Shipping In CanadabyGlen Herbert
With over one third of its national income, or gross domestic product, derived from international trade, Canada is among the major trading nations of the world. Although most of this trade occurs with the United States using road, rail and water transport, Canada engages in extensive trade by sea with many other parts of the globe. Indeed, commercial shipping and seaborne trade is one of the country's most important strategic and economic interests. Canada's extensive marine transportation system of sea trade routes, ports and inland waterways, including the Great Lakes and the St. Lawrence Seaway, is critical to national economic wellbeing. In addition to international seaborne trade, Canada is dependent on domestic water trade and movement in and between its maritime regions along all three coasts. The purpose of this article is to provide a "snapshot" of Canadian shipping and seaborne trade patterns. It attempts to show some of the important trends in international and domestic seaborne trade: what is being moved; how much; where and why. It is only with an understanding of these factors that one can begin to understand the strategic and economic importance of shipping to Canada and the world. This article draws upon two major sources: an earlier study published by Dalhousie University based on 1992 seaborne trade figures ; and the most recent edition (1996) of Shipping in Canada, which is published by Statistics Canada. Wherever useful, comparisons to the 1992 situation are made, thereby enabling some analysis of major trends over a four year period. The logical place to begin is with an overview of Canadian seaborne trade. Table 1 shows seaborne cargo handled in Canada in millions of tonnes. This trade is broken into three main categories: with in Canada; with the United States; and with the rest of the world. When compared to 1992 figures, an increase of nearly 30 million tonnes in overall seaborne trade is evident. Although not shown in Table 1, much of this growth occurred in exports to the United States and imports from the rest of the world. On the other hand, domestic tonnages dropped significantly over the four years. To begin to understand these trends, the major components of Canadian trade must be considered, starting with international trade patterns.
In terms of tonnage, water trade to and from the United States along the Pacific and Atlantic seaboards and across the Great Lakes accounts only for about 33 percent of Canadian international seaborne trade. Table 2 provides a breakdown by international region of Canadian seaborne loadings and unloadings. Canada's trade ratio between exports and imports in tonnage is more than 2 to 1. Our trade with the Asia-Pacific region and Europe is dominated by exports, while other trade patterns are more balanced. When this trade is looked at in terms of dollar value, the unloaded cargo grows in significance. In 1996, the value of non U.S. exports was $50,459 million (Cdn) and the value of non U.S. imports to Canada was $75,603 million (Cdn). While official figures are not available regarding the exact nature of this international trade, it can be assumed from the main commodities and geography involved that at least 95 percent of non U.S. trade by tonnage is moved by water. However, determining the relationship between tonnage and dollar value is much more problematic, and estimates on the amount of non U.S. trade by value that moves by sea range from 65 to 85 percent. There are two important points to be made here:
Taking into account these uncertainties, one does begin to see an inverse relationship between tonnage and dollar value in Canadian seaborne exports and imports. To better understand the dichotomy in seaborne trade between tonnage and value, the nature of the cargo moving in ships must be considered. Table 3 looks at the nature of Canadian international seaborne trade in terms of the major commodities moving back and forth across the Pacific and Atlantic oceans, as well as the Great Lakes. This table illustrates the general pattern of raw and partially processed materials leaving Canada in return for a fairly wide range of finished goods shipped in from other countries. Generally speaking, raw, unfinished products, such as coal, lumber and iron ore, are bulkier and lower in value, while finished and refined goods are much higher in value and lower in volume. In addition to a near balance between Canadian exports and international imports in value, this illustrates an important strategic concern for Canada: a lack of a diversified, mature industrial base. For international seaborne trade, Canada's marine transportation system can be broken down into four main regions:
The regional trade distributions for all commodities in 1996 are shown in Table 4. Table 5 shows the regional breakdown for the six largest categories of commodities at the national level (as shown in Table 3).
