Canada’s ports are spreading a wide net to help offset a slump in global commodity demand.
For Canadian ports on the east and west coasts, a common priority remains to expand horizons while protecting existing markets amidst volatile global economic and trade trends. High up on the radar screen for port officials is measuring the impact of slower demand in China for such commodities as iron ore which are vital for certain Canadian ports relying heavily on bulk cargo, such as Quebec and Sept-Iles currently experiencing declining business. Ports like Montreal and Vancouver, with very strong general cargo and container bases, are faring considerably better despite Canadian GDP growth this year hovering below 2%.
Among recent significant new investment developments at Canadian ports, much industry attention was captured by the late July announcement of a long-term lease agreement between Port Saint John in New Brunswick and DP World for the operation, starting on Jan 1 2017, of a container facility that for some 20 years had been managed by the stevedoring division of Logistec Corporation. The latter has an extensive network of 40 terminals in 30 ports in eastern North America.
Long-term Lease for DP World at Port St. John
The long-term lease with DP World will continue for about 30 years in the context of the port’s ambitious expansion program slated for completion by 2021. DP World will introduce new assets including the revamping of terminal cargo handling equipment to deliver exceptional customer service, stated a Port Saint John press release.
Dubai-based DP World, one of the largest marine terminal operators in the world handling more than 170,000 TEUs per day, is already present in Canada with terminal operations in Prince Rupert, Vancouver and Nanaimo. Saint John will represent its first presence on the east coast of North America.
The announcement follows the recent funding commitments for the C$205 million West Side Modernization Project from the Federal and Provincial Governments together with Port Saint John, which will see the container terminal revitalized and the container berths and main channel deepened over the next seven years.
Replying to the AJOT, Linda Kragnes, manager of corporate communications, disclosed that the DP World “initial investment will be about C$10-15 million, but we will continue investing in the future to further expand capacity and productivity of the terminal.”
CN is a key rail partner in the project as it is in DP World’s Fairview container terminal at Prince Rupert.
Mark Hallman, director of communications and public affairs, told AJOT: “CN is the sole Class 1 railway directly serving the Port of Saint John and offers the port the only single-line, double-stack container train route to markets in eastern Canada with no border crossing and a single border-crossing to markets in the U.S. Midwest.”
A prime goal is to attract larger ships to the Bay of Fundy port at either high or low tides, thereby enabling Saint John to emerge as a bigger container player on the East Coast, notably complementing its traditional north-south Latin America trades with more maritime exchanges with Europe.
Port Saint John is Eastern Canada’s largest port by tonnage and has a diverse cargo base, including dry and liquid bulk, break bulk, and cruise. Total traffic in 2015 was 26.4 million metric tons. Present container traffic is relatively small but has nearly doubled since 2012 to 97,100 TEU thanks in part to the arrival of MSC (Mediterranean Shipping Company).
On the lease agreement, Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World, said: “We are delighted to further extend our presence in Canada to the Port of Saint John, New Brunswick. We believe that the future growth prospects for the port are strong and we are excited to be participating with Saint John Port Authority in their expansion plans. Our investments and commitment to Canada are for the long term, contributing to trade and the development of its national and local economies as well as providing employment for people with a leader of world trade.
“We are delighted to have a presence on the east coast of North America for the first time and see great growth potential. We are excited to work with the shipping community and our worldwide network and have been working with port management on our plans to build on the experience and success of our operations in Western Canada.”
Peter Gaulton, Chair of the Board of Directors, Port Saint John, said: “We are pleased to join together with a global trade partner who shares our vision for the growth potential of this Port based on its geographic location and rail optionality. When reviewing the proposal for terminal operations, we were impressed by the presence that DP World already has at three major port authorities in British Columbia and the depth and breadth of their business in ports and terminals worldwide.”
Elsewhere on the East Coast, things are looking up at Nova Scotia’s Port of Halifax– especially in the container sector. Total traffic was down 3.4% in 2015 at 7.56 million tons compared to the previous year, but container cargo climbed by 4.6% to 418,359 TEUs. And the positive trend has continued with box throughput up nearly 20% in the first six months of 2016 at 236,000 TEUs versus a year earlier. Total volume was up 24%.
New investments and new services have played an important role. The most recent significant investment was announced this past winter by Halterm Container Terminal Ltd., a wholly-owned subsidiary of Macquarie Infrastructure Partners, of an additional outlay of C$4.5 million to upgrade equipment in the terminal facility.
