Tuesday, April 3, 2012

Canadian 2012 Transport Outlook Positive

The 2012 outlook for Canada’s freight transport sector is broadly positive, according to a newly-released report by London-based analysis company Business Monitor International.

Imports are expected to rise during the year, partially because of the strong Canadian dollar, according to BMI’s “Canada Freight Transport Report Q2 2012” analysis. Although the report states domestic consumption growth is expected to slow, imports are expected to remain high, according to the company.

“Canada’s external accounts should continue to be buffeted as a strong dollar pushes up imports, even as global demand for commodities maintains an elevated level of exports, both of which bode well for the country’s port sector,” the analysis reads in part.

Freight transport volumes should also be supported by the fact that an increasing number of shippers are using Canadian ports to import goods destined for the US, in an attempt to avoid paying the harbor tax on imports coming through US ports, the analysis states.

Among the other conclusions in the report:
  • Port of Metro Vancouver tonnage throughput is forecast to grow 2.7 percent in 2012. And over the medium term, BMI projects a 2.6 percent increase to 2016.
  • Rail tonnage is expected to grow 5.9 percent during the year.
  • Growth of 6.2 percent in road freight tonnage is also expected in 2012.
Regarding industry trends, BMI’s report says that global marine terminal operator DP World expanding its operations in Canada by signing an agreement to operate the Port of Nanaimo’s facilities is a positive step, since the country’s imports remain strong.

The analysis also predicts that longer trains will become more of an industry norm in North America over the medium term.

“The rail freight sector is following its shipping intermodal counterpart in espousing the bigger-is-better viewpoint, making the most of economies of scale,” the report states, while mentioning that rail operator Canadian Pacific is investing in developing its operational infrastructure to accommodate the longer transport vehicles.

The positive outlook for the Canadian economy is tempered by risks pointed out in the report, however. The first is that any significant slowdown in the US recovery would be highly negative for Canadian transport sector.

Similarly, the analysis states, any significant slowdown in Chinese demand would be negative for commodity prices and Canadian exports, and therefore presents potential downside risk to forecasts.