Canadian ports navigate through global trade challenges

By: | Issue #674 | at 08:21 AM | Channel(s): Ports & Terminals  Ports  

When 2018 began, Canadian port officials were much encouraged by rising cargo trends thanks to firm demand in bulk and general cargo in global trade with Europe, China-led Asia and the United States, by far Canada’s leading commercial partner. But the overall outlook rapidly became seriously complicated when the Trump Administration ignited trade wars on “national security” grounds” with Canada, the European Union (EU), Mexico and China.

As this issue of AJOT was going to press, Canada and the United States had resumed tense negotiations in Washington on Sept. 5 to amend the North American Free Trade Agreement soon after President Trump had announced a separate deal with Mexico and threatened to impose punitive tariffs on auto imports from Canada if Canada did not accept his proposals. The talks were expected to continue, with Prime Minister Trudeau insisting on the retention of a dispute resolution mechanism -qualified a “red line” - while showing some flexibility in its supply management system to allow greater access to US dairy farmers.

Beginning on June 1, the Washington administration imposed import taxes of 25% on Canadian steel and 10% on Canadian aluminum – tariffs also applied to the EU. Canada reluctantly applied counter-measures on July 1, including tariffs on steel, aluminum and various other products. At this early stage, the ripple effect appears much more substantial on Canadian metals manufacturers dependent on selling products in the United States than on Canadian ports.

Port of Montreal on target for another container record in 2018.
Port of Montreal on target for another container record in 2018.

U.S. industry buys half of its aluminum (an estimated 2.8 million tons) from Canadian primary producers Alcoa, Rio Tinto and Aluminerie Alouette in Sept-Iles.

While it is chiefly shipped by surface transportation, some aluminum manufactured in Canada is shipped by water. For instance, 11,000 metric tons of aluminum were carried by ship from the Port of Saguenay to the United States in 2017.

Resurgent demand and a sharp fall in Chinese cheap steel exports have sparked the highest steel prices in years. A source indicated that this has benefited such a Canadian port as Quebec, where the facilities of Quebec Stevedoring Limited are enjoying a brisk business in handling steel products.

At the Port of Hamilton, home to Canada’s largest steel complex (ArcelorMittal Dofasco and Stelco), it’s a mixed picture. “Cross-border shipments have been affected by the U.S. 25% tariff,” a stevedoring executive said.

However, although ArcelorMittal, the world’s biggest steelmaker, has reported strong profits thanks to its major U.S. exposure and the recent trade actions, its chief executive of the Hamilton facility, Sean Donnelly, has warned that “left unmitigated for a prolonged period of time” the combined impact of the tariffs and the diverted offshore imports of steel could result in reduced production, potential shutdown of operating lines, impacting over 1,000 direct jobs and over 4,000 indirect jobs in Ontario and Quebec.

Meanwhile, the 18 member ports of the Association of Canada Port Authorities (ACPA) had much cause for satisfaction on the heels of an unprecedented performance of widespread cargo growth in 2017. Last year saw 14 of the 18 ACPA ports report increased volumes. Five of them – Prince Rupert, Toronto, Saguenay. Saint John and Quebec – posted double-digit increases. Canada’s largest port, Vancouver, saw its total soar to a record 142 million tons. And Montreal vaulted to a new peak of 38 million tons. All told, the ACPA ports handled 334 million tons in 2017 versus 311 million tons in 2016 – representing about 75% of volume at all Canadian ports.

East Coast Ports Eye More Growth

On the east coast, the Port of Montreal is continuing its robust forward momentum of recent years, as reflected in the record 2017 total traffic of 38 million tonnes and container cargo of 1.5 million TEU.

“We are anticipating a record year on the container business for 2018,” Tony Boemi, VP Growth and Development, told AJOT.

He indicated that the port’s overall container trade was up by 7% in the first five months of this year versus the same period last year.

“Europe’s strong performance so far this year is leading our growth on the container side,” he said, pointing notably to significant import gains from Spain and Germany while Belgium and Italy were performing strongly on exports.

