Canada had a merchandise trade deficit of $312 million in December of 2023 according to numbers released on Feb 7 by Statistics Canada.1 It’s Canada’s first monthly trade deficit since July. The climbing value of the Canadian dollar was a factor.
Exports Down for Second Consecutive Month
Total exports measured $64.1B in December, down 1.9%, the second straight monthly decline. Exports decreased 0.4% in real or volume terms on the month, and were down 0.3% year over year, when compared to December 2022.
Imports Up Slightly in December
Total imports for December were up 0.2% to $64.4B, with real or volume imports rising 1.3%. Imports were up 1.4% year over year. This despite declines in 8 of the 11 product sections.
Canada’s Trade Surplus with US, Deficit with Other Countries both Narrow
Canada’s merchandise trade surplus with the United States narrowed from $11.2 billion in November to $9.2 billion in December. This as exports fell and imports climbed. Meanwhile, Canada’s trade deficit with countries other than the US narrowed slightly, from $10.1 billion in December to $9.5 billion in November.
Industry Breakdown
Farm, fishing and intermediate food products
Exports $4.8 billion, down 1.5% month over month
Imports $2.5 billion, down 1.7%
Basic and industrial chemical, plastic and rubber products
Exports $3.5 billion, up 3.1%
Imports $4.9 billion, down 3.8%
Forestry products and building and packaging materials
Exports $4.1 billion, up 3.6%
Imports $2.8 billion, down 0.6%
Industrial machinery, equipment and parts
Exports $4.2 billion, down 6.8%
Imports $7.5 billion, down 1.2%
Electronic and electrical equipment and parts
Exports $2.7 billion, down 2%
Imports $6.8 billion, down 5.7%
Consumer goods
Exports 6.9 billion, down 3.6%
Imports $13.3 billion, up 9.4%
Economics Cause Soft Fourth Quarter in Warehousing
The fourth quarter of 2023 was relatively slow in comparison to 2022 for Canadian Alliance Terminals (CAT), a trend that has continued into 2024. President William McKinnon attributes this to economic factors, with inflation persisting and job creation stalling.
“A lot of goods in our facility go direct to consumer,” he explains, “and consumers have been reeling in their spending. It’s certainly not the wild days of late 2020 where huge demand led to high occupancy.”2
McKinnon says that different clients take different approaches to such economic circumstances.
“I think the general approach that most of our clients are taking is cautious in nature,” he reports. “In times like these, some organizations will see an opportunity to expand and leverage debt. It’s just very unpredictable in that regard.”
McKinnon remains optimistic about the future and says that CAT will be ready, come what may.
“I’d like to have a Ouija board that works,” he laughs.
Is Supply Chain Chaos Prompting New Strategic Approach?
Conflict on the Red Sea is just the latest example of an unforeseen international event impacting the supply chain. McKinnon points out that most of the traffic on the West Coast doesn’t go through that waterway, but acknowledges that some companies have begun taking more caution as complications have piled up.
“There are organizations that have adopted a more strategic and conservative approach to inventory management,” he says. “There’s a cost to carrying safety stock, but it does provide more stability. There are others who prefer to gamble.”
Government Should Listen to Business for Supply Chain Policy
The UK Government have taken new measures to help their country deal with supply chain shocks, including cutting down on red tape, and stress-testing resilience for critical imports.3
McKinnon believes that government does have a role to play in supply chain management and that policy should be informed by those whom it affects most.
“I think the government needs to listen to industry and industry needs to tell the government what they need,” he says.
Cited Sources
1 Government of Canada, Statistics Canada. “Canadian International Merchandise Trade, December 2023.” The Daily – , February 7, 2024. https://www150.statcan.gc.ca/n1/daily-quotidien/240207/dq240207a-eng.htm.
2 Direct Communication with William McKinnon
3 Review, GT, and Jenny Messenger. “UK Targets Supply Chain Shocks in Critical Imports Strategy.” Global Trade Review (GTR), January 19, 2024. https://www.gtreview.com/news/europe/uk-targets-supply-chain-shocks-in-critical-imports-strategy/.