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Canada Shipping Report Q1 2012
Business Monitor International, Nov 2011, Pages: 135
Business Monitor International's Canada Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's shipping industry.
BMI are forecasting real GDP growth in Canada of 2.4% in 2012, a downgrade from their previous forecasts of 2.8%. While the economy showed signs of a slowdown in H111 - with real GDP growth estimated to have come in at just 1.0% quarter-on-quarter annualised in Q211 (the slowest since Q309) compared with 3.7% in Q111 - BMI believe there will be a modest pick-up in H211 led by business investment and despite a potential slowdown in consumer activity.
Canada's external accounts will 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. Although BMI expect domestic consumption growth to slow, the strong dollar should maintain a high level of imports. A strong dollar would otherwise be bad for exports, but BMI note that its strength is partly due to high commodity prices; around 50% of Canadian exports are related to natural resources, including energy and metals. BMI expect external demand for commodities to remain strong. Both imports and exports should increase by 4.0-4.5% in 2012.
Headline Industry Data
- 2012 Port of Vancouver tonnage throughput forecast to grow 2.7%. Over the medium term BMI project average annual growth of 2.6% to reach 138mn tonnes in 2016.
- 2012 Port of Vancouver container throughput forecast to grow 5.6% in 2012. Over the medium term BMI project a 5.4% increase to reach 3.5mn twenty-foot equivalent units (TEUs) in 2016.
Key Industry Trends
US Ports Losing Out To Canada Due To Harbour Tax - With the outlook for the US peak shipping season remaining cautious, the country's ports are growing increasingly concerned about the business they are potentially losing to their North American neighbours. Shippers seeking to avoid the Harbour Maintenance Tax are sending their cargo via Mexican or Canadian ports, putting further pressure on US facilities which are already seeing import declines as consumer sentiment remains sluggish.
Canada Moving Towards Trade Pact With China - In a deal that could considerably boost throughput for ports on Canada's west coast, Canada and China are in talks over a free trade agreement (FTA). Federal Trade Minister, Ed Fast, said he is concerned that 'protectionism is on the rise' amid global economic turmoil, but is confident Canada will soon agree a key trade deal with China as well as conclude negotiations with the European Union in 2012.
Risks To Outlook
BMI's positive outlook for the Canadian economy indicates a strong base for growth at the country's ports. Total throughput will be driven mainly by exports, boding well for ports and the shipping sector. On the downside, a significant slowdown in the US economy would be extremely negative for Canadian business confidence, commodity prices and exports, and therefore for the shipping sector. Similarly, although exports to Asia-Pacific countries increased in 2010, a significant slowdown in the US would be negative for commodity prices and exports, and therefore presents potential downside risk to their throughput forecasts.
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