Alberta Budget 2025: Logistics Firm Stakeholder Brief

Executive Summary

Alberta Budget 2025 invests $8,475 million in three-year transportation capital, including $2,500 million for roads and bridges and significant corridor expansion projects. For logistics firms, the budget presents both opportunity and disruption. The highway investment program -- including Deerfoot Trail upgrades ($485 million), Highway 3 Twinning ($106 million), Highway 63 north of Fort McMurray ($101 million), and Highway 881 improvements ($141 million) -- directly affects key freight routes. However, U.S. tariffs at 15% on goods and 10% on energy fundamentally alter cross-border trade volumes and routing, requiring logistics firms to adapt operations, pricing, and corridor strategies. The full fuel tax of 13 cents per litre and the new electric vehicle tax add to fleet operating costs.

Top 5 Relevant Budget Measures

1. Highway Rehabilitation: $1,067 million over three years -- The largest road maintenance investment, improving pavement condition, load-bearing capacity, and safety on the provincial highway network that logistics firms depend on daily.

2. Highway Twinning, Widening, and Expansion: $264 million in new projects -- Key corridor investments include Highway 11 Twinning from Red Deer to Rocky Mountain House ($208 million), Highway 3 Twinning from Taber to Burdett ($106 million), Highway 40 widening between Grande Cache and Hinton ($69 million), Highway 63 Twinning north of Fort McMurray ($101 million), and Highway 881 safety improvements ($141 million). These directly affect freight route capacity and safety.

Deerfoot Trail Upgrades: $485 million over three years -- Calgary's primary north-south freight corridor receives the largest urban road investment, with $197 million in 2025-26. This directly benefits logistics operations in the Calgary distribution hub.

Tariff Assumptions: 15% on goods, 10% on energy -- The budget's baseline trade assumption creates fundamental shifts in cross-border logistics volumes, routing decisions, and customer supply chain strategies. Retaliatory tariffs on imported goods raise costs for logistics firms dependent on U.S.-sourced equipment and supplies.

Fuel Tax: 13 cents per litre, no relief through 2027-28 -- With WTI forecast below $80/bbl (the threshold for partial relief), the full fuel tax remains in effect. Combined with the new electric vehicle tax introduced February 2025, fleet operating costs face upward pressure.

Risks

U.S. tariffs represent a structural disruption to logistics demand. Cross-border trade volumes are expected to decline as tariffs reduce exports to the United States and retaliatory measures reduce imports. For logistics firms with significant cross-border operations, this could mean reduced shipment volumes, margin pressure from clients seeking to pass tariff costs through the supply chain, and the need to restructure routing and capacity.

The economic slowdown amplifies logistics demand risk. Real GDP growth at 1.8%, down from 3.0%, combined with declining retail sales growth (1.8% forecast) and rising unemployment (7.4%), suggests reduced goods movement across the Alberta economy. Consumer spending caution directly affects warehouse throughput, last-mile delivery volumes, and retail distribution activity.

Fuel and taxation costs are rising. The full fuel tax of 13 cents per litre with no prospect of relief through 2027-28, combined with the new electric vehicle tax, increases operating costs for fleet operators. For firms with thin margins on competitive freight rates, this cost escalation may not be fully recoverable from customers.

Highway construction activity, while beneficial long-term, creates short-term routing disruptions. Multiple major projects occurring simultaneously -- Deerfoot Trail, Highway 3, Highway 63, ring roads -- require logistics firms to plan for temporary detours, lane reductions, and construction delays.

Opportunities

The $2,500 million roads and bridges investment directly improves the highway network that logistics firms use. Highway rehabilitation ($1,067 million) reduces vehicle wear and maintenance costs, improves fuel efficiency on better pavement, and reduces accident risk on high-volume freight routes.

Highway twinning and expansion projects address specific corridor bottlenecks. Highway 63 north of Fort McMurray ($101 million) and Highway 881 ($141 million) are critical oil sands logistics corridors. Highway 3 Twinning ($106 million) connects southern Alberta to British Columbia and supports agricultural freight. Highway 11 Twinning ($208 million) improves the Red Deer to Rocky Mountain House corridor for forest products and tourism supply chains.

The Deerfoot Trail upgrade at $485 million addresses Calgary's most significant urban logistics bottleneck. For firms operating distribution centres in the Calgary region, reduced congestion translates directly to lower costs, faster delivery times, and improved fleet utilization.

