In my last blog I compared the Edmonton region to other Canadian jurisdictions in terms of exports and concluded that although trade is already an important part of our regional economy, there is still significant unrealized potential.
This time I wanted to take a deeper dive into the export activity that already exists in the region.
There is limited detailed data available on international trade at a municipal level, however data at a national and provincial level reveal some interesting stories. Take data on top destinations for exports for example. Unsurprisingly the United States takes the number one spot for both Alberta and Canada by a wide margin – beyond that, things start to diverge. For the first time in many years, Japan surpassed China as Alberta’s top trading partner in 2022. While when we look at Canada as a whole, China remains at the number two spot. In general, Asian countries feature more prominently in Alberta relative to Canada – this likely stems from the excellent access Alberta companies enjoy via the ports of Prince Rupert and Vancouver.
On the other hand, European nations are not as significant in terms of trading partners for our province. The only European nation in the top ten for Alberta is the Netherlands. Interestingly, Peru is number six in Alberta, likely due to their participation in the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). When I look at the list of top Alberta export destinations compared to the top Canada export destinations I see a lot of opportunity for Alberta companies to increase exports to India and Brazil. Both countries have large populations and we have excellent market access. Many Indian and Brazilian companies also have extensive experience working with Canadian companies- so there is a strong precedent to build upon.
Figure 1, Top Destinations for Canadian and Albertan Exports (2022), Alberta exports for the top 10 trading nations in 2022
Existing trade is one thing, but what can the data suggest around where future opportunities may lie? Figure 2 shows the top ten nations where we saw the fastest growth since 2017. The data suggests that the most promising region for growth is the Americas. Half of the top 10 nations with fastest growing Alberta imports come from this region (Figure 2).
Figure 2, 2017-2022 Percent Change for top 10 Alberta Export Growth Destinations
However if we ignore countries that are not already a top 10 trading partner (i.e. we only look at countries from Figure 1), a slightly different picture of priorities emerges (Figure 3). Of our existing top ten export destinations, the fastest growing importers of Alberta goods and services are South Korea, Peru and Ecuador.
Figure 3, 2017-2022 Percent Change for top 10 Alberta Export Destinations
If we look at data from DNB Hoovers we can get a sense of the types of businesses that are currently exporting in the Edmonton region (Figure 4). Unsurprisingly, manufacturing companies are the most likely to export compared to other industries. Companies involved in the provision of professional services are a close second however, demonstrating the value that our skilled talent pool has in a global context.
Figure 4, Edmonton Region Exporters by two-digit NAICS (percent of total Edmonton Region exporters)
Statistics Canada does track the value of exports by high level industry (two digit NAICS code). If we look at exports by industry for Edmonton (Figure 5) you can see growth across many categories- which is positive.
Figure 5, Value of Exports from the Edmonton Region by Select Sector over time (Thousand CAD)
A closer look however (ie changing the axis so that they are all the same scale– Figure 6), reveals that many of these sectors, while growing, are still contributing relatively small numbers to the region’s overall exports.
Figure 6, Value of Exports from the Edmonton Region by Select Sector over time (Thousand CAD)
The conclusion is two-fold. First, there is a lot more potential for diversifying exports and second, there is already a track record of success in the manufacturing sector that we can build from.
As always, we may not want to take these numbers at face value. For example, when you look at trade value across Canadian municipalities, the Edmonton region is in seventh place for total export value (Figure 7). Calgary on the other hand is in first place. Most of Calgary’s exports are listed as oil and gas – a total of $59 billion. The Edmonton region’s exports of oil and gas on the other hand are reported at only 1.4 billion, while in fact, the majority of the exports on Calgary’s books actually originate from the Edmonton region. This fact, however, is not captured in Statistics Canada data – so exact numbers are hard to define.
Figure 7, Value of exports by Canadian Census Metropolitan Area Over Time
Despite this information not being captured, the Edmonton region is one of only two of Canada’s largest major municipal areas that contributed to Canada’s positive trade balance in 2022 (Figure 8). There is enormous unrealized potential for exports relative to our peers; however, in 2022 we exported more than we imported.
Figure 8, Trade Balance by Major Canadian City Over Time
After examining the available data, there are a couple of strategies which I think could pay off related to expanding exports from the Edmonton region. First, building export strategies for specific markets where we are already getting traction. This will leverage some of the relationships already have and strengthen and grow these connections. Second, looking at specific sectoral strengths and expanding in those areas. There is likely still room for us to grow our manufacturing exports for example, but the same is true for our food and agriculture sector, especially when it comes to value-added products. There is a growing number of our local distilleries, breweries, food producers and others that are already expanding into international markets. These strategic moves will certainly help to fuel their growth here. Building upon some of our smaller sectors where we have strong growth potential but are starting from a much smaller base would also help to expand those industries locally and support the build out of clusters. This in turn drives investment into these sectors. When it comes to the question: should we attract new investment or grow our local companies through export, the answer is: both – a rising tide really does float all boats.
Does any of this pique your curiosity around what exporting could do for your business? If so, please reach out to the Edmonton Global team. We can help navigate you to resources that will help you start on your export journey. Additionally, you can learn more about Edmonton’s connectivity and logistics advantages here.