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INDUSTRY PULSE: Surge in machinery and equipment lead improvement in export volumes

OTTAWA, Ont. -- Outbound shipments of machinery and equipment, the biggest export sector, rebounded from two months...

OTTAWA, Ont. — Outbound shipments of machinery and equipment, the biggest export sector, rebounded from two months of decline, surging 8.1% in March to more than $8.2 billion according to Statistics Canada data. This returned export values of machinery and equipment to levels of December 2005 when they were the highest since January 2003, a very strong month for aircraft exports.

March’s rebound was driven primarily by foreign demand for aircraft, engines and parts (+53.2%). Exports of aircraft have registered an upward trend since early 2005 as increased military activities have fuelled demand for Canadian planes and helicopters. This increase returned aircraft export values to January’s levels.

Exports of agricultural and fishing products advanced 3.0% in March. The gain was led by growth in exports of wheat (+18.8%), fish and fish preparations (+5.9%), crude vegetable products (+9.9%), and live animals (+4.5%). March marked the third consecutive increase in wheat exports and the second consecutive month for live animal exports.

Live cattle exports increased by over 20% in March, as a result of an increase in the number of feeder cattle and slaughter steers and heifers flowing to the United States from Canada. Total quantities of live cattle exported in March were comparable to those in recorded for March 2002. This is the first time that export quantities have approached pre-ban levels since the import ban on cattle under the age of 30 months was lifted.

Exports of industrial goods and materials were virtually unchanged at $7.2 billion in March. This occurred in the wake of a two-month decline and a gain of nearly $200 million in December 2005 when these exports hit a record high $7.4 billion. Exports of zinc and copper hit record-high values in March as a result of the continuous climb in price for these commodities. However, gains in metals and other industrial materials were matched by declines in chemicals and nickel ores and other metal ores.

Energy exports remained at $7.4 billion as gains in exports of coal and electricity were matched by a decline in outbound shipments of natural gas. Natural gas exports fell 2.4%, the third consecutive decline, the result of lower prices.

Real exports, or exports adjusted for price, of crude petroleum were up in March. However, a third consecutive drop in crude petroleum export prices offset the gain in volumes, resulting in export values holding at $2.9 billion.

Exports of forestry products slipped a further 0.8% following an 8.6% drop in February. Exports of newsprint and other paper products were up 6.3% after declines in the first two months of 2006; however, shrinking exports of lumber and sawmill products, as well as wood pulp and other products, pushed values down for the month.

Exports of automotive products dropped 2.0% to $7.2 billion in March despite a 3.3% gain in trucks and other motor vehicles and a 3.2% increase in motor vehicle parts. For the second straight month, exports of passenger autos and chassis registered sizable loses, down 6.6%. While production of high-demand models remain strong, there has been a slowdown in motor vehicle production overall in recent months.

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