There has been a small decrease in Asian business (which represents about one quarter of Montreal’s total container trade) due mainly to a drop in the exports of agricultural products and waste paper.

New era launched for Port of Sept-Iles with recent arrival of the Magnus Oldendorff at the newly-built multi-user dock where it loaded 190,000 tons of iron ore.
New era launched for Port of Sept-Iles with recent arrival of the Magnus Oldendorff at the newly-built multi-user dock where it loaded 190,000 tons of iron ore.

Turning to other developments, Boemi hailed the virtual vote of confidence in the “Montreal business model” exemplified by the recent decision of Maersk, the world’s biggest container operator, to launch effective early July a new service linking Montreal and Halifax to the Mediterranean and the Far East via transhipment hubs.

On the infrastructure front, a four-pronged C$120 million project got underway last year. Chief objectives are to optimize the intermodal network, expand the shortsea shipping vocation, develop bulk terminals, and upgrade wharf fenders and pier rehabilitation.

And in a related development, Sylvie Vachon, President and CEO of the Montreal Port Authority, welcomed the financial support of C$45.8 million received from the federal National Trade Corridors Fund to invest in road improvements that would improve traffic fluidity.

The Port of Montreal is also moving ahead on its plan to build a container terminal at Contrecoeur which would add 1.15 million TEU in capacity when operational in principle by 2023. For the moment, the regulatory environmental process still remains to be completed.

Last year marked a stellar period for the Port of Quebec, with cargo handled rising by nearly 11% to 27.5 million tons. A major factor was the surge in iron ore traffic to a record 8.2 million tons.

The deep-water port is pursuing its environmental assessment efforts related to the major project announced last December by Mario Girard, President and CEO of the Québec Port Authority, for the proposed construction of a container terminal within the context of the Beauport 2020 expansion plan. Girard feels that with a water depth of 15 metres at high tide, the Port of Québec is well positioned to capitalize on the changing landscape of global shipping, including ever bigger containerships.

In May, the port received C$15.5 million in financial support from the federal National Trade Corridors Fund to upgrade infrastructure in three sectors: Anse au Foulon, Estuaire and Beaupor

New Era for Sept-Iles

At the port of Sept-Iles, a new era was launched earlier this year with the arrival in March of the first large bulk carrier at the newly-built multi-user dock. The MV Magnus Oldendorff loaded 190,000 tons of iron ore from the Bloom Lake mine of Québec Iron Ore Inc. for delivery to China’s Port of Qingdao. It is the only facility in North America able to accommodate Chinamax bulk carriers with capacities up to 400,000 tonnes.

On the same occasion, Pierre C. Gagnon, President and CEO of the Sept-Iles Port Authority, underlined the benefits for customers of the launching of the new conveyor for the Société ferroviaire et portuaire du Pointe Noire. Last year, the port posted a 6% increase in cargo volume to 24.2 million tons, thanks chiefly to iron ore shipments from IOC Rio Tinto and Tata Steel Minerals Canada.

Mid-way between Montreal and Quebec City on the St. Lawrence River, the Port of Trois-Rivières formally inaugurated this past spring a breakbulk terminal operated by Logistec Corporation that entailed investments exceeding C$27 million.

“This terminal will allow us to improve the competitiveness of businesses in the region and shipping on the St. Lawrence,” said Gaétan Boivin, President and CEO of the Trois-Rivières Port Authority (TRPA). Last year saw the port handled 2.6 million tons.

Halifax on Comeback Trail

Following lengthy stagnation, the deep-water Port of Halifax is on the comeback trail thanks to a resurgence sparked by 10,000 TEU ships now regularly calling on North America’s east coast plus the arrival of new services. Last year, container cargo soared by 16% to a record 560,000 TEU. The previous summit was 550,462 TEU in 2005.

“Positive momentum continues with 11 consecutive quarters of containerized cargo growth,” said port spokesman Lane Farguson.

In Q1 2018, box volume at Halifax stood at 134,3676 TEU – up nearly 3% from a year earlier, while total cargo was up 5.6% at 1.2 million tonnes.

