped to 4.3% in 2021, compared to 7.5% in 2020 and a 10-year average of 4.1%. Although the sector’s unemployment rate compares favorably with the national average of 7.5%, that was not reflected in wage growth. While average weekly earnings in transportation and warehousing grew by 1.4% in 2021, they increased by 3.1% on average for all industries. 

Competitiveness

The World Economic Forum’s Global Competitiveness Index is a yearly indicator of a country’s performance, based on measures of productivity and economic growth. Transportation infrastructure is included in calculating the Index and helps compare the quality of transportation infrastructure in Canada to other countries.

Overall, Canada ranked 14th in 2019 with a score of 79.6, close to the best performer, Singapore, which had a score of 84.8. Canada slipped 2 spots and lost 0.3 points compared to 2018. This is partly due to trade issues that have affected Canada’s ability to stay competitive.

In terms of transportation infrastructure, Canada ranked 32 and scored 65.7 (far below the 100 level, an ideal state where an index component ceases to be a constraint to productivity growth). This score highlights areas that need improvement, including the quality of roads, as well as the efficiency of train and seaport services. On the other hand, road connectivity (98.7) and airport connectivity (96.3) both scored very high with little room for improvement.

Productivity

Recently, multifactor productivity (a way of measuring the economy’s performance by comparing the amount of goods and services produced (output) to the amount of material used to produce those goods and services) in the transportation and warehousing sector has plateaued. Between 2011 and 2020, multifactor productivity decreased around 3.6% per year, compared to the 0.4% increase for the business sector as a whole.

In contrast, labour productivity in transportation and warehousing decreased over the same period, at an annual rate of 0.6%. That’s lower compared to the overall business sector which increased by 1.9%. Labour productivity for rail transportation outperformed the business sector with average annual growth rate of 3.9% while air transportation declined by 1.8% over the same period.

 

Supporting trade

Transportation is important for trade. It allows natural resources, agricultural products and manufactured goods to reach domestic and international markets.

In 2020, the value of interprovincial merchandise trade totalled $163 billion, down 5.9% from 2019.

In 2021, international merchandise trade equalled around $1.24 trillion, a 16.8% increase from 2020 and the highest annual value of total trade on record. The U.S. remains Canada’s top trading partner, with $774 billion in total trade ($476 billion exported, $298 billion imported), up 19.4% from 2020. The U.S. made up 62% of all Canadian trade in 2021.

Excluding the U.S., Canada’s top 4 trading partners included China, Mexico, Japan and Germany. These 4 countries represented 17.0% ($212 billion) of Canada’s total international trade in 2021.

Canada has 15 free trade agreements in force with 49 countries, representing two-thirds of the global economy. Canada is also the only G7 country to have free trade agreements with every other member of the G7. These agreements connect Canadian businesses to over 1.5 billion consumers around the world.

Government expenditures and revenues

Federal Government

Total federal transport-related expenditures reached $8.9 billion in 2020-2021, an 11.8% decrease from 2019-2020. While Transport Canada's expenses increased 24% from the previous year, this overall decrease can be attributed to reduced expenditures from Infrastructure Canada, Canadian Air Transport Security Authority (CATSA), Windsor Detroit Bridge Authority and Parks Canada.

- Figure: Federal expenses, 2011 to 2021

Federal expenses, 2011 to 2021

 

 

Figure description: Federal expenses, 2011 to 2021

The stacked column chart shows the federal expenses for 6 modes of transportation: Air, Marine, Rail, Road, Transit and Other from the 2011/12 fiscal year until the 2020/2021 fiscal year. Total for the 2020/21 fiscal year was $8.9 billion. Air spending totaled $1.07 billion. Marine spending totaled $2.6 billion. Road spending totaled 2.2 billion. Rail spending totaled $701 million. Transit spending totaled $1.05 billion.

