Canadian market

Canada is the world’s second largest country based on total area (Russia is first, the United States is third) and the world’s tenth largest economy.  Economic growth is rooted in strong free market principles, including development of domestic manufacturing sectors, responsible use of natural resources, and pursuit of export opportunities.

Canada maintains its own currency, the Canadian dollar, which is sometimes referred to by its nickname, the loonie.  For more than 30 years, the U.S. dollar enjoyed a period of strength over its Canadian counterpart, which made U.S. goods more costly in the Canadian market.  That period came to an end however, in 2007, when the Canadian loonie reached parity with the U.S. dollar.  Since then, the Canadian dollar has slipped against the U.S. dollar, but remains a highly stable currency.

Following is a brief overview of key components of the Canadian economy:

U.S/Canadian Trade

Every day, almost $1.5 billion worth of goods cross the U.S./Canadian border.  Total goods traded during 2017 amounted to $533.7 billion. This marked a two percent decrease over 2016 volume.

The United States is Canada’s largest trading partner, serving as the top destination for Canadian exports, and the leading source of Canadian imports. In 2017 Canadian exports to the U.S. totaled $274.5 billion, and imports were valued at $259.2 billion.

In 2015, U.S. trade with China surpassed trading levels with Canada, thus ending Canada’s decades-long tenure as America’s largest trading partner.  However, Canada remained the United States’ largest goods export market during 2017, and the third largest source of imports.

Despite this change in status, the two countries remain committed to building the trade relationship and removing barriers that impede the flow of goods.  The North American Free Trade Agreement (USMCA) has been an important catalyst for trade since taking effect in 1994. Among other things, USMCA eliminates duties on domestically-produced goods traveling among the three signatory countries (Canada, Mexico and the United States).  (USMCA is currently being reevaluated by all three governments. Follow the Purolator blog for the latest news about USMCA.)

E-Commerce

Canadian shoppers are expected to spend $43 billion on online sales during 2018, an increase of 25.3 percent over 2017 levels.  This impressive increase will continue the steady rate of growth in online spending since 2010. E-commerce is expected to account for nine percent of all retail sales during 2018.

As Canadian consumers are increasingly drawn to the convenience and flexibility of online shopping, many U.S. retailers have benefitted, with 68 percent of Canadian consumers indicating they have made purchases from non-Canadian websites.  Further, research by Boston Consulting Group (BCG) found U.S. retailers account for one-third of all Canadian e-commerce dollars, and in some categories, as much as 60 percent of online spending goes to U.S. retailers.

Clearly then, there is an opportunity for U.S. e-retailers to meet demand among Canadian consumers.  But before a U.S. business rushes in to the Canadian market, it’s critical to understand a few key factors:

According to Statistics Canada, the 2017 population of Canada was 36.7 million people and is spread across ten provinces and three territories.  More than 80 percent of the population live in urban areas, and 90 percent are within 100 miles of the U.S. border.  This means the overwhelming majority of the Canadian population is easily reachable through traditional distribution routes.

But for the more than seven million consumers and businesses not located near established urban routes, delivery options can be challenging.  For example, how would your business arrange shipping to Canadian customers living in the remote Northwest Territories, with a population density of .04 people per square kilometer, or to Manitoba with a population density of 2.4 people per square kilometer, or to individuals living on any of Canada’s 15 populated islands?