By looking at Tables 4 and 5, some important international trade patterns can be identified for the four regions, particularly in terms of the trade balances between imports and exports, and the major commodities moving into and from each region. In the Atlantic region, there is nearly a balance between loading and unloadings, with tonnage being slightly larger for the former. The major commodity type for seaborne international trade in the region is crude oil and petroleum products. To a considerable degree, this reflects geography. Even though Canada is quite capable of energy self-sufficiency, it continues to be more economical to import crude oil by sea than to extend pipelines east of Montreal. This reveals a significant strategic vulnerability for Eastern Canada regarding energy sources. However, with recent developments in offshore energy, particularly in the Hibernia oilfield and Eastern Scotian Shelf gas fields, the Atlantic region will be able to reduce some of its international energy dependence, as well as move toward a greater balance of petroleum exports and imports. Apart from oil, the Atlantic region has few other large scale imports, and actually boasts a well diversified industrial base for exports. On the west coast, trade in and out of Pacific ports is primarily a function of exports of bulk raw materials and forest products. The shipping of coal and wheat to Asia-Pacific countries, especially Japan, continues to dominate the region's trade patterns. Forest products of all types are exported around the world and a major proportion of Canadian exports of minerals (e.g., sulphur) and chemicals are moved through Pacific waters. The Pacific region accounts for over one-third of Canadian international trade, and is characterized by an export/import ratio of 9 to 1. The St. Lawrence region comes in second to the Pacific in terms of trade tonnage, with a dominance of exports over imports. The major commodity type moving along the St. Lawrence river continues to be iron ore and other ferrous products, most of which is mined in northern Quebec. International trade through Canadian ports in the Great Lakes is almost entirely with the United States in a complex cross-trading system for bulk commodities, such as coal, iron ore, salt and other minerals, and industrial raw materials. Although both countries are self-sufficient in these items, it is often cheaper and more convenient to trade with each other across the lake than to use domestic sources of supply. Once again, geography is a major determinant of the region's trade patterns. It is interesting to note that imports actually dominate exports in the Great Lakes system. While it has increased substantially in tonnage from 1992, Canada's international trade remains unbalanced. It is generally characterized by exports of raw materials or partly processed goods, and imports of finished, higher value goods in return. Although in tonnage Canadian seaborne trade patterns appear highly favorable, the value of this trade tells a much different story. This reflects the relative immaturity of the Canadian industrial base. While Canada has moved ahead in the high technology industries, it is still lacks a diversified manufacturing capability. The division of labour of the present global economy, characterized by the use of cheaper labour in developing countries for manufacturing, appears to be firmly entrenched. Moreover, the global dependence on Canadian raw materials is vulnerable, particularly as new recovery technologies and alternative industrial materials continue to emerge. Canada must continue to address these strategic trade concerns into the next century. Domestic Trade As shown in Table 1, 48.8 million tonnes of various commodities were moved between Canadian ports as domestic trade in 1996. Tables 6 and 7 provide a break down of domestic shipping patterns by Canadian region and by major commodities moved.
The 1996 figure for domestic cargo actually constituted a record low, as exemplified by comparison with the 1992 figure of 52.3 million tonnes. Declines were most evident in domestic cargos of wheat, crude and refined petroleum, and pulpwood. Domestic shipping remains, however, a major part of the diverse regional economies that constitute Canada, particularly in the Great Lakes, St. Lawrence and Pacific regions. This is primarily explained by the major industrial activities in Ontario and Quebec which rely on water transport for bulky materials, such as iron ore. In the Pacific, water transport is important to both the movement of bulky cargos, such as forest products, and people (although the ferry system is not included in this assessment) between island and coastal communities. The consistent drop in domestic shipping in the Atlantic region is primarily explained by reductions in shipments of crude petroleum within the region. Although not shown here, domestic water transport remains critical for re-supply of remote communities in the Arctic region.
Ports In 1996, 189 ports handled the 357.8 million tonnes of international and domestic cargo. Over 50 percent of this tonnage was handled by seven ports, as shown in Table 8 on the next page. Vancouver, Canada's busiest port handled over 71 million tonnes of cargo in 1996, almost one-fifth of all cargo moving through Canadian ports. This represents an increase of over 10 million tonnes from 1992. Vancouver also led other ports in exports with 64.2 million tonnes loaded in 1996. Dry bulk cargo, principally coal, wheat and sulphur, accounted for 69 percent of the port's tonnage, and most was exported. The bulk ports of Sept-Îles/Pte-Noire and Port-Cartier handled 22.5 and 21.7 million tonnes respectively in 1996. International and domestic loadings of iron ore and concentrates comprised the major portion of shipments for both ports. By comparison, Sept-Îles/Pte-Noire increased from its 19.2 million tonnes in 1992, while Port Cartier tonnage remained the approximately the same.
