Canadian Industry Statistics (CIS)
Capital Investment
Transportation and Warehousing (NAICS 48-49)
Under this topic you will find information on annual and accumulated
purchases of machinery and equipment and construction assets in Canada's
Transportation and Warehousing (NAICS 48-49) sector. This information
can help you to gain insight into the rate of technological change,
competitiveness and general health of the sector.
NOTE: No Capital Investment data is available for the
Transportation and Warehousing (NAICS 48-49) sector.
Gross Capital Stock provides a measure of accumulated
capital investment. it is the value of all fixed assets still in use, at the
actual or estimated current purchasers' prices for new assets of the same type,
irrespective of the age of the assets. These data are not adjusted for
depreciation of assets.
Examining the accumulated capital asset base for the Transportation and Warehousing sector,
accumulated capital investment increased from
$228.2 billion in 2002 to $329.6 billion
in 2011, or at a compound annual rate of 4.2%. Between 2010
and 2011, a 5.2% increase was observed.
Accumulated Capital Investment* by Type of Asset: 2002-2011
Transportation and Warehousing (NAICS 48-49)
Type of Asset |
Value in
$ billions |
CAGR**
2002-2011 |
% Change
2010-2011 |
2002 |
2011 |
|
|
Machinery and Equipment |
89.5 |
97.6 |
1.0% |
-0.6% |
Construction |
138.7 |
232.0 |
5.9% |
7.9% |
| |
Total |
228.2 |
329.6 |
4.2% |
5.2% |
Breaking accumulated investment into the two main asset types, machinery and
equipment investment increased from $89.5 billion
in 2002 to $97.6 billion in 2011, an average annual
increase of 1.0%. Over the course of the most recent
year, machinery and equipment investment decreased by
-0.6%.
Construction investment increased from $138.7
billion in 2002 to $232.0 billion in 2011, or at a
5.9% annual rate. Between 2010 and 2011 an increase of
7.9% was observed.
Accumulated Capital Investment by Type of Asset: 2002-2011
Transportation and Warehousing (NAICS 48-49)
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Annual Capital Investment is a flow (in this case, over the course of a
year) that adds to the stock of capital. In most cases, firms choose to invest
when business conditions are favourable and real interest rates are lower.
Therefore, in most cases, investment is higher in times of economic
prosperity.
Annual investment in the Transportation and Warehousing sector increased from
$12.9 billion in 2002 to $21.5 billion
in 2011, or at a compound annual rate of 5.8%. Between 2010
and 2011, an increase of 14.6% was observed.
Annual Capital Investment by Type of Asset: 2002-2011
Transportation and Warehousing (NAICS 48-49)
Type of Asset |
Value in
$ billions |
CAGR*
2002-2011 |
% Change
2010-2011 |
2002 |
2011 |
|
|
Machinery and Equipment |
8.7 |
9.3 |
0.7% |
4.3% |
Construction |
4.2 |
12.2 |
12.5% |
23.9% |
| |
Total |
12.9 |
21.5 |
5.8% |
14.6% |
Breaking annual investment into the two main asset types, machinery and
equipment investment increased from $8.7 billion in
2002 to $9.3 billion in 2011, or at a compound annual
rate of 0.7%. Over the course of the most recent year, machinery
and equipment investment increased by 4.3%.
Construction investment increased from $4.2 billion
in 2002 to $12.2 billion in 2011, or at a
12.5% annual rate. In the most recent year, an increase of
23.9% was observed.
Annual Capital Investment by Type of Asset: 2002-2011
Transportation and Warehousing (NAICS 48-49)
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Another way to look at capital investment is to calculate the ratio of
annual investment to accumulated investment. Annual investment performs two
functions: the replacement of capital stock which has been sold or depreciated
to zero and enhancement of capital stock.
The degree to which capital stock must be replaced will depend upon how
quickly technology changes, how much capital is available for investment and
how competitive an industry is.
Firms normally choose to enhance their stock of capital during times of
economic prosperity, when higher sales and lower interest rates make it
profitable to do so.
The investment ratio for materials and equipment went from 9.7%
in 2002 to 9.6% in 2011. Looking at building and engineering
construction, the ratio was 3.0% in 2002 while in 2011 it stood at
5.2%. It is likely that construction will not require replacing as
quickly as capital equipment so the ratio will be lower than it is for the
later in most cases.
The chart below illustrates how the investment ratio has varied from 2002
to 2011.
Investment Ratio (%) by Type of Asset: 2002-2011
Transportation and Warehousing (NAICS 48-49)
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The data in this section come from Statistics Canada's Fixed Capital Flows and Stocks.
Data are available for the years 2002-2011.
Accumulated investment is a gross measure, as depreciation is not subtracted
from investment. Yearly deductions are made to gross stock to account for
assets that cease to exist in that year.
Assets are broken into two categories: Machinery and Equipment and
Construction. Only non-residential Construction is measured, and it includes
both building construction (such as factories and offices) and engineering
construction (such as roads and dams).
A more complete summary of Statistics Canada's Fixed Capital Stocks and
Flows data, including criteria used to classify assets, is available in the Data Sources section of this
site.
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To better understand the relationship between annual capital investment and
accumulated capital investment, it is important to distinguish between stocks
and flows.
A stock is a quantity that exists at a particular point in
time. A flow is a quantity per unit of time (such as a year).
The stock of capital (i.e. plant, equipment, buildings, tools, etc. used to
produce goods and services) is changed by two flows: investment and
depreciation.
Investment is the purchase of new capital, and thus
investment increases the stock of capital. Depreciation
decreases the stock of capital through wear and tear and the passage of
time.
In Canadian Industry Statistics, accumulated capital investment can
be viewed as the stock of capital being increased by the flow of annual capital
investment. Accumulated investment is a gross measure, as depreciation is not
subtracted from investment. Yearly deductions are made to gross stock to
account for assets that cease to exist in that year.
With other factors held constant, the greater the expected profit rate from
new capital, the greater is the amount of investment firms will undertake. The
expected profit rate is influenced by the phase of the business cycle and
advances in technology.
In an business cycle expansion the expected profit rate increases, and
during a contraction it decreases. During an expansion sales and the rate at
which firms use their capital yield a higher profit rate, while a contraction
means lower sales, less efficient use of capital and a lower profit rate. As
firms become more experienced in their use of new technology, they expect costs
to fall and profits to increase.
Decisions to invest in capital are also influenced by interest rates, as the
funds required to finance investment in capital are usually be borrowed, or
drawn from the firm's retained earnings. In either case, higher interest rates
mean a higher opportunity cost of
investing funds in capital, and therefore, holding other factors constant, the
lower the real
interest rate the greater is the amount of capital investment.
Ultimately, firms will consider the expected profit rate and the real
interest rate together when making decisions on capital investment in most
cases. In some cases, however, factors like rapid technology advancement and
the level of competition within an industry can force firms to invest in
capital regardless of the profitability of the investment and the real interest
rate.
In Canadian Industry Statistics, the measures of Accumulated
Capital Investment and Annual Capital Investment are expressed in current
dollars (i.e. the values are not adjusted to account for inflation). Both
measures are broken down into two asset types: Machinery and Equipment and
Construction. Only non-residential Construction is measured, and it includes to
both building construction (such as factories and offices) and engineering
construction (such as roads and dams).