“The entire port community has been working to increase cargo volumes,” stated Patrick Bohan, Director of Supply Chain Logistics, Halifax Port Authority. “This positive trend has been ongoing since April of 2015, and while it is encouraging there is still much to be done.”
Since 2004, the Port of Halifax and its stakeholders have invested over C$250 million in infrastructure, including deepening capacity at terminals and adding several post-Panamax cranes.
The deepwater port was given a big boost last August when both Hapag-Lloyd and French carrier CMA CGM launched the first calls to Halifax of container vessels in the 8500-TEU category. For CMA CGM, this coincided with the addition of a Halifax call at Halterm to its Columbus service between Asia and North America.
Montreal Continues with Wind in its Sails
On the St. Lawrence River, Montreal continues to have the wind in its sails as Canada’s second busiest port after Vancouver on the heels of another record performance in 2015.
Last year saw Montreal’s total traffic increase by 5.2% to 32 million metric tons while container cargo grew 4.1% to 13.1 million tons, or close to 1.5 million TEUs. In purely North Atlantic container trade, Montreal offers stiff competition on the East Coast to NY/NJ.
Sylvie Vachon, president and CEO of the Montreal Port Authority, stresses: “This reflects the fact that, more than ever, the Port of Montreal is a real growth force.”
In the first half of 2016, Montreal’s box volume was down a few percentage points from a year earlier but total traffic was up nearly 13% at 16.8 million tons, thanks chiefly to a big increase in liquid bulk.
On the capacity expansion side, a new container terminal is being developed in the Viau sector. As part of the port’s 375th anniversary celebrations in 2017, the Alexandra Pier and Iberville Passenger Terminal are being completely upgraded and renovated. And a federal environmental process is underway for future development of a container terminal at Contrecoeur.
For its part, the Port of Quebec handled 21 million tons in 2015 versus 24 million tons in 2014. There has been a general drop in raw materials that was not offset by liquid bulk and agri-food products. And still awaiting environmental approval as well as government and private funding is a proposed multi-purpose terminal project called Beauport 2020 that could cost up to half a billion dollars.
West Coast Ports on the Move
On the cargo front, the Port of Vancouver remains, by far, Canada’s largest port, handling 138 million metric tons in 2015, just 1% below its record throughput of 140 million tons in 2014. Sectors experiencing declines were offset by others hitting new records – notably containers, potash, grain and agri-products.
“In the last five years, the port has grown by the equivalent of the annual volume of Canada’s largest port, the Port of Montreal,” points out Robin Silvester, President and CEO. “And we anticipate growth to continue at about the same rate over the next five years, despite the current slowdown.”
Thanks to increased trade with Asia, container traffic rose by 5% to 3.1 million TEUs. Grain and agri-product exports jumped by 8% to 25.1 million tonnes. Coal volumes were down by 8% due chiefly to reduced demand from China.
In the first quarter of 2016, container cargo was down 4.2% from a year earlier at 704,387 TEUs. But the overall positive trend was reflected in container exports up 1.4%.
As part of ongoing efforts to expand infrastructure, the Port of Vancouver is backing plans to boost capacity by two-thirds by 2019 at the Centerm container terminal in Burrard Inlet. Most of the gains would flow from enhanced rail capacity and a reshaped storage container storage area.
On the other hand, environmental activists remain on the warpath against the proposed construction (still under federal regulatory review) of a three-berth container terminal on a man-made island adjacent to Deltaport at Roberts Bank. This huge project would offer 2.4 million TEUs of added capacity.
Corporate note: to provide clarity for stakeholders and customers, the port this past spring made a name change - dropping Port Metro Vancouver to simply become Port of Vancouver and retaining its legal name of Vancouver Fraser Port Authority.
In northern British Columbia, the surging Port of Prince Rupert is maintaining its robust growth in container cargo as the West Coast gateway with the shortest transit times to Southeast Asia and excellent direct CN rail service to the Midwest. The trendline was strong with container throughput close to matching last year’s volume at the end of July.
Whereas total traffic in 2015 dipped by 5% to 19.6 million tons due to declining commodity markets, a 25% spike in container activity generated a new record at 775,442 TEUs. Work is in progress at Fairview container terminal to boost capacity to 1.3 million TEUs by 2017.