CN eyes stake in Halterm container terminal in Halifax

Canadian National Railway is seeking to emulate its success on Canada’s west coast by establishing a bigger beachhead on the east coast by bidding, with an unidentified partner, to acquire a stake in Halterm Container terminal at the Port of Halifax.

“As part of our action-oriented approach to grow trade volumes on our eastern network, CN is exploring the opportunity with a partner of getting involved in the acquisition of Halifax’s Halterm container terminal,” said CN spokesman Jonathan Abecassis, thus reiterating the central message made earlier this week by CN president Jean-Jacques Ruest in an interview with Canada’s Financial Post publication.

During this interview, Ruest said the goal of the potential acquisition of the terminal owned by Macquarie Infrastructure was to create a “Prince Rupert of the East” – referring to the strong growth of the Port of Prince Rupert in recent years in maritime trade with Asia through notably a direct CN network connection with the US Midwest market. The Fairview Container Terminal in Prince Rupert is operated by DP World and has been regarded as the fastest growing container facility on North America’s west coast.

Industry observers are monitoring closely to see whether the as yet undisclosed partner will surface as a leading global terminal operator or even a carrier active on the Atlantic, Suez and Panama Canal trade routes.

Kevin Piper, spokesman for the local union representing more than 100 longshoremen working at the terminal said CN appeared to be interested in transforming Halifax into a gateway port (as opposed to a discretionary, top-off port) than can handle larger vessels and freight trains more than three kilometers long.

“That’s what these big ships need,” Piper told the Canadian Press news agency. “They need to have the rail capacity when they dump off. You don’t want to stockpile the containers. You want to load them directly to the rail. That’s what they do in Prince Rupert.”

The deep water Port of Halifax and the Halterm and Ceres container terminals rely heavily on CN, the sole rail provider for reaching markets in Central Canada and the United States. The port currently handles container vessels in the 10,000 TEU class but could handle still larger box ships now calling on the East Coast of North America at New York and other ports following harbor dredging.

In the past few years, Halifax has been on the comeback trail, handling a record 560,000 TEUs in 2017 – sparked by new services and the larger box ships calling on the east coast. This represents, though, just one third of total container volume at the Port of Montreal on the St. Lawrence River, much further inland and closer to the strategic Midwest market.

Mr. Ruest said that if CN were successful, it would make changes to the Halterm business model. “We’re interested to get behind a terminal to make them ready for bigger things and run them in a way they have not been run in the past.”

The CN chief executive said that CN wants to expand the terminal capacity to be able to service two large containerships simultaneously and accommodate long freight trains.

The Halifax Port Authority recently began construction of a temporary berth extension at Halterm (slated for completion in 2020), but it would seemingly not be big enough to assemble the longest double-stack trains. “We’re willing to put in some of our rail infrastructure to create a solution for the big trains,” Ruest said.