Year Air Marine Rail Road Transit Other
2011/12 847.7 1,235.70 544 1,336.90 1,051.00 922.3
2012/13 811.2 1,279.50 470.1 1,166.40 775.7 1,017.40
2013/14 885.1 1,329.50 448.8 752.4 846.2 1,071.70
2014/15 984.8 1,267.20 451.5 1,017.60 751.4 1,308.70
2015/16 1,003.80 2,044.20 499.7 1,386.60 820.5 1,220.40
2016/17 1,048.20 1,972.10 396.3 1,619.20 813.6 930.4
2017/18 1,080.40 2,058.10 412.9 2,006.90 717.2 902.9
2018/19 1,182.00 2,918.90 615 1,771.90 1,538.70 842.3
2019/20 1,254.90 2,728.30 616.8 3,126.30 1,271.40 1,085.60
2020/21 1,070.10 2,563.00 701.1 2,157.70 1,051.30 1,352.30

Source: Transportation in Canada 2021, Statistical Addendum, Table G2

 

In 2020-2021, the three main federal departments in terms of transportation-related spending were Transport Canada, with $1.97 billion (22.2% of total federal spending), followed by Infrastructure Canada with $1.8 billion (19.8% of overall spending) and the Canadian Coast Guard with $1.5 billion (16.7% of overall spending). Federal spending included operating and maintenance expenses, capital expenditures as well as transfer payments. Tax expenditures, such as the cost of the GST exemption for municipal transit and the Public Transit Tax Credit, are also included.

At the federal level, transportation-related revenues offset transportation-related spending (4.1 billion). Federal revenues from transportation items totaled $13.1 billion in 2020-2021, a 13.6% decrease from 2019-2020. This includes $4.9 billion in fuel taxes and $7.5 billion in sales taxes on transportation-related household purchases. Overall federal user fees, licenses and other miscellaneous revenues, including major items such as the Air Travellers’ Security Charge ($90 million in 2020-2021) and lease payments by airport and marine port authorities ($19.3 million in 2020-2021), were down 68.9% compared to the prior fiscal year. Federal fuel and excise fuel tax revenues decreased by 13.9%, while transportation-related sales tax revenues increased by 2.0%.

Provincial-Territorial Governments

Provincial-territorial spending on transportation totaled $33.5 billion in 2020-2021, up 30.0% from the previous year. After netting-out federal transfer payments related to transportation, provincial-territorial spending was $29.1 billion, an increase of 30.3%. British Columbia reported the highest year-over-year increase (45.7%), along with Nunavut (38.3%) and Québec (36.5%). Manitoba and Newfoundland and Labrador were the only two jurisdictions reporting declines in transportation-related spending, down 7.7% and 12.9% respectively.

Provincial and territorial transportation-related revenues came from sales taxes on transportation-related household purchases, fuel taxes, license and registration fees, user fees and various other sources. In 2020-2021 revenues amounted to $27.5 billion, a 4.4% decrease from the previous year. Sales tax revenue made up for 40.5% of overall provincial-territorial revenues, with fuel taxes contributing 30.3%.

Fuel tax revenues in 2020-2021 ($8.4 billion) decreased by 19.0% across all provinces compared to 2019-2020. New Brunswick had the largest decrease (down 35.5% versus 2019-2020), followed by Ontario (down 28.0%) and then Yukon (down 27.8%).

Federal-Provincial-Territorial public revenues and expenditures by mode

Combined federal-provincial-territorial expenditures (net of transfers) increased by 17.2 % in 2020-2021. With the largest portion being road expenses in Quebec 6.4 billion (up 43.6%) followed by transit expenses in Ontario 5.3 billion (up 72.1%) from 2019-2020.

Federal and provincial/territorial spending are not distributed evenly across modes. Taken together, the provinces/territories account for over 89.6% of expenditures for roads and transit, while the federal level contributes three-quarters or more of total expenditures on air, marine, rail and multimodal.

- Figure: Federal, Provincial and Territorial expenses by mode

Federal, Provincial and Territorial expenses by mode

 

 

Figure description: Federal / Provincial and Territorial expenses by mode

The stacked column chart shows both federal (orange) as well as provincial/territorial (blue) expenses by mode for the 2020/2021 fiscal year. Total combined expenses reached $41 billion. Total federal expenses reached $13.1 billion. Total provincial/territorial expenses reached $27.1 billion.

Mode FED PROV
Air Mode 377.82 139.93
Marine Mode 333.73 33.88
Rail Mode 54.11 35.38
Road Mode 10,954.71 24,893.71
Transit Mode 33.51 653.05
Other Modes 1,302.98 1,792.63

Source: Transportation in Canada 2021, Statistical Addendum, Table G2

Note: uses gross expentiures and does not net out tranfers

 

Federally, marine mode expenses decreased by 6.1% from the previous year but were responsible for 28.8% of transportation spending, while road was by far the largest mode for the provinces and territories. Road expenses in 2020-2021 were up 23.4% to $18.7 billion and made up 64.1% of all Provincial and Territorial expenses.

