Canadian initiative
Northern ports Prince Rupert, Vancouver boast growing Asian trade, inland connections.
By Chris Dupin
Canada's Asia-Pacific Gateway and Corridor Initiative (APGCI), launched in 2006, aims to boost trade with Asia from both Canada and the United States.
'Trade with Asia-Pacific countries is absolutely vital to not just to the West, but Canada's overall GDP,' said Stockwell Day, minister for the Asia-Pacific Gateway and president of Canada's Treasury Board. Day, a well-known Conservative politician, announced in March he would retire from politics and is not standing for reelection in May.
Canada wants 'the most competitive shipping alternatives in the West,' Day said. The Canadian government in collaboration with western provinces British Columbia, Alberta, Saskatchewan and Manitoba; as well as municipalities and the private sector, is investing in 47 infrastructure projects costing $3.5 billion. The federal government's share for the projects is $1.5 billion.
Most of these involve improvements to roads and rails, many around Canada's two major West Coast ports of Vancouver and Prince Rupert, but also many as far inland as Winnipeg.
'We have a strong competitive message we want to advance,' Day said. 'We want Canadian businesses, exporters and manufacturers, to be able to take that message to wherever they want to do business throughout Asia, and say they have a competitive advantage in Vancouver and Prince Rupert to people who are making sailing decisions to and from Asia.'
Canadian ports' proximity to North Asia via great circle routes means 'we have a sailing time advantage,' he said.
For example, the Prince Rupert Port Authority said its facilities are 4,642 nautical miles from Shanghai, compared to 5,092 miles for Vancouver, 5,101 miles for Seattle-Tacoma, and 5,810 miles for Los Angeles-Long Beach. Prince Rupert said that makes it 58 hours closer than the Southern California ports.
The Canadian ports also say they are competitive with U.S. ports in terms of rail service. Canadian National serves both Vancouver and Prince Rupert and said it can offer 'hot shot' service to Chicago in 100 hours. In 2009 it acquired the Elgin, Joliet and Eastern Railroad to improve transit times in and around Chicago.
Canadian Pacific, which serves Vancouver, said it can offer fifth-morning availability on imports moving to Chicago, where it has intermodal terminals in Bensenville and Schiller Park.
On the export side, Canadian exporters 'are having a great deal of success and I think we are just on the verge of some very significant growth,' Day said, not just in sales to China and India, but other Asian countries such as Vietnam, Indonesia and Malaysia.
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| 'We have a potential opportunity for exports, especially as we see the surge in demand for forest products into China.' | |
| Shaun Stevenson vice president of marketing and business development, Port of Prince Rupert |
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The initiative has placed a heavy emphasis on improving the flow of traffic to and from ports. This includes creating the Roberts Bank Rail Corridor, a project to eliminate grade crossings along a 45-mile stretch of rail leading to and from Vancouver's Deltaport container terminal and the adjacent Westshore coal terminal, and the 25-mile South Fraser Perimeter Road, a $1 billion project that will also benefit Deltaport.
Further inland projects include the twinning of the Trans Canada Highway in Banff National Park near Lake Louise.
The projects are aimed at both increasing Canadian exports and capturing a growing share of cargo moving not only to and from Canada, but also the United States.
APGCI has also spent another $57 million on other programs including consultation with stakeholders, international marketing, and a 'skills table' ' a non-profit partnership between unions, businesses and schools that seeks to make sure the gateway has enough people with the right skills and training to meet its needs.
Prince Rupert. The initiative has played a role in helping promote the Port of Prince Rupert, including the Fairview Container Terminal, which is operated by Maher Terminals.
That terminal opened in 2007 and is helping revitalize the economy in this city, which has a population of about 13,000 and is located about 30 miles south of Alaska.
Container volumes have grown from almost nothing to 343,366 TEUs in 2010, 29.5 percent more than in 2009. Loaded containers were up 32 percent to 256,619 TEUs.
The port said 98 percent of the cargo that is offloaded from ships moves directly to rail. CN exclusively serves the port.
While the original business plan for Fairview was to provide a way for Asian cargo to rapidly get into the U.S. Midwest, about one-third of the cargo now moves into eastern Canada, said Maynard Angus, the port authority's manager of public affairs.
