This report was commissioned by the Canada Transportation Act Review Secretariat and submitted in September 2015. It describes global trends in Asia affecting the region’s future development and Canada’s transportation systems in the next 15 years. We identify major trends in the Asia Pacific under the framework of five key drivers of change: 1) demography and society; 2) economics and finance; 3) energy and the environment; 4) technology and innovation; and 5) security. The complex interplay between these trends will have important implications for Canada’s transportation future. Each section features one of the key drivers of change and highlights the trends in Asia within that driver of change, the implications of those trends for Asia, and the implications of those trends for Canada’s transportation system.
The Asia Pacific region has become an increasingly significant player in the global economy and will continue to rise in importance over the next fifteen years. By 2030, the region will account for 45 to 50 per cent of the world’s GDP. The future of the Asia Pacific will be shaped by changes in demography and society; economic development and finance; energy and the environment; technology and innovation; and security. These drivers of change will not only affect the development of the Asia Pacific region, but Canada and its transportation system as well.
The demographic and societal profile of the Asia Pacific will transform over the next decade and a half as a result of changing population trends, continuous urbanization, and growing middle classes. As a consequence, consumption patterns are likely to shift to more discretionary goods and services from abroad, causing an increase in flows of goods, services, immigrants, tourists, students, and professionals between Canada and the Asia Pacific. Canada’s transportation system will be under pressure to accommodate these increased flows.
Increasing intraregional Asian trade flows and the development of the ASEAN Economic Community (AEC) will propel regional integration, but the region’s ultimate success in fostering connectivity will be highly dependent on its ability to finance and build regional infrastructure and negotiate and ratify more bilateral and multilateral free trade agreements (FTAs). If Canada is to emerge as a true gateway hub between the Asia Pacific and the Americas, it too will need to strengthen its trade-related infrastructure.
Commensurate with Asia’s economic growth will be an increasing demand for energy. Since the Asia Pacific’s demand for energy outweighs its supply, diversification of both the types and geographical sources of energy will be needed to ensure the demand is met. Before Canada can become a viable supplier to Asia, it will need to further develop its rail and marine infrastructure and regulations to ensure safe and efficient movement of oil and natural gas via railway and tanker.
Current scientific studies project that over the next few decades climate change will lead to an increase in polar sea ice melt, rising sea levels, and natural disasters. Considering that Canada’s northern territories are part of the Northwest Passage for ships, Canada should take measures to address future shipping along this passage.
Technology and innovation will also be imperative in pushing the Asia Pacific’s growth forward. Rising Internet and mobile phone penetration will further drive e-commerce and m-commerce development. There is likely to be a large demand for new transportation-related technologies and innovations that can enhance transportation infrastructure and services both within the Asia Pacific and Canada.
Last, security threats in the Asia Pacific, such as territorial disputes, maritime piracy attacks, terrorist violence, trafficking of people and goods, and cyber attacks may affect regional stability and disrupt supply chains and their logistics. Although territorial disputes, piracy, and trafficking do not have much of a direct impact on Canada’s transportation system, technology used for transportation is increasingly vulnerable to terrorist or cyber attacks.
Based on the analysis provided by this report, in order to prepare Canada’s transportation system for the future, the Canada Transportation Act Review (the Review) should consider recommending that the following actions be taken by the relevant decision-makers:
- adjust current transportation legislative and policy frameworks to support Canada’s trade competitiveness in Asia, a region of growing importance to Canada’s economic health;
- further develop the Asia Pacific region’s gateways and corridors;
- optimize the quality and use of transportation infrastructure capacity through, for example, improved alignment of transportation policies and regulations and/or the use of innovative financing mechanisms;
- accommodate and leverage the increasing flow of travellers between Asia and Canada;
- make the relevant Canadian transportation and logistics workforce more Asia competent; and
- address emerging environmental and security threats to ensure Canada’s safe and sustainable transportation.