1. Canada-China Trade: Impact on Canadian Road Transport & Lessons Learned from Trading with the “Other Giant” David Bradley CEO, Canadian Trucking Alliance Beijing, September 26, 2005

2. China-Canada Relations Norman Bethune  Field surgeon (1937-39) Pierre Trudeau  Diplomatic relations (1970) Jean Chretien  6 official visits (1993-2004) People:  Nearly 3 million Canadians of Asian origin  (35% of Vancouver & 28% of Toronto’s population)  China = Canada’s second largest source of students

3. Canadian Trucking Industry If you got it a truck brought it:  90% of all consumer products & foodstuffs  Two-thirds of Canada-US trade Competitive service:  $55 billion a year industry  >10,000 for-hire companies  170,000 Class 8 trucks Major employer:  400,000 + employees  Largest occupation (males) = truck driver (265,000)

4. Canada: Trading Nation Canada-US + world’s largest trading partnership Each other’s largest trading partner For how long? US trade = 73% of Canada’s trade with the world 40% of Canada’s GDP dependent on trade with US 86% of CDN exports go to US

5. Canada-China Trade Imports from China Exports to China China is Canada’s:  2 nd largest trading partner  2 nd ($24 billion) in imports  4 th ($7 billion) in exports 1999-2004:  Total China-Canada trade aagr of 21% However, Canada losing share of exports to China  Pattern of trade has shifted in past 20 years  1984 Canada exported 4 X what it imported  Balance of trade opposite direction Trade Partners 1. USA 2. Japan 3. South Korea 13. Canada 1. USA 2. China 3. Japan Composition of Exports (PRC/Can) 1. Electrical machinery 2. Boilers, appliances 3. Toys, sporting goods 4. Furniture, bedding,,etc. 1. Wood pulp 2. Organ. chemicals 3. Electric machinery 4. Fertilizers

6. North American Trucking: #1 Challenge -- Capacity Driver Shortage  Oldest workforce  Few young workers  225,000 truck drivers by 2008 Border Bottlenecks  US security measures Infrastructure Gap  Canada-US bridge capacity  Highway congestion  Port congestion

7. China Factor Capacity crunch:  Impact on infrastructure & all modes  More containerization = more congestion  West Coast ports (3,000 containers/day; 40% of all goods move by truck)  Record TEU (2004), up 11% (2005)  Shifting traffic patterns (retail sector through Panama) Diesel fuel:  Diesel more expensive than gasoline Currency issues:  Nuan vs US dollar

8. Feeling the Strain Rail:  Shortage of intermodal rail cars Trucks:  Shortage of drivers & trucks  Labour unrest at ports Congestion:  Ports  Road & border congestion Service:  Longer waits impact JIT

9. Industry Response: The Perfect Storm Opportunity:  Best opportunity in 30 years to raise trucking rates  Accessorial charges  Fuel surcharges  Driver pay Customer Relations:  Increased co-operation between carriers & shippers  Shippers of preference Government Relations:  Waking up

10. Recent Statements from Government “The rest of the world has not been standing still – far from it. A booming China is changing the competitive landscape and causing the reconfiguration of global supply chains …NAFTA provided an important first step, now we must take our game to the next level.”  David Emerson, Minister of Industry Canada, June 2005 “… emerging economies of China, India and Brazil represent an increasing challenge, forcing our transportation system to rapidly evolve and adjust to economic globalization and integration.”  Jean-C. Lapierre, Minister of Transport Canada, May 2005 "Success in the 21st-century global economy demands regional …regional integration and cooperation will be necessary to ensure that North America remains competitive in the global economy."  Carlos Guetierrez, US Secretary of Commerce, June 2005

11. Response: Governments Security & Prosperity Partnership):  US/Canada/Mexico  300 point plan  Eliminate barriers to trade Tyranny of small differences Tax/registration compacts Key: Efficient flow of goods across US border:  Essential to maintain Canadian route as key corridor/gateway for Asia-US container traffic  Security risk assessment  Paperless border, ITS  International bridge capacity Infrastructure Investment:  Port capacity expansion  Highways

12. The New Reality When economies grow, things change – fast. When trade accounts for a large part of that growth – there’s going to be plenty of change in transportation and logistics services.  Traffic World, May 2005 Countries that resist adaptation put their economic future at risk.  David Emerson, June 17, 2005 The future is not what it used to be.  Yogi Berra Xie