After two years of operation, he said, customers in Toronto, Montreal and Ottawa began to route cargo through Prince Rupert.
Trains are divided in Winnipeg with two-thirds of containers moving to Chicago and Memphis and the others continuing east.
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Through the first three months of 2011, traffic was down 14.9 percent to 65,381 TEUs, but loaded containers continued to climb, 2.6 percent to 56,090 TEUs.
The port said it expects this spring to increase from two to four the number of container services calling Fairview. Three services are operated by COSCO, one by Hanjin, both members of the CKYH alliance along with 'K' Line and Yang Ming.
In fact the port has become an important enough gateway that this spring COSCO named one of the new 8,500-TEU ships it has put into service there the COSCO Prince Rupert.
Angus said the port has been attractive to shippers of high value goods looking for both fast and reliable delivery of goods.
Prince Rupert's success has raised concerns about cargo diversion from U.S. ports.
U.S. Federal Maritime Commission Chairman Richard A. Lidinsky said he plans in May to discuss with West Coast port representatives their concerns about being disadvantaged because of the U.S. harbor maintenance tax and questions they raised about rail rates.
Lidinsky, who noted forwarders have told the FMC they are pleased with the Prince Rupert routing, said the commission could launch a fact-finding investigation, issue a notice of inquiry, or meet with the Canadian embassy to learn more about the issue.
While Prince Rupert's trade is tilted toward imports, exports have been growing. They accounted for 20 percent of loaded containers in 2009, but grew to 25 percent last year and 37 percent in the first three months of 2011.
While COSCO would not discuss its services in and out of Prince Rupert, one of the services seems to recognize the growing export trade from the port. COSCO's South China Express or SEA service is adding Prince Rupert as a second call after Long Beach.
Shaun Stevenson, vice president of marketing and business development at the Port of Prince Rupert, said that should be beneficial to exporters moving cargo through the port, noting export capacity on other services has been limited because Prince Rupert has traditionally been the first inbound call.
'We're certainly not meeting demand at this point. We have a potential opportunity for exports, especially as we see the surge in demand for forest products into China,' Stevenson said.
Angus said much of the wood being shipped through Prince Rupert originates in Prince George, about 500 miles from the port, which he calls one of the largest 'fiber baskets' in the world.
While the terminal's original design capacity was 500,000 TEUs, Stevenson said the port is confident it can handle as many as 750,000 TEUs at the facility.
There are three gantry cranes at the terminal's one container berth. The port expects to complete the permitting phase in mid-2012 for a $650 million project to more than double Fairview's footprint and boost capacity an additional 1.5 millions TEUs.
The expansion will move forward 'when it makes commercial sense. The port, Maher Terminals and CN are all aggressively working toward advancing it as quickly as possible,' Stevenson said. There may also be an opportunity to expeditiously add a berth at the end of the north end of the terminal, though at the moment, he said the port does not expect any difficulty handling four ships per week with the single berth.
Prince Rupert also has a booming bulk cargo business. The Ridley Terminal, which is owned by a crown corporation of the federal government, handles coal, coking coal, petroleum coke and wood pellets. It saw exports double in 2010 to 8.3 million tons, and they are expected to reach 11 million tons this year. That's close to the facility's 12 million-ton capacity, so it is looking at projects to boost capacity to 16 million tons.
Grain exports ' mostly wheat, barley, canola and canola meal ' totaled 4.3 million tons in 2010, down 15.5 percent. The facility has a capacity of 7 million tons.
Vancouver. Vancouver handles more than seven times as much cargo as Prince Rupert, and is the third-largest West Coast container port after Los Angeles and Long Beach.
While nearly two-thirds of the container cargo moving through Prince Rupert is destined for the United States, only about 5 percent to 6 percent of Vancouver's volume is headed south of the border.
Created in 2008 through the merger of three separate port agencies in the region, Port Metro Vancouver (PMV) has facilities scattered along 370 miles of shoreline.
These range from Deltaport on Roberts Bank near the U.S. border, to terminals along the Fraser River, to container terminals Vanterm and Centerm, and a host of private bulk terminals on Burrard Inlet adjacent to downtown Vancouver.
Port Metro Vancouver handled a record 2.5 million TEUs in 2010, 17 percent more than in 2009. Volumes have continued to grow this year as first quarter container traffic hit 576,711 TEUs, up 11 percent from the first three months of 2010.
