The trends and outlook of the Canadian transportation sector will be largely affected by long-term structural drivers.
- Changes in demographics and societal norms
- Environment and climate Initiatives
- Technological advancement
This chapter will take a closer look into these long-term drivers and highlights the importance of understanding the impacts and implications they have on Canada’s transportation sector. Furthermore, key factors affecting short-term recovery of the sector are also covered, such as emerging COVID-19 variants, the impact of public investment, and a shift in demand for transportation services across all modes.
Key long-term drivers affecting transportation
Over the past two decades, the Canadian population has increased by more than 20% to 38.5 million in 2021. Looking ahead, the population is expected to increase by more than 2.5 million by 2036. As major urban centres absorb the bulk of that growth, the United Nations, through its World Urbanization Prospect, projects that urbanization in Canada will reach 88% in 2050, up from 83% today, increasing demand for urban travel and the risks of congestion. Higher urban congestion could also raise demand for public transit. According to the TomTom 2021 Traffic Index, which ranks urban congestion worldwide across 404 cities worldwide, Vancouver ranks as the most congested city in Canada, followed by Montreal and Toronto with extra overall travel time between 24% and 33%.
The growing population of Canadian seniors will also affect the nature of passenger transportation in the future by increasing the need for more flexible and accessible transportation. In 2036, Statistics Canada expects the population aged 65 and over to reach 24% of the population, up from 18.5% in 2021.
The demographic outlook highlighted above will also impact the human resource availability of transportation activities and operations. As the population ages and an increased portion of today's workers retire, there will be a smaller supply of skilled professionals to take their place.
Shifting Social Norms
The public response to the COVID-19 pandemic, and the changes Canadians had to make in their everyday lives has caused a shift in social norms, including the way Canadians travel. This has been compounded by the safety concerns surround mass transit use presents during the pandemic. Two notable societal changes affecting the recovery of the passenger sector are:
- Shift towards remote work led to a reduced need for commuting
- Reluctance towards using public transportation has led to increased personal vehicle use
The Traffic Injury Research Foundation found that prior to COVID-19, 42.2% of Canadians preferred personal vehicle use as their primary method of transportation, rising to 69.9% by November 2020. In contrast, 41.2% of Canadians preferred public transportation prior to COVID-19, dropping to a mere 4.4% in the same timeframe.
Better options in shared mobility, enhanced transit infrastructure and technological advancements could create incentives for a modal shift back towards collective/public transportation.
In 2021, the Government of Canada continued to take action to advance zero-emission vehicle (ZEV) adoption across the country and instituted a mandatory target of 100% light duty vehicle ZEV sales by 2035.
Between the launch of the program in May 2019 and December 2021, over 127,000 Canadians and Canadian businesses benefitted from Transport Canada’s iZEV Program. The program’s popularity increased significantly in the 2021 calendar year, experiencing a 40.9% uptake over the same period in 2020, which saw a drop in demand due to the COVID-19 pandemic. The program, along with other federal zero-emission vehicle investments, helped to increase the zero-emission vehicle market share of light-duty vehicles to 5.6% in 2021, up from 3.8% in 2020 and 3.1% in 2019.
On December 17, 2021, consultations were launched on the commitment to require all new cars sold in Canada be ZEVs by 2035, which gave Canadians an opportunity to shape Canada’s path towards 100 per cent ZEVs sales by 2035, including more ambitious interim target for 2030.
Canada needs to position itself for a future characterized by emerging and disruptive technologies and new approaches. Connectivity and automation will have far-reaching impacts on the transportation sector, and the economy. Adapting to the exponential growth in the rate of change of technological advancement and applying the benefits of these advancements to improve the efficiency and safety of the transportation sector is key in maintaining a world class transportation network.
Significant advances in information, communication, and other technologies have taken place over the past two decades. These technologies have brought major change to nearly every sector of the economy, including transportation.
New technologies are being used for transportation infrastructure, equipment, and supply chain management to make them smarter and more efficient. Changes like ride sharing and “last-mile” delivery services have changed both how and where transportation occurs and will continue to disrupt transportation.
This trend shows no sign of slowing down, and in fact, is likely to speed up as the public and private sector adjust to new ways of working. Changes in technology and innovation will impact both demand and supply of transportation. Major upcoming disruptions include:
- recent technology (cloud logistics, internet of things)
- emerging technology (artificial intelligence, advanced analytics, blockchain), and
- advanced technology (automated vehicles, robotics)
These innovations could improve corridor flows, reduce costs, help with collaboration, reduce safety and environmental impacts, change the origin and destination of shipments, and the nature of transportation services.
Key short-term drivers impacting the transportation recovery
Air Passenger Recovery
While modest growth in air transportation activity in Canada was seen through the summer and early fall of 2021, the timeframe for a return to pre-pandemic levels remains uncertain and assets critical to recovery of the sector remain at risk. Canada’s domestic air travel sector is recovering at a slower rate than in the U.S and other nations, this is largely attributed to a drastic reduction in business travel. It is expected that a permanent 20% loss in business travel will carry on post-pandemic.
Rapidly changing factors, such as the emergence of new COVID-19 variants, additional public health and safety measures and changing consumer confidence will continue to present ongoing operational and financial challenges for air carriers and airports throughout Canada. Air travel demand may grow slower after the pandemic with some business travel replaced by technology, but a faster recovery of leisure travel is expected due to pent up demand.
While the passenger sector faces a more difficult path to recovery due to the pandemic, the freight sector quickly recovered to pre-pandemic levels.
Global supply chain disruptions will continue to challenge the sector, as we saw throughout 2021. Microchip shortages have affected the manufacturing of technical goods across the globe. In Canada, the effects are felt deepest within the automotive industry, who struggle to meet consumer demand amid such shortages. 2021 bore witness to a trend of disruptions including the Suez blockage, labour disruptions, increasing shipping container demand and cost, and global conflict.
Canada’s harsh winters and the increasing impact and frequency of extreme weather events require the transportation network to remain resilient. In 2021, we witnessed such climate related challenges the West suffered wildfires and flooding. These events, compounded with generally harsh winter conditions, led to slow downs and disruptions that are likely to persist into the future as we continue to face climate challenges related to GHG emissions.