Concerted government and private investment needed. Ottawa-Canada's transportation system is gummed up by capacity constraints, labour stoppages, climate-related disruptions and long project approval times, says a report from RBC Economics. As a result, exporters are suffering and international investors eyeing new opportunities in the agrifood and many other sectors are being discouraged and Canada's reputation is suffering, the report said. Meanwhile, the U.S. Inflation Reduction Act (IRA) has “kicked off a global competition for the coming investment boom as global trade flows are reshaped by energy transition and geopolitics.” Canada could attract a lot of foreign investment “but transportation infrastructure—marine ports, airports, railways, roads, and pipelines—that efficiently, reliably, and sustainably connects goods and people to global markets is central to our success,” the report said. “An urgent new strategy is needed to reimagine transportation infrastructure holistically, with new, hard assets complemented by investments in data and technology, sector cooperation, smart regulation, and talent.” While Canada achieved a 7th place global standing in the World Bank's 2023 Logistics Performance Index, it “ranks considerably lower for timely, transparent, and competitively priced movement of goods, with its two-day median port turnaround time - twice the OECD average. Truck freight prices are up 25 per cent from pre-pandemic levels.” Canada has a history of underinvesting in its transportation sector despite an uptick in freight cargo traffic, the report said. At least $600 billion in real investment is needed by 2040 to keep pace with Canada's economic growth. “Seizing new export opportunities and making supply chains more resilient, including to the effects of climate change, will require significantly more. The U.S. is investing in its core infrastructure with $550 billion in new federal spending. “Jolted by interruptions such as pandemics, geopolitics and climate disasters, the industry has woken up to the risks looming over a transportation sector already straining to keep up with economic and population growth,” the report said. “Logistics interruptions are not new in Canada, with no fewer than thirteen real or potentially major interruptions in the past six years.” Each event sowed doubt about Canada's reliability when global factors were already providing plenty of uncertainty. While investment in physical transportation infrastructure has picked up in the last few years, especially in marine and rail, it is barely outpacing economic growth. Seizing new export opportunities and making supply chains more resilient, including to the effects of climate change, will require significantly more investment6” The federal government will support priority projects through the $4.6 billion National Trade Corridor Fund until 2028. “The recently released National Adaptation Strategy identified transportation among sectors at high risk of interruption and committed concrete actions and funding.” However, most of the investment will nonetheless fall to the private sector and provinces, the report said. Air and maritime port authorities face restrictions on debt financing and suffered revenue losses during the pandemic and airports took on a lot more debt. “Despite their interest in long-tenor assets, pension funds are not major investors in transportation infrastructure given the absence of clear user-pay revenue streams and other barriers to reaping returns from innovation.” Railways have long struggled with consistent service standards and the trucking sector is the epicentre of the labour challenges that have dogged the entire sector. Road and rail freight price growth have outpaced headline inflation, with trucking indices 25% higher in spring 2023 than before the pandemic. Aligning priority transportation infrastructure investments to support industrial, trade, climate and regional development priorities is key. The federal government is engaged but progress has been slow and piecemeal, the report said.