Canada’s trade surplus for the month of February 2022 was $2.7 billion according to a report released by Statistics Canada on April 5, down from $3.1 billion a month earlier. Imports totalled $56.1 billion in February, a 3.9% rise that partially offsets the steep 7.5% decline seen in January. Exports, meanwhile, reached a record $58.7 billion, a 2.8% gain.
Imports Up Across Most Categories
Imports of metal and non-metallic mineral products rose 14.3% in February, more than offsetting the 11.8% decline observed in January. The January dip was a one month interruption to an upward trend seen in the category during recent months. Copper and palladium were among metals imported more heavily during February. Future supply concerns, owing to the war in Ukraine, among other factors, may have been a contributing factor to the increased action.
Imports of consumer goods rose 2.5%, with the sub-category of clothing, footwear and accessories increasing 13.6%. Much of this increase is owning to rising prices as opposed to real volume increases.
Fertilizers, pesticides and other chemical products saw an 18.4% increase in exports, reaching a record high. This contributed to a 5.6% increase in the larger category of basic and industrial chemical, plastic, and rubber. This activity is also being partially attributed to uncertainty over future availability and cost, with lower production in China, and quotas on exports from Russia being contributing factors.
Export Increases Driven by Energy, Aircraft, and Consumer Goods
Energy exports rose by 7.8% in February, reaching a record high of $15.4 billion. This represents 26.2% of total exports, after the category accounted for only 19.7% of exports a month earlier.
A 9.9% increase in the value of crude oil exports can largely be attributed to higher prices. Once again, global supply uncertainties are driving the change.
The wild ride continues in the category of aircraft and other transportation equipment and parts with a 54% rebound in February, after January’s 32.9% decrease. Exports of aircraft more than tripled during the month.
Exports of consumer goods actually declined by 11.4%. A contributing factor was a 47.5% dip in pharmaceutical product exports. This actually represents a return to normalcy after a spike in recent months, owed to a large import of Covid-19 medication that was imported in November, only to be labelled, packaged, and re-exported in the November-January time period.
Trade Surplus with U.S., Deficit with Rest of World
Canada’s trade surplus with the U.S. widened to $10.3 billion in February, the largest such surplus since December 2005. Exports to our southern neighbor were up 1.4% while imports shrank by a tenth of a percentage point.
Meanwhile, Canada saw its trade deficit with countries other than the U.S. widen from $6.6 billion in January to $7.7 billion in February. Imports from China rose by a noteworthy 26.9%, this despite the Chinese New Year which usually leads to a dip in exports from the country.
Fuel Surcharges Impacting Inflation
“We’re definitely seeing fuel surcharges from a domestic transportation perspective,” says Canadian Alliance President William McKinnon, who has also heard from clients about surcharges affecting ocean and rail transportation. “The instability of the price of a barrel of oil is having a trickle down effect that’s not only impacting us when we fill up our vehicles, but throughout the entire supply chain,” he says.
McKinnon says that fluctuating energy prices have an impact on everything from transportation to plastics and food.
“As fuel prices go higher, farmers’ costs are going to go up,” says McKinnon.
“We’re going to likely see an increase in the cost of grains, pulses, and that whole category. Europe is seeing supply and demand issues with wheat. There are a lot of things moving around.”
Port of Vancouver Volumes Increase Slightly
The Vancouver Fraser Port Authority recently released statistics indicating that the volume of goods that moved through the Port of Vancouver increased by 1% in 2021, despite numerous challenges, which included global supply chain shortages and extreme weather.2 While such a slight increase may sound trivial, McKinnon has seen a difference in the scheduling of arrivals.
“We’re seeing customers who used to get a constant flow of 3 containers a week now getting 20 containers once a month,” he says.
Trucker Shortages Impacting Variable Capacity
McKinnon says that trucking companies are feeling the effects of truckers retiring or otherwise leaving the industry.
“A couple of companies that we work with are struggling to get enough additional variable capacity to meet the swings within their business,” he says.
According to McKinnon companies are equipped to handle business as usual, but find themselves less able to adjust to surges.
“If they run ten loads a day to Calgary, they have that all set up,” he says.
“On days where they have twelve or thirteen loads they used to be able to pick up the phone and get a quick load from somebody else on short notice, but there’s less of that available now.”
Trucker Wages Will Ultimately Increase
McKinnon believes that maintaining capacity within the industry will ultimately be a matter of dollars and cents.
“It all boils down to a sustainable, reasonable premium or a wage that makes it work,” he says. “Within Metro Vancouver, if you’re driving a five ton truck, you’re probably making $60K/year. If somebody new is coming into the industry, they’re probably going to need $80-100K to make it worth their while.”
As groups of independent drivers in the US move toward unionization, McKinnon believes that wage increases are inevitable.
“If a driver can’t make enough money to support the lifestyle they want, they’re not going to drive,” says McKinnon, “it’s that simple. Ultimately the price hike will just move through the supply chain.”
Cited Sources
Personal communication with William McKinnon
1 Government of Canada, Statistics Canada. “Canadian International Merchandise Trade, February 2022.” The Daily – , April 5, 2022. https://www150.statcan.gc.ca/n1/daily-quotidien/220405/dq220405a-eng.htm
2 Globe Newswire. “2021 Trade through the Port of Vancouver Steady despite Supply-Chain, Extreme Weather Challenges.” financialpost. Financial Post, March 24, 2022. https://financialpost.com/globe-newswire/2021-trade-through-the-port-of-vancouver-steady-despite-supply-chain-extreme-weather-challenges.