The road sector was the main source of revenues for both the federal and provincial/territorial levels of government, making up 90.4% of transportation-related revenues provincially/territorially and 83.9% federally.

- Figure: Federal, Provincial and Territorial revenues by mode

Federal, Provincial and Territorial revenues by mode

 

 

Figure description: Federal / Provincial and Territorial revenues by mode

The stacked column chart shows both federal (orange) as well as provincial/territorial (blue) revenues by mode for the 2020/2021 fiscal year. Total combined revenues reached $42.4 billion. Total federal revenues reached $8.9 billion. Total provincial/territorial revenues reached $33.5 billion.

Mode FED PROV
Air Mode 1,070.09 350.03
Marine Mode 2,563.03 1,109.20
Rail Mode 701.13 47.40
Road Mode 2,157.69 19,773.23
Transit Mode 1,051.29 11,701.17
Other Modes 1,352.29 495.95

Source: Transportation in Canada 2021, Statistical Addendum, Table G2

Note: uses gross expentiures and does not net out tranfsers

 

COVID-19 expenditures

The COVID-19 pandemic has had an immense financial impact on the transportation sector. In response, the Government of Canada has launched a multitude of financial relief programs to keep supplies flowing, protect jobs, maintain connectivity, and ease businesses back into normal operations and facilitate their recovery. Transportation related revenues and expenses were noticeably impacted during 2020-2021. Federal, provincial and territorial expenses reduced by 17.1% and revenues decreased by 7.6%.

While many of these programs are led by Transport Canada, others led by other departments also provide funding that impact the transportation sector. Funding summaries are highlighted below.

Air sector

It is no surprise that the air sector was heavily impacted by the pandemic, with domestic air travel dropping from 93 million passengers in 2019 to 24 million in 2021. To aid the sector, support has been offered to:

  • Airports
  • Airlines
  • Industry-wide support
Airport support

In total, $1.12 billion in subsidies have been provided to airports:

Program

Highlights

Airport Critical Infrastructure Program (ACIP)

Offers support to large airports to make critical investments in safety, security, and transit infrastructure

  • Funding: $500 million
  • Program running from 2020-2026

Airport Relief Fund (ARF)

Provides direct financial relief to airports with revenues less than $250 million in 2019

  • Funding: $65 million
  • Provided throughout 2021

Enhanced Airports Capital Assistance Program (ACAP)

Contributes funding to small/regional airports with annual passenger flows between 1000 to 525000

  • Funding: Up to $186 million, plus $38 million per year
  • Running from 2021-2023

Rent Relief (Deferral or Waiver)

Defers or waives rent payments to assist airports in maintaining airport operations

  • $29M waived for small/medium airport authorities
  • $200M deferred for airport authorities operating Toronto (Pearson), Montreal, Vancouver and Calgary airports
  • Running from 2021-2024
Airline Support

In total, $240 million in subsidies and $3.3 billion in loans have been provided to airlines:

Program

Highlights

Remote Air Subsidy Program (RASP)

A federal program plus provincial and territorial funding to ensure essential air connectivity links (fly-in only) to transport medical supplies, medical travel and food

  • Funding: Up to $174 million
  • Running from July 2020-December 2021

Carrier-Specific Loan Deals

Deals to major airlines to ensure their ensure liquidity during the pandemic. May include clauses for social commitments such as job protection and ensuring connectivity

  • Funding: Up to $7.2 billion
  • Program ran throughout 2021
Industry-Wide Support

Program

Highlights

Regional Air Transportation Initiative (RATI)

Enables the regional air ecosystems to remain operational, supporting regional economic growth. Eligible for airlines, airports, and other supporting parties

  • Funding: Up to $206 million
  • Running until March 2023

Canada Emergency Wage Subsidy (CEWS)

A Finance led subsidy to enable impacted companies to retain workers an rehire lost personnel and ease back to normal operations.

  • Funding: Up to $2.7 billion for the air sector
  • Program ran from March 2020-October 2021