Trade down in ’09
MONTREAL — A structural change in demand for autos and wood products will likely limit growth in North American trade for years after it suffered its worst decline in 2009 since NAFTA went into effect 15 years ago, analysts said Thursday.
“I don’t know if we’ll ever see those peak numbers again, but we do think that gradually, over time, we’ll work our way somewhere back to a more normalized level,” Edward Jones analyst Brian Yarbrough said in an interview.
While transportation volumes have started to improve, it could take several years before they reach the levels of 2007 and 2008.
Yarbrough said there is little hope that Americans will once again purchase as many as 16.5 million cars a year or build two million new homes annually.
Demand in those two key sectors helps drive cross-border trade in industries that employ hundreds of thousands of Canadians.
Last year’s auto sector collapse, falling oil and natural gas prices and the housing bubble contributed to a 23.3 per cent decrease in surface transportation trade, the U.S. Transportation Department said in a report Thursday.
It marked the largest annual decrease since the North American Free Trade Agreement went into effect in 1994.
The value of products that were shipped by truck, rail and pipeline between Canada, the United States and Mexico dropped to US$637 billion in 2009 from US$829.9 billion in 2008 and US$797.3 billion in 2007, the report said.
The year ended with a 10.5 per cent increase in December compared with 2008, the only month that saw a year-over-year increase.
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