The border between the pandemic and building back better
As neighbors, allies, and friends, economic ties between Canada and the U.S. run deep. The U.S. is Canada’s largest trading partner, with a shared border facilitating the bilateral movement of goods and resources such as food, fuel, and medical supplies. This relationship is and will continue to be a major source of economic prosperity for both countries as our economies recover.
The COVID-19 pandemic has pushed both Canada and the United States to close the land border to non-essential travel and introduce restrictions for essential border crossing – a mandate that continues to be extended, with no certainty on re-opening just yet.
Virtually all Canadian provinces and sectors that involve cross-border relations are impacted by pandemic restrictions due to the high level of integration between our two countries. In this article, we explore the challenges and opportunities for tourism and supply chains.
The tourism industry, which relies on domestic and international travel, has taken on the brunt of this impact, with expenditures in the province estimated to have fallen 48% since 2019, and direct job losses estimated at 23,000, or 30 percent according to Travel Alberta.
“COVID-19 has devastated Alberta’s tourism sector, with the provincial visitor economy suffering the largest single year drop ever,” explains Deborah Spence, Manager of Stakeholder Engagement and Communications at Travel Alberta. “Border restrictions are among the many measures that, while necessary to curb the spread, have had a disproportionate impact on our industry, which of course, relies on human interaction and people’s ability to travel to destinations of their choosing.”
However, despite these challenges, there is also opportunity to promote tourism. Prior to the lockdowns, the number of American visitors to Canada increased every year, reaching record highs in 2019. It’s been more than a year since then, and the demand for leisure travel is higher than ever, with trip cancellations and postponements stacking up against continued restrictions.
Capitalizing on this demand both domestically and internationally and making recovery plans to leverage such opportunities will benefit businesses as they rebuild post pandemic, and Travel Alberta is already preparing for such opportunities when the time comes.
“We are hopeful that current health measures and vaccinations will pave the way to more freedom for Albertans and other visitors to explore the province this summer,” says Deborah Spence. “We are forging ahead with a smart recovery plan aimed at capitalizing on pent-up demand and are ready to start promoting our province as soon as conditions allow. We are excited to get people dreaming about and planning their visits to destinations in every corner of the province.”
The tourism industry is not the only sector affected by cross-border and broader pandemic restrictions. In part fueled by disruptions to the global supply chain, Canada-US supply chains have seen their share of logistical complications, which has impacted all Canadian sectors including energy, agriculture, and manufacturing.
North American businesses and consumers have seen shortages and delays in goods and products throughout this past year while the demand for consumer goods is rising. For example, the price of lumber has seen record highs in early 2021, particularly in the U.S., as more people look to buy or improve their homes, leaving the Canadian forestry sector scrambling to catch up. Across industries, the challenge to meet demand is leading to higher costs, which are ultimately passed down to the consumer, making goods increasingly expensive.
While the rising demand for goods is challenging to meet, it also presents a unique opportunity for Alberta and Canada to expand our economic potential. The demand for our exports such as lumber, and energy products, and raw materials, from our southern neighbors and globally, presents an opportunity for Canadian businesses to grow their operations to achieve economies of scale as we shift our focus to economic recovery.
Having some certainty around border reopening, particularly around when border travel will be permitted, who will be allowed to cross the border, and the specifics of post-pandemic measures, will allow business across industries to develop more effective economic recovery strategies and position themselves to leverage their resources and capitalize on opportunities for economic growth.
By focusing on strengthening our domestic supply for high demand goods and services, strengthening local and cross-border supply chains with the U.S., and preparing to leverage pent-up demand for tourism when the border reopens, we can be one step closer to building back better post pandemic.