Saint John, New Brunswick handled 20.6 million tonnes, with increases in liquid bulk primarily crude and refined petroleum to 16.1 million tonnes. General bulk cargos, such as wood pulp, other forest products, and non-metallic minerals, also increased in 1996. A look at the 1992 figure of 15.6 million tonnes shows the major growth experienced by the port. Montréal/Contrecoeur handled 19.2 million tonnes, 63 percent of which was unloaded from international and other Canadian ports. This represents an increase of 2.6 million tonnes from 1992. Approximately 50 percent of Montréal/Contrecoeur handlings in 1996 were general cargos, such as chemicals, machinery and other industrial equipment. Québec/Lévis, which moved nearly 17 million tonnes of cargo, saw a decrease in its dry bulk handlings, primarily accounted for by reduced trans-shipments of wheat, iron ore and coal. This was partially offset by increases in other cargos, such as corn and cement. Since 1992, the port has seen an increase in tonnage of just over a million tonnes. Halifax handled 13.6 million tonnes in 1996, with 4.6 million tonnes of containerized and general cargo, 5.4 million tonnes of liquid bulk products, and 3.6 million tonnes of dry bulk cargo, primarily gypsum. It is interesting to note that Halifax, like Saint John, has a close balance between loaded and unloaded cargos. The figures for 1996 actually dropped marginally below 1992 levels. However, with the strong possibility of post-Panamax container traffic using Halifax as a major stopping point, growth will not likely be a major problem for the port. In addition to looking at individual ports, it is useful to look at the two major transportation systems in Canada: The Western System, which is almost entirely self-contained, dominated by the port of Vancouver and the Puget Sound focal area, and largely comprised of trans-Pacific trade in bulk commodities. This system accounts for nearly 36 percent of all Canadian international seaborne trade. The Eastern System, which is a looser knit of trade patterns to and from all parts of the world, and in which there are two major traffic patterns:
Container Traffic Canadian ports handled a record 17.9 million tonnes of containerized cargo in 1996. However, it should be noted that containerized cargo represents only five percent of all cargos moved in Canada. This is actually down in relative terms from 1992, when containerized cargos accounted for 7.6 percent. Of course, when looked at in terms of dollar value, container trade becomes a very significant component of Canada's seaborne trade. With important improvements in internodal systems linking ports with land transportation systems, as well as increases worldwide in containerized shipping, this represents a major area for growth into the next century. Outbound tonnages represent the highest proportion of containerized cargo at 10.3 million tonnes or 60 percent. General cargo accounted for 98.4 percent of all containerized tonnage in 1996. The largest commodity carried in containers was machinery/equipment and miscellaneous cargo, representing approximately 34 percent of container freight. The three leading container ports in Canada: Montréal/ Contrecoeur; Halifax; and Vancouver handled 95.3 percent of total containerized cargo:
In 1996, Canadian ports shipped 921,987 TEUs, 97.4 percent of which contained cargo. They received 793,163 TEUs, 77 percent of which contained cargo. This indicates an imbalance in the percentage of empty containers loaded and received in Canadian ports. This imbalance is primarily explained by the nature of the cargos involved: Canadian neo-bulk exports (e.g., newsprint, base metal products) tend to take up more TEUs than foreign incoming container cargos, which are usually smaller, high value products. The two most important foreign regions for containerized cargo in 1996 were Europe and the Asia-Pacific. Loaded and unloaded tonnages were relatively balanced for Europe (4.7 Mt./4.8 Mt.), while containerized cargo shipped to Asian ports was more than double that received by Canada (4.0 Mt./1.7 Mt.). Ships In 1995, 208 Canadian-domiciled marine carriers, comprised of for-hire (commercial), private and government sectors, operated a marine fleet of 1,771 vessels and employed 22,225 people with $1.1 billion in wages. The domestic fleet is dominated by tugs and barges, but also includes general, bulk and tanker vessels, and passenger ferries. Operating revenues totalled $3.1 billion, while operating costs amounted to $3.4 billion. Revenues from the transportation of goods accounted for 48.8 percent of this, with the remaining 51.2 percent derived from nine other activities, such as chartering and towing. Most of these non-commodity revenues were gained in the domestic market. Of the $3.1 billion in revenues, international services accounted for $1.17 billion. The majority of this shipping involves trade with the United States, particularly across the Great Lakes. The amount of overseas trade by Canadian-registered ships is negligible, and Canadian-owned ships operating around the world are almost all registered in other countries, including open registries or "flags of convenience". Shipbuilding The shipbuilding and repair sector is an essential component of a strong national maritime industry. In Canada, it provides for the development and production of ships and equipment used domestically and internationally, provides thousands of skilled jobs, as well as serving as a key element of the industrial defence base. However, Canada's shipbuilding industry has been shaped by political forces, not market forces, primarily through subsidies, duties and government procurement policies. This makes the industry quite vulnerable and heavily reliant on political decisions. For example, recent cuts to government fleet operating budgets is of major concern to the industry. The various regional components of the Canadian shipbuilding and repair industry are quite active. In the Atlantic region, shipyards are involved in the growing offshore oil and gas industry, supplying the Navy with new vessels, and building tugs and domestic container vessels. In Quebec, yards are primarily focused on repair and overhaul of sea-going vessels and offshore structures. In the Great Lakes, Port Weller Drydocks is working on self-unloader vessels, while on the west coast, construction and maintenance of fast ferries is the major activity. It is beyond the scope of this backgrounder to address the many and complicated issues involved in Canada's shipbuilding industry. These include concerns about what constitutes appropriate levels of government assistance, enhancing market competitiveness, and how to penetrate markets in the United States and beyond. Conclusions This backgrounder has served to provide a brief glimpse of some of the more important aspects of Canadian shipping and seaborne trade. The point to stress is that shipping remains a major national and regional economic activity for Canada. As a major maritime nation, Canada will continue to rely on its marine transportation system of sea trade routes, ports and waterways to prosper in the global economy. Shipping, therefore, remains a vital Canadian strategic interest. References | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||