By Jock Finlayson, ICBA Chief Economist
A few years back, amid the chaos of the COVID pandemic, the federal government appointed a group of experts to examine Canada’s transportation supply chain. The National Supply Chain Task Force dutifully carried out its work over 2021 and much of 2022, engaging with stakeholders and policymakers, assembling data, and undertaking research – before producing a final report in October 2022.
That report didn’t pull punches, describing Canada’s transportation supply chain as mired in “crisis” conditions. While the pandemic and its short-term effects on trade and transportation networks influenced the analysis and findings of the Task Force, the challenges gripping Canada’s supply chain were judged to extend well beyond the disruptions and stresses experienced in the years immediately preceding and during the COVID shock. Notably, the Task Force highlighted “several longstanding structural and systemic weaknesses in Canada’s transportation supply chain” that required urgent policy attention.
As often happens, the federal government has been slow to act on the Task Force’s call to action. One example of Ottawa’s pattern of neglect can be seen in Canada’s dismal ranking on the World Bank’s latest “port performance index,” covering 405 container ports worldwide. The Index gauges port performance by measuring the amount of time vessels must spend in ports. Because the federal government has jurisdiction over the country’s ports and in fact owns most of them, Ottawa’s role in this area is critical.
Canada is a mid-sized economy that depends heavily on international trade and commerce for much of our prosperity. Combined, exports and imports have amounted to between 60-80% of Canada’s GDP since 2000, with year-to-year variations reflecting the impact of the business cycle, commodity price trends, exchange rate shifts, and occasional economic shocks (e.g., the pandemic in 2020-21). By transportation mode, road transport moves around half of Canada’s traded goods (imports plus exports), followed by water, air and rail. Maritime ports are at the heart of Canada’s commerce with offshore markets, as almost all of our exports to and imports from Europe, Asia and other jurisdictions beyond North America are transported – at least in part — by ship.
The Port of Vancouver handles over $800 million worth of traded goods per day, followed by the Port of Montreal ($400 million per day). Other significant Canadian ports include Prince Rupert and Halifax. According to the World Bank’s latest assessment, all of Canada’s major ports score poorly on “productivity” – a broad measure that captures ship processing times and the efficiency with which goods are loaded/unloaded once container vessels are in dock. The performance of ports is based on their cargo handling capacity, work practices, and the equipment, machinery and technology available to facilitate port operations.
The accompanying figure summarizes where Canada’s ports are ranked. Unfortunately, we are home to some of the least efficient ports – both in North America, and globally. Vancouver, Montreal and Prince Rupert all score in the bottom decile among global container-handling ports; Halifax ranks 95th overall and is 46th among 167 medium-sized ports reviewed by the World Bank.
Ultimately, it is the responsibility of the national government to establish the conditions that will enable Canada’s ports to up their game on productivity and efficiency. Progress depends on smart investments in technology (notably automation), sensible labour practices and a commitment to labour stability, and improving ports’ capacity to handle both bulk and container cargoes.
The Trudeau government’s record in all of these areas leaves much to be desired. Globally, Canada’s reputation as a reliable supplier of traded goods has suffered in recent years due to frequent labour disruptions at the nation’s ports, insufficient investment in technology and capacity, and ineffective port governance. At a time when many of our politicians are talking about diversifying Canada’s trade beyond the United States, it is imperative that policymakers turn their attention to these issues. The goal of trade diversification will be a chimera unless Canada’s ports are able to significantly narrow existing performance gaps relative to their leading global peers.
