Making it, and making it to the destination: Challenges for domestic manufacturers

According to a recently released Statistics Canada analysis on interprovincial trade flows and frictions, the manufacturing industry contributed one-third (33.3%) of total trade between provinces and territories in 2021. 

The manufacturing industry was by far the highest contributor to internal trade in 2021. This industry’s contribution was close to triple that of finance, insurance, real estate, rental, leasing and holding companies (11.8%) as well as mining, quarrying, and oil and gas extraction (11.2%), and more than triple that of wholesale trade (10.6%).

Although less than one-fifth (18.6%) of the manufacturing industry’s output went to internal trade in 2021, this industry plays a central role in the linkages in the economy. This was especially the case for businesses that ship products over long distances—whether to wholesalers, distributors, or final destinations—and those that acquire domestically produced materials or components as inputs for their own production processes.

With that in mind, let’s have a look at what manufacturing businesses have been saying more recently about transportation, according to the latest data from the Canadian Survey on Business Conditions, as well as some transport-related price indexes.

Labour disputes are a significant disruption to acquiring inputs, products and supplies

In the first quarter of 2025, manufacturing businesses that experienced disruptions which impacted their ability to acquire inputs, products or supplies from Canada or abroad over the previous 12 months often cited labour disputes as a key factor. Specifically, more than one in five (21.6%) manufacturing businesses cited labour disputes impacting transportation providers or logistics providers, while one in six (16.8%) reported labour disputes impacting suppliers.

Other reasons given for disruptions were international geopolitical events (13.4%) and natural events (8.3%).

Transportation costs, selling to other provinces and territories, supply chains and inputs are expected obstacles

During the first quarter of 2025, more than one in four (25.7%) manufacturing businesses said transportation costs would be an obstacle over the next three months. 

And although 1 in 20 (5.0%) manufacturing businesses said that challenges related to exporting or selling goods and services to customers in other provinces and territories would be an obstacle, this was more than double the rate observed for businesses overall (2.4%).

Two in five (20.6%) manufacturing businesses expected at least one supply chain-related obstacle over the next three months. Among these businesses, 1 in 10 (10.0%) expected difficulty acquiring inputs, products or supplies from within Canada.

Manufacturing businesses are more likely to outsource deliveries

When manufacturing businesses were asked in the first quarter of 2025 about the types of tasks, projects or short contracts outsourced over the last 12 months, one in five (20.4%) businesses reported outsourcing delivery driving and errands—a share more than twice that of businesses overall (9.1%).

Trucking and freight rail prices down, couriers and local deliveries more expensive

Prices for truck transportation (-0.4%) decreased in the fourth quarter of 2024 compared with one year earlier, while those for freight rail services (-3.1%) declined over the same period.

In contrast, prices for couriers (+8.3%) were up year-over-year in March 2025, while those for local messengers and local delivery (+2.2%) saw an uptick over the same period.