Transport Canada’s newly published annual report ranks the country’s transportation sector last among Group of Seven economies for productivity growth over the past 25 years, a gap officials expect to persist through the next decade.
The report, titled Transportation in Canada 2025, traces the ranking to a sharp drop in sector productivity after 2017, even as productivity across the broader economy held roughly flat over the same stretch. The Bank of Canada forecasts the sector’s productivity will stay stagnant for at least another decade, even as officials pitch overseas markets as the answer to a shrinking US trade relationship.
Canada currently has no automated port capacity, even as roughly 8% of global container terminal capacity, spread across 72 of 850 terminals, runs at least partially automated, the report found.
Transport faced more regulatory requirements per unit of economic output than any other Canadian industry as of 2021, well above manufacturing, wholesale trade or construction. That regulatory load has grown steadily since 2006, pushing up costs and stretching timelines for major projects.
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Transportation infrastructure investment grew at an average of 1.6% a year between 1981 and 2023, compared with 2.4% annual growth for the overall economy, and marine infrastructure lagged furthest behind at just 0.3% average annual growth, the slowest of any mode.
On digital trade processes, Canada trailed all seven peer countries measured in a 2024 trade digitalization index, including the US and the United Kingdom, and ranked well behind leaders like New Zealand and South Korea.
Exports to the US fell 5% to $566 billion in 2025, while exports to the rest of the world rose 16% to $214 billion. Much of that overseas growth came from a surge in gold shipments to the United Kingdom, though Germany, the Netherlands and China also posted double-digit gains. Ottawa has set a goal of doubling overseas trade by 2035 as part of a broader diversification strategy.
A Business Development Bank of Canada survey cited in the report found 55% of Canadian firms already have a diversification strategy in place and 64% plan to diversify further within two years. But those firms pointed to higher logistics costs on longer overseas routes, unfamiliar regulatory and customs requirements, and limited access to capital as the main barriers to acting on those plans.
Ottawa has responded with several measures. Bill C-5 and the Major Projects Office aim to speed up approvals for infrastructure projects deemed in the national interest, alongside a new Trade Diversification Corridors Fund and an Arctic Infrastructure Fund.
The agency also published a progress report on its Red Tape Review last year, identifying 34 planned actions to cut regulatory burden. The department had completed 14 of those actions or had them on track for completion by spring 2026.
The report calls these measures early steps, not a resolution, and warns the underlying challenges “remain significant and closely connected.”
Transport Canada projects Canada’s economy will grow 1.5% in 2026 and 1.9% in 2027, trailing global growth forecasts of roughly 3% over the same period. Part of that slower growth is attributed to an aging population and cooling immigration targets — the same demographic pressures it separately flags as a source of labor shortages across the transportation sector.
