HALIFAX, N.S. - Canada and the US have enjoyed a long and fruitful trading relationship together, with more than $2 billion in goods changing hands each day. Many North American cross-border regions -...
HALIFAX, N.S. – Canada and the US have enjoyed a long and fruitful trading relationship together, with more than $2 billion in goods changing hands each day. Many North American cross-border regions – such as the Pacific Northwest, the Southern Ontario-Michigan corridor and the Montreal-New York corridor – have reaped considerable fortune from this trade, creating integrated economies together despite the international border that divides them. But some neighbouring regions, in spite of their close proximity, have never been able to realize the same economic success.
Atlantic Canada, combined with parts of New England in the US, is one such region. The area, dubbed “Atlantica,” encompasses Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland, and southern Quebec on the Canadian side, and Maine, New Hampshire, Vermont and upstate New York on the American side. Together these states and provinces share a long list of common troubles, including limited political influence, higher than average unemployment and out-migration, and lower than average income.
For years the region laid essentially dormant, with ports and other transportation resources under-utilized, but a recent shift in global trading patterns has put Atlantica back on the map.
According to Brian Crowley, president of the Halifax-based think-tank Atlantic Institute for Marketing Studies, Asia is currently enjoying an “economic renaissance” with nations like Japan, China and India taking advantage of tremendous productivity, manufacturing investment and availability of labour. This turn of fortune for the Asian market has seen vast increases in trade between North America and Asia, which has given businesses in Atlantica an opportunity to cash in.
Traditionally, trade routes between the two continents have favoured the West Coast ports (via the Panama Canal), but with those ports operating at near capacity, shippers are starting to run out of options.
“All the major port analysts are saying that by 2008, you won’t be able to have any incremental increases in traffic through those ports without incurring big costs and long delays,” Crowley says.
The Panama Canal can’t allow ships carrying more than 4,500 containers, even though the biggest ship today carries about 10,500 containers with future ships that may reach up to 15,000 containers. So who is going to pick up the slack on this huge flow of Asian merchandise to consumers in North America? Crowley’s answer: The Suez Express Route, which travels from the Mediterranean Sea, across the Atlantic, eventually settling at the Port of Halifax.
“The best route for them to get to North America that isn’t congested or incapable of handling the ships is the Suez Express Route,” Crowley explains. “If you think about a container ship leaving from Hong Kong bound for New York, there’s two ways that it can go: it can go across the Pacific and through the Panama Canal and up the East Coast, or it can go through the Indian Ocean through the Suez Canal and across the Atlantic. The difference in distance between those two is 300 miles, so distance is not an issue here. The Suez Canal is under-utilized; it’s got spare capacity, it can take the largest container ships afloat and so the congestion on the West Coast, the congestion and capacity limitations on the Panama Canal, all these things are going to start pushing traffic onto the Suez route.”
That additional push of traffic is going to mean a major increase in business on the shores of Halifax. With the Suez Express already carrying 7% of world seaboard trade, Halifax is poised to assume a new strategic position in world trading circles.
“When you consider that the Port of Halifax is currently only using roughly 50% of its capacity (about 550,000 containers), we could get up to 1.2 million without really breaking a sweat. If you consider how big that opportunity is … this could be a mainstay of not just the regional economy, but a very important piece of nationally and continentally significant infrastructure,” Crowley says.
Which brings us past “Atlantica: the geographic region” to “Atlantica: the concept.” Simply stated, “Atlantica: the concept” is a rekindling of the historical north-south trade routes in order to boost the social, economic and political climates of the region. Though the concept itself is nothing new, it’s only been about four years that AIMS, the Atlantic Provinces Chambers of Commerce (APCC) and other local groups have been working in earnest to push the Atlantica concept on local policy makers.
“The idea of Atlantica is that we have here on the East Coast, a natural economic region, which is split by the border, and so we have one region in two countries,” Crowley says. “By building coalitions across the border between groups and interests that want to remove the barriers to trade, we can build infrastructures and build appropriate business and government relations and all the things that will allow us to take better advantage of the kinds of opportunities that this new trade pattern creates for us.”
But in order to fully realize this potential, there are several barriers for the region to overcome, most notably infrastructure and border efficiency.
“We’ve got a fairly good highway in the Trans-Canada, but if you wanted to move across the American border into markets in New England and even in New Brunswick, the highway isn’t four lanes all the way from Saint John to the border,” Crowley says. “Once you get into Maine, you’ve got real problems; you’ve got regulatory barriers. I think the load limit on I-95 is 80,000 lbs whereas the load limit on Canadian highways is 100,000 lbs and you often get containers that weigh more than 80,000 lbs.”