The weaker Canadian dollar (69.6 US cents) improves the competitiveness of Alberta exports that logistics firms transport. Even with tariffs, the currency advantage may sustain some export volume, and non-U.S. export growth creates new logistics demand.

Trade diversification driven by tariffs could create new logistics opportunities. As Alberta businesses seek alternative markets in Asia, Europe, and other regions, logistics firms with multi-modal capabilities and international freight forwarding capacity are positioned to capture new business.

Likely Government Intent

The government views transportation infrastructure as both an economic corridor enabler and a counter-cyclical job creation tool. The emphasis on highway expansion and twinning reflects priorities for resource transportation (oil sands, agriculture, forestry) and interprovincial connectivity. The $2,863 million LRT investment is primarily urban transit rather than freight-oriented.

The Airport Gateway Strategy ($4 million operating increase) signals interest in improving air freight and logistics connectivity at key Alberta airports. The Red Deer Regional Airport expansion ($11 million) adds regional logistics capacity.

Immediate Questions to Ask Ministries

1. What is the construction phasing and traffic management plan for simultaneous major highway projects? How will freight routing be accommodated during construction?

2. How is the Airport Gateway Strategy being implemented, and what logistics facility improvements are planned?

3. Will procurement contracts for highway projects include provisions for tariff-driven material cost escalation?

4. How does the government's trade diversification strategy translate into logistics infrastructure priorities? Are any east-west corridor investments planned?

5. What is the timeline for fuel tax relief activation if oil prices fall below $80/bbl?

48-Hour Action Checklist

• Assess tariff impact on cross-border shipping volumes and develop routing contingency plans
• Map highway twinning and expansion projects against key freight routes to identify network improvements
• Calculate the combined fuel tax and EV tax impact on fleet operating costs for 2025-26
• Prepare a statement on the logistics sector's role in tariff response and trade diversification
• Contact Transportation on the Airport Gateway Strategy and logistics-relevant infrastructure priorities

30-Day Monitoring Checklist

• Submit corridor priority recommendations to Transportation and Economic Corridors
• Engage with Jobs, Economy and Trade on trade diversification logistics requirements
• Monitor highway construction schedules for temporary freight routing adjustments needed
• Track municipal water and wastewater infrastructure for flood risk reduction along freight corridors
• Assess Red Deer Regional Airport expansion implications for regional logistics operations
• Coordinate with retail and manufacturing associations on supply chain tariff impact assessments
• Monitor fuel pricing and WTI oil price for potential fuel tax relief activation

Suggested Message Frames

Frame 1 -- Freight Corridors: "Alberta's logistics network is the backbone of trade diversification. The $2.5 billion roads and bridges investment is critical, but highway projects must prioritize freight corridors that connect Alberta to non-U.S. markets."

Frame 2 -- Trade Pattern Shift: "Tariffs are not just a price issue -- they are a logistics challenge. Changing trade patterns require infrastructure that supports diverse routing, not just north-south corridors."

Frame 3 -- Urban Bottleneck: "Deerfoot Trail at $485 million addresses Calgary's most critical bottleneck. For logistics operators, urban congestion is a direct cost, and this investment delivers real operational savings."

Opposition Narratives to Anticipate

Environmental advocates will argue that highway expansion perpetuates fossil fuel dependency and should be redirected to rail and intermodal infrastructure. Urban transit advocates may contrast the $2.5 billion highway investment with transit funding and argue for more balanced modal investment. Small business advocates may argue that the fuel tax burden falls disproportionately on logistics-dependent rural businesses. Labour advocates may focus on trucking industry working conditions and safety standards.

Logistics firms should emphasize their role in economic connectivity, supply chain resilience, and trade diversification, while noting that efficient logistics reduces per-unit emissions through better route optimization and higher fleet utilization.

Data Points to Monitor

• Cross-border freight volume data from Canada Border Services Agency
• Highway construction project timelines and traffic management plans
• Fuel pricing and WTI price trajectory relative to the $80/bbl fuel tax relief threshold
• Retail sales and industrial production data as indicators of domestic freight demand
• Trade diversification data: export volumes to non-U.S. destinations
• Red Deer Regional Airport freight traffic data
• Steel and equipment pricing for fleet renewal and expansion decisions
• Municipal infrastructure project procurement that creates logistics demand for material delivery