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- The Gateway and Corridor Approach: Transportation in the global economy
The Gateway and Corridor Approach: Transportation in the global economy
Between 2001 and 2006, the world economy has grown more than during any other five-year period since World War II. As one of the most trade-reliant nations in the G-8, Canada has been benefiting from this global growth. By the end of 2007, exports and imports of merchandise had both hit record highs, reaching $465 billion and $417 billion, respectively.
At the same time, the global economy is changing significantly. The North American Free Trade Agreement (NAFTA) and the European Union (EU) gave rise to new trading blocs that have underpinned the new integrated global marketplace. Coupled with the emergence of new economic powers such as China and India, global marketplace integration is driving the distribution of economic activity, as well as the expansion of world trade.
The emergence of global supply chains as the preeminent business model is a key factor in global economic changes. Propelled by dramatic advances in information and transportation technology, leading-edge production strategies now feature deeper integration of research, design, sourcing, manufacturing, marketing, distribution and service dispersed across the globe. Commonly referred to as «integrative trade», this new international business model uses lower trade barriers to distribute production around the world through out-sourcing and off-shoring to maximize efficiency and reduce costs of each component — taking advantage of global supply chains.
Advancing Transportation System Productivity
Market-oriented federal transportation policies of the last 25 years contributed to productivity gains in the sector that far outstripped those in the economy overall. For example, over the period 1991-2006, multi-factor productivity increased by 90% in freight rail, 63% in air transportation and 18% in for-hire trucking, versus 9% in the overall business sector. While the policies (commercialization, privatization and deregulation of transportation infrastructure and services) were mode-specific, the next generation of productivity gains will require a considerably greater degree of integration across the elements of the national transportation system.
These changes in how businesses operate have significant implications for transportation. Intensifying competition within the global marketplace among supply chains, major cities and major integrated regional trading blocs has increased the pressure to achieve greater scale and efficiency in the infrastructure systems that support major trade flows, and that move international passengers.
With businesses increasingly relying on seamless, secure and efficient multi-modal transportation systems as keys to their success, transportation is being recognized as more crucial than ever to Canada’s competitiveness. For example, the Conference Board of Canada states that "Private industry and all levels of government need to be relentless in pursuing the modernization and coordination of trade, transportation and border infrastructure, including security, as a national priority."1 The Canadian Manufacturers and Exporters Association states that, "Canada’s transportation infrastructure must develop the capacity to meet the growing volume of goods traded withinNorth America as well as with Asia and Europe. We must put in place the infrastructure and logistics systems that will enable Canada to become the logistics hub of North America — the preferred point of entry and exit for trade between North America and the growing Asian market." 2
While the Government of Canada has committed unprecedented levels of federal investment for infrastructure priorities 3, meeting these challenges will take more than public funds. A new emphasis on the transportation system, rather than any particular mode or element, is necessary to maximize the contribution of Canadian transportation to global supply chains.
In an increasingly connected world, the key will be an integrated approach to physical and policy infrastructure. This approach places transportation infrastructure at its core, but goes further to encompass other interconnected issues of public policy, regulation, and operational practice that directly impact how well the infrastructure works and how well Canada takes advantage of it. As for investment, the crucial role of private investment will be highlighted, along with a commitment to policies that foster a positive climate for it to increase, while safeguarding the public interest.
This integrated, system-based perspective helps situate crucial considerations such as the roles of technology, environmental stewardship and security — all of which transcend traditional mode-specific approaches.
Gateways are first and foremost, multi-modal, and the air industry has an important role to play. Airports serve as primary ports of entry for international business travellers and tourists to Canada. The roles of air carriers and airports are also significant in the import, export and distribution of high value, time sensitive goods.
However, air transport does not operate in isolation. As with all other modes, they must plan and act in a multi-modal manner to maximize economic potential. Links with road transportation are particularly crucial, and warrant the attention of all parties as part of a systems approach.
Canada’s Asia-Pacific Gateway and Corridor Initiative (APGCI) was the first application of this new approach. The purpose of the Initiative is to strengthen Canada’s competitive position in international commerce by more effectively linking Asia and North America.
When Prime Minister Stephen Harper launched the APGCI in October 2006, the Government indicated that a select number of other regions are also potential targets for an integrated "gateway and corridor" approach based on international trade and commerce volumes of national significance and transportation policy considerations. The next step was identified to be this National Policy Framework. The direction was reinforced in November 2006 by Advantage Canada, the Government’s economic plan. It noted that high-quality, modern public infrastructure that allows people and goods to move freely and efficiently is essential to Canada’s long-term prosperity, with the infrastructure that underpins gateways to foreign markets being especially important. Advantage Canada promised a new fund for gateways and border crossings, to be guided by the National Policy Framework.
Canada’s Asia-Pacific Gateway and Corridor Initiative
The Initiative is an integrated set of investment and policy measures seeking to:
- boost Canada’s commerce with the Asia-Pacific region;
- increase the share of North America bound container imports from Asia; and
- improve the reliability of the Gateway and Corridor for Canadian and North American exports.
The Asia-Pacific Gateway and Corridor is a network of transportation infrastructure including British Columbia’s Lower Mainland and Prince Rupert ports, their principal road and rail connections stretching across Western Canada and south to the United States, key border crossings, and major Canadian airports.
With $1 billion committed by the federal government, the APGCI brings together several major thrusts:
- Strategic infrastructure investments across Western Canada, justified especially by international trade and system efficiency considerations, and cost-shared with provincial governments, cities, regional transportation bodies, the Vancouver Port Authority, Canadian National (CN) and Canadian Pacific Railway (CPR).
- Innovation in the application of Intelligent Transportation Systems (ITS) technology to improve traffic flow and safety where international trade is contributing to congestion.
- Security and efficient border management, including a new container screening program at Prince Rupert’s Fairview Terminal, set to open in Fall 2007.
- Governance and policy renewal, including amalgamation of three adjacent port authorities, legislative modernization, international marketing, “Blue Sky” international air policy liberalization and a focus on skills issues.
Canada is ideally situated to prosper by connecting North America and growing Asian economies. Canada’s new government will continue to act strategically through sound investments and policy measures to achieve this goal.
1 Conference Board of Canada, Mission Possible: Stellar Canadian Performance in the Global Economy, 2007 (page 65).
2 Canadian Manufacturers and Exporters, The Future of Manufacturing in Canada, February 2005.
3 The 2006 and 2007 Federal Budgets commit a total of $33 billion to Building Canada, the federal government’s new long-term plan for infrastructure.