Border obstacles have also increased significantly in the five years since 9/11, with people on both sides of the border feeling the strain on the economy. The question is how does Atlantic Canada maximize its chances of working with the US to come up with a border system that protects the security of both countries, but doesn’t diminish the economic opportunities present for both countries? Crowley says Senator Susan Collins from Maine may be part of the answer.
Senator Collins grew up in Caribou, Me., a community that shares a border with New Brunswick, where she frequently visited relatives on the Canadian side. Her experience of living in a border community will likely be a key factor in swaying US officials to consider Atlantica, especially since she also happens to be chairperson of the Senate committee that oversees Homeland Security, Crowley says.
“She is one of the key people who’s been shaking money loose from Washington to study the Atlantica infrastructure and she’s helping to support the designation of the East-West highway and high priority of that corridor,” he says. “She’s going to be a major ally for Atlantica and for Canada in pushing to make sure that the economic exchanges across that border are as free and efficient as they can be because her own constituents’ interests depend on it. Those are the kind of cross-border coalitions that I think are really at the very heart of the Atlantica idea. We want to build a sense on both sides of the border that our economic fates are inextricably intertwined.”
Working with the US government to create a transportation-sensitive economy is critical, according to Crowley.
“I don’t think it’s too much to say that in the emerging world that we’re looking at, infrastructure is destiny and transportation is destiny,” he says. “If we can’t move the massive weight of goods (needed) to consumers, it’s a loss of standard of living for us (and) it’s a loss of trading relationship with Asia. It is a huge logistical problem for us and it’s quite clear that trucking is going to be a major part of the equation.”
The US Department of Transportation predicts that truck traffic in the US is going to double in the next 16 years and while rail and sea are not without their troubles, the importance of trucking to the success of Atlantica sh
ould trump them both, says Crowley.
“Nothing is going to displace the importance of trucks. These other things are complimentary to trucks, which are really the backbone of the North American distribution system. This is one of the reasons why a key piece of Atlantica is going to be this idea of an East-West highway, connecting Halifax to southern New Brunswick right to northern New England and upstate New York. It’s going to be a major piece of the puzzle.”
Stephen Dempsey, president and CEO of the Greater Halifax Partnership and chair of the APCC, has been working to solve some of these problems and find ways to increase the level of economic activity in the region.
“We want to make sure that our business climate here is as competitive as anywhere else in the country (but) differences in transportation rules and regulations can create challenges and costs for businesses,” he says.
Dempsey says that while Atlantic Canada was once considered a dead end for business, people are now starting to realize the level of transportation access available to the region.
“There was a time that people would look at Atlantic Canada and say, ‘Well, you’re disadvantaged. You’re at the end of the road. You’re all the way out in Atlantic Canada and even worse, you’re stuck out in the middle of the Atlantic Ocean,'” Dempsey says. “Our reaction to that is we’re actually right in the centre of the action. We’re right in the middle between the European Union and the NAFTA markets. We have tremendous logistic advantages. We have a tremendous port here in Halifax and we’ve got rail access all the way into Mexico. So transportation and the transportation links are what make this geography work for us.”
Local carriers in the Maritimes are also starting to realize the benefits of restoring trade partnerships with New England. Vaughn Sturgeon, president of the Warren Group in Rexton, N.B., operates the majority of his business in the Atlantica zone, including his local bulk hauling and ready-mix company.
“We’re really looking just to get more synergy building in this region which means more business and more working back and forth with local partners in Maine, New Hampshire, Vermont and New York,” says Sturgeon, who has also been on the AIMS board for the past two years. “It’s a much more natural spot for us to work and it’s easier to keep drivers local. I think most people in our business are working to build that more localized segment of their business. I think they realize that longhaul trucking has been a good part of what we do for a long time, but with driver (supply) situations being what they are, the more we build that more localized zone, the better.”
Over the past several decades, Atlantic Canada has poured a lot of money into politicized economic development projects, but with little results. What has separated Atlantica from the rest of the pack, Crowley says, is that the concept has always been rooted in a simplistic but concrete reality.
“There have been a thousand schemes to create economic activity here, but almost none of them in my view have been successful because they weren’t based on genuine, stable economic opportunity. They were the kinds of things invented by politicians desperate to spend money or show that they cared about the region,” he says. “The difference here with the Atlantica project is this is a genuine opportunity that’s quite easy to demonstrate and is quite unique to this part of the world.”
The chief supporters behind Atlantica agree that demonstration time is over. After years of meetings and conferences, AIMS and the APCC are ready to roll up their sleeves, stop talking and take action.
“Let’s get down to business,” Sturgeon says. “Let’s talk about lowering tariffs, regulatory issues and whatever’s in the lane now. Let’s talk about promoting the Port of Halifax now. Let’s talk about doing whatever we can to increase trade now. There are a lot of steps to be taken, but let’s get at this now. We’ve talked about this enough, probably too much, let’s get at it and do what we need to do.”