Hard to Port
Surprise surprise. Traffic is down at all major entry points into Canada.
The number of inbound containers at the Port of Vancouver, for example, was down 28 percent to start 2009 compared to last year. Halifax, meanwhile, is running at less than one-third capacity.
One way of looking at it is, the economic downturn has given everyone a chance to catch their breath.
It’s also giving people in the trucking business, particularly those who pick up and deliver off the docks, an opportunity to be prepared for when the economy takes off.
Many ports had already started rolling out expansion plans well before the recession. And while it’s true that some of those plans have been put on hold (Prince Rupert, for example, has postponed construction of Phase 2 of its container port terminal for a year), many other projects are moving forward. In fact, most ports are taking advantage of slow times to invest in projects that will improve efficiencies.
Trois-Rivieres, for example, plans to invest $120 million over the next 10 years. Montreal has a $2.4-billion vision for 2020. And the two most important ports — Vancouver and Halifax — are venturing forward into an unpredictable global market.
Halifax has been trying to increase traffic with the Atlantic Gateway marketing campaign, but Cliff Mackay of the Railroad Association of Canada (RAC) says he’d also like to see improved inland infrastructure as well as more attention paid to short-sea shipping along the Eastern seaboard and an improvement in north-south flow in an effort to swell inbound and outbound traffic.
"The other policy issue on the east coast is, you’ve got either existing ports or a number of new port ideas up at any one time. That, frankly, makes it difficult to concentrate capacity and traffic to a port like Halifax."
Professor Mary Brooks of Dalhousie University, however, says inter-regional competition is common for parts around the world.
"As a port, you’re always fighting to get that traffic on short-term contracts to cover the costs of the investment you’ve made, which leads to really nasty competition," she says.
Gary LeRoux, executive director of the Association of Canadian Port Authorities (ACPA) sees the Atlantic Gateway concept as something that will bring a new focus, not just by the port authority, but also by a council of "private-sector interests — like Irving and Armour Transportation, and other shippers."
"They’re all focused on ‘what can we do?’" he says. "These are the guys who pick up the freight from the ports and move it. They’re focused on this now, and I think that will bring returns over the long term because everybody is looking at it, not just the port authority.
Now there’s a bigger community of interest land side, so I think eventually there will be a critical mass of attention and action."
Halifax has another advantage: India.
Mackay says the route through the Suez Canal, which has opened up Canada’s east coast to trading with Asia and India, offers significant time-savings compared to east-bound routes across the Pacific.
He is hopeful, noting that there have been several recent trade missions involving Indian shippers who have visited Canadian ports and government officials to see what Canada has to offer.
Then there’s China.
Brooks predicts it will become increasingly expensive to manufacture there as Chinese workers start to demand higher wages.
"A fair amount of manufacturing in the globalized world [could] move to places like Vietnam [or] Malaysia. Halifax is uniquely positioned to pick that up over west coast ports because you get a dividing line where it’s actually more cost-effective to go to an east coast Canadian port than to go trans-Pacific."
But that’s contingent on many variables. David Seath, vice president of CRSA Logistics, a division of Ryder, says his company has some incremental origins from southeast Asia that may be added to the Halifax route, provided the service and pricing are not compromised. He finds that the transit times from Asia via the Port of Halifax are longer than what can be achieved through Vancouver.
Which, of course, has issues all its own. According to Mackay, in Vancouver, the elephant in the room is labor.
"You’re just never sure that things are going to stay calm," he says.
According to Chris Badger, chief operating officer for Port Metro Vancouver, the situation has cooled down. "From the truck perspective," he says, "recent events in Vancouver have shown that we have a much more mature and robust trucking situation than we’ve had in the past."
He’s referring to the agreement that says that drayage carriers must pay independent truckers a set, standard pay and fuel-surcharge rate.
He says the collective-agreement process for the owner-operators was dealt with, well and appropriately. "There were no shutdowns or attempted shutdowns of the port, there was no impediments put in place with the flow of cargo."
LeRoux agrees, adding that truckers realize that it’s not wise to have shippers from around the world view Vanport negatively. "They realize that ultimately everybody loses if they get a bad rap."
Prior to the economy taking a dive, the other major issue at Vancouver was capacity. Badger believes the economy is going to recover "fast and it’s going to be big."
He says ongoing capacity improvements — including the introduction of a third berth, coming online at the end of this year — will provide about 30-percent more capacity than what’s in demand. "We believe [it’s] an appropriate situation to be in if one is expecting an upswing in goods."
And then, of course, there are other problems on the horizon, like excessive security. Also, as Mackay says, container screening could become more widespread as the economy heats up.
"Right now it’s not an issue because everyone has got tons of capacity, but if we get back into a situation like we were in ’07 where you are starting to push the limits… screening is something we’ll have to address in the future," he says.
Fortunately, it does look like initiatives are being taken on the regulation front, and the federal government’s national policy framework for gateways and national corridors has focused a magnifying glass on what’s needed to make freight more fluid.
"We’re looking at everything in corridors that could hamper the flow of freight," LeRoux says. "Infrastructure capacity is one thing, regulation is another."
He says any impediment to the free flow of goods needs to be addressed for Canada to thrive in the global economy.
"Is it an environmental assessment that’s taking long? Then speed it up. If it’s marine service fees that shouldn’t be there, get rid of them — get rid of anything that’s negatively impacting freight movement."
Ultimately there is cause for optimism in Canada, says Brooks, who notes the number of infrastructure projects and new examples of stakeholder collaboration.
"Canadians should be proud. We’ve got some great ports in this country," she says.
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