The world's 19-largest container lines call Vancouver, said Alix Li, account services manager of trade development at PMV. (No. 20, United Arab Shipping Co., has no transpacific services.)
One of the attractions, he said, is balanced import/export trade. The ratio of laden import to export containers at PMV was 1.3 in 2010 compared to 2 in Long Beach, 1.7 in Seattle and 3.1 in Prince Rupert. The only more attractive ratio, 0.8, was to be found in Oakland, where exports outpace imports because of its strong agricultural exports.
PMV's containerized grain traffic is expected to increase from 16 percent of all grain exports in 2009 to 21 percent by 2015, as new container stuffing capacity comes online and demand continues to increase.
Lumber is another strong backhaul cargo. Exports were up 32 percent last year to 3.3 million tons through Vancouver.
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| Vancouver is the third-largest West Coast container port after Los Angeles and Long Beach. |
That's been a godsend to the lumber industry in Canada, which saw production of sawn lumber drop from 80.9 million cubic meters in 2006 to 45.2 million cubic meters in 2009, before an uptick in 2010 to 53.3 million cubic meters, according to Statistics Canada. The U.S.-Canada softwood lumber dispute and U.S. housing downturn caused shipments from Canada to plummet.
But Asia, China in particular, has emerged as a strong new market for Canadian lumber. Containerized lumber exports to China through Vancouver were estimated at more than 1.4 million metric tons in 2010, up from less than 200,000 tons in 2005.
China has traditionally used concrete and steel as primary building materials. But Canada has been promoting greater use of lumber for construction.
Vancouver-based forest products company Canfor said it has established a school in Shanghai to train carpenters in wood frame construction, and the government has seen the China market share of its spruce-pine-fir lumber jump from 1 percent to 30 percent.
Deltaport, Vancouver's largest container terminal, opened a third berth in January 2010, a $400 million project that increased container capacity to 1.8 million TEUs from 1.2 million TEUs.
The expansion features three dual-lift cranes that are able to lift two 40-foot containers at a time.
The terminal, operated by TSI Terminal Systems Inc., handles more than half the containerized cargo that moves through PMV facilities. TSI also operates the Vanterm Terminal in downtown Vancouver.
PMV is planning a further expansion of Deltaport. Li said the T-2 project would add another 2 million TEUs of capacity.
Deltaport is located on a manmade island, constructed with material dredged from the Strait of Georgia. It shares the island with Westshore Terminals, which it said is North America's largest single export coal terminal.
Westshore, which shipped 24.7 million tons of coal last year, said in March it plans to spend $43 million to replace a single railcar dumper with one able to simultaneously unload two hopper cars. That new piece of equipment would lift Westshore's annual capacity to 33 million tons, from about 28 million to 29 million tons.
Combined with other port terminals, 30.3 million tons of coal was exported through Vancouver in 2010, 25 percent more than in 2009. Day said 22.3 million tons was metallurgical coal, while most of the rest was low in sulfur content.
Still, China's use of coal to generate electricity has sparked concern among some environmentalists.
'The demand is going to continue to be there,' Day said. 'But congruent with that, to take China for example, they are recognizing we have natural gas in abundance.'
In February PetroChina announced a deal to pay $5.4 billion to take a 50 percent share in Encana Corp.'s Cutbank Ridge field in British Columbia and Alberta. Encana, Apache Canada and EOG Resources Canada are building a big new LNG terminal on Bish Cove near Kitimat, south of Prince Rupert to serve the growing Asia market.
Shipment of other bulk cargoes are also increasing for Vancouver:
' Agricultural products totaled 19.1 million tons in 2010, 6 percent more than in 2009.
' Chemicals, basic metals and minerals were 11.8 million tons.
' Fertilizers were 9.3 million tons, up 42 percent.
' Potash volumes were up 143 percent, and Saskatchewan is sometimes called the Saudi Arabia of potash because of its huge reserves, said Mike Lovecchio, senior manager of media relations and public affairs at Canadian Pacific.
CP and CN have both signed supply chain collaboration agreements with PMV to improve productivity and performance. The agreements set frameworks to develop mechanisms to define, measure, monitor and evaluate the performance of each participant at the port against established benchmarks.