Explaining the Post-2017 Fall in Productivity in the Transport Sector in Canada

Productivity growth in Canada has been abysmal in Canada in recent years. Using either 2017 or 2019 as a base, output per hour growth in this country has been by far the weakest in the G-7. For two-digit NAICS industries, the transportation and warehousing sector has experienced the worst labour productivity performance, down 4 per cent per year since 2017, compared to a 0.6 per cent increase for the business sector. This massive drop in productivity has resulted in the level of output per hour in the transportation sector falling from 93 per cent of the business sector average in 2017 to 77 per cent in 2023. This one sector reduced business sector productivity growth by about 0.2 percentage points per year. The objective of this report is to shed light on the nature of this fall in productivity growth in the transportation and warehousing. Three of the nine three-digit transportation sector industries are found to account for over 78 per cent of the fall in labour productivity growth in the sector, namely air transport, public transit and trucking. The report provides a detailed analysis of how and why productivity fell in these industries.