Market Trends of canada freight and logistics Industry
Canada's transportation sector soars in 2022 with 17.6% YoY growth, boosted by eased travel policies and urban transit growth
- Canada's transportation and storage sector saw a slow recovery in 2021 with a 1.08% YoY growth, followed by a significant improvement in 2022, with a 17.6% YoY growth by easing travel restrictions, and urban transit growing by 26%. This sector contributed CAD 83.44 billion (USD 61.59 billion) to Canada's GDP in September 2022, which increased to CAD 84.11 billion (USD 62.09 billion) in October 2022. Canada's large size and dispersed population make it crucial to have an efficient and accessible transportation system to connect people and support economic activities.
- The government invested USD 18 billion in new grain terminal equipment in the Port of Montr茅al in 2022, increasing the number of on-site containers, improving grain-cleaning service quality, optimizing traffic flow in the yard, and increasing capacity for loading and handling containers. It will ensure that transportation and storage facilities in Canada are good so that grain and other agricultural products can be shipped reliably for import and export.
- The Canadian government has been investing in the sector over the years. In 2021, the government provided an additional CAD 1.9 billion (USD 1.40 billion) over four years (2021-22 to 2024-25) to the National Trade Corridors Fund, which will spur investments toward much-needed enhancements to Canada's roads, rail, and shipping routes and build long-term resilience for the Canadian economy and support internal trade. The government invested in major transportation projects over 11 years (2017鈥�2028), improving all transportation networks' effectiveness, resiliency, and integration.
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Rising tensions in the Middle East are expected to affect crude oil supplies and lead to sudden price hikes
- Canadians are facing record-high gas prices, which is making trucking companies more unaffordable, and operational costs are rising, as fuel is an important parameter for the operational cost of trucking. In 2022, gas prices rose rapidly as the Russia-Ukraine War exacerbated a global supply shortage. Gasoline prices in Canada averaged 0.99 USD/liter from 1992 until 2023, reaching an all-time high of 1.59 USD/liter in June 2022. Furthermore, retail gasoline prices fell in the fourth quarter of 2023 as crude oil prices declined and gasoline refining margins contracted, reaching a 31-month low in October 2023.
- Canadian retail fuel prices climbed in Q1 2021, pushed higher by rising crude prices and stronger refining margins. The main factor leading to fluctuations in diesel prices was the international demand for distillate fuel. Crude oil prices almost doubled in March 2021 compared to the same period in 2020. Over half of this growth occurred during the first three months of 2021. From December 2020 to March 2021, crude oil prices increased by 35% to over 50 cents (USD 0.5) per liter, directly translating into higher wholesale and retail gasoline prices. In 2022, retail gasoline prices fell by 50 cents (USD 0.5) per liter in Q3 as crude prices fell and refining margins contracted.
- Gasoline prices rose 0.8% YoY in February 2024. North America, strong crude oil production is expected to continue in the coming years. Also, as more Canadian crude oil is expected to reach global markets with the Trans Mountain Pipeline expansion coming online, there will be amply supplied crude oil markets. However, increased risks due to rising tensions in the Middle East are expected to affect crude oil supplies and lead to sudden price hikes.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Canada's population growth surged in 2022, fueled by immigration and growing metropolitan areas
- Retail-wholesale trade, along with construction projects under development, is leading the GDP growth in the country
- The online food market is exploding in Canada and about 10% of food sales are expected to occur online by 2025
- Canada strives towards its ambitious goal of doubling exports to 50% by the year 2025
- Rising tensions in the Middle East are expected to affect crude oil supplies and lead to sudden price hikes
- Production of commercial vehicles is increasing despite a slight decline in sales due to residual impacts of the pandemic
- The federal government decided to invest USD 547.5 million in the purchase incentive program of Transport Canada for medium and heavy-duty ZEVs
- Construction projects and fluctuating oil trade are significantly impacting overall vessel movements
- The Canadian government is increasing investments to modernize and improve port performance
- Road freight transport accounted for more than 60% of the total freight volume in Canada
- Green Manufacturing Initiative worth USD 4 million to boost the economy of Canada
- Energy and petroleum costs rise on the US East Coast due to the Russia-Ukraine War impacted Canadian pricing
- Small- and medium-sized enterprises (SMEs) in Canada account for 93% of the manufacturing industry
- Consumer goods imports in Canada recorded 14.6% growth fueled by higher prices in 2022
- Growing operational costs in 2022 owing to rising fuel costs due to the Russia-Ukraine War and driver shortages in the country
- Canada ranked 7th in the Logistics Performance Index due to a rise in investment and infrastructure development
- Road freight is the primary mode of transport in Canada, transporting around 1.3 billion tons in 2022
- Maritime trade strengthening with National Trade Corridors Fund (USD 4 billion investment) initiative
- Freight rates increased in 2022 majorly due to high fuel costs, surge in trucking prices, and shortage of drivers
- Canada expands road network over 10 million km and strengthens port efficiency with an investment of USD 75 million