Kim Holtermand, CEO of Halterm, recently suggested that the South End facility, which has no air draft or other impediments, could accommodate vessels in the 14,000-TEU plus category. The port’s long term master plan under preparation is expected to recommend an extension of the Halterm berth to handle two mega containerships simultaneously.

Saint John Cargo Climbs

At the third-largest port in Canada by tonnage, Saint John year-over-year total cargo volume climbed by over 4 million tons in 2017. Total cargo – dominated largely by liquid bulk - handled in 2017 was 30.4 million tons, a 15% increase over 2016.

All cargo sectors, aside from the anticipated exception of containers, experienced significant gains in 2017. Additionally, the loss experienced in containerized cargo was lessened due the introduction of a new weekly container service by CMA CGM in 2017. This second global container service joined MSC who have been calling Port Saint John on a weekly basis since 2012.

“Our significant increase in tonnage for 2017 is attributable to the success of our stakeholders in the bulk sectors (dry, liquid and breakbulk) as well as our first year of operations with DP World at the multi-purpose cargo terminals on the West Side,” said Jim Quinn, President and CEO of Port Saint John. “The DP World partnership blends their global reach and influence together with our terminal modernization project to achieve the common objective of continued growth and a bright future for the Port and its supporting port service community.”

Great Lakes Off to Strong Start in 2018

Following an excellent year in 2017, the Port of Hamilton got off to a good start in the early months of the 2018 season, declared Ian Hamilton, President and CEO.

“Now with three grain terminals running at full capacity, exports of Ontario grain were lined up and ready to go from day one,” he said, pointing out that more than half a million metric tons of Ontario grain were exported overseas by mid-June. “With the continued growth in agri-food, we expect to have a great year in 2018.”

Last year saw Hamilton record its highest volume since 2014 at 9.9 million tons. More stability at port-adjacent steel company Stelco sparked a rebound in coal tonnages (up 21% in 2017 over 2016).

“The port’s overall cargo mix continues to rebalance, with agricultural commodities now making up 23% of the total cargo compared with 12.5% in 2010,” Mr. Hamilton said. “This agri-food growth has been driven by an influx of private sector investment in the port – to the tune of $200 million in recent years.”

For the Port of Thunder Bay on the tip of Lake Superior, the early months of the 2018 Seaway season featured a brisk opening on the heels of a full-year total of 8.8 million tons in 2017.

For example, commodity shipments of grain, coal and potash in May were consistent, with over 1.0 million tons of bulk cargo being loaded for outbound shipment. Thunder Bay is the primary Seaway export port for Western Canadian bulk commodities. The port’s project cargo activity remains in full swing.

At Windsor, the third largest Canadian port on the Great Lakes, there’s a new CEO at the helm. Steven Salmons, who formerly worked with the City of Windsor. Within 12 to 18 months, he sees total traffic attaining 6 million tons compared with the current 5.1 million tons. “We are anticipating some expansion in aggregates, steel and construction supplies with the start-up of the Howe Bridge construction.”

West Coast Robust Cargo Trends

For the leading ports on the Pacific Coast trading with Asia, spring did not come soon enough. A particularly harsh winter throughout Western Canada notably affected railway operations which in turn provoked serious congestion problems for shippers at the key gateways of Vancouver and Prince Rupert already coping with growth management challenges.

Overall 2017 cargo through Vancouver – Canada’s largest port - reached a record high of 142.1 million tons, up five per cent from 2016. Sectors experiencing strong growth include containers and bulk grain, both of which hit new summits. Container throughput surged by 11% to a record 3.3 million TEU.

The upward trend has continued, with total traffic increasing by 4.4% to 72.1 tons in the first six months of this year. Container throughput for the period climbed by 5% to 1.64 million TEU.

With forecasts showing that Canadian West Coast ports will need additional capacity to meet demand by the mid-2020s, Robin Silvester, president and CEO of the Vancouver Fraser Port Authority, reiterates that even with capacity expansions at existing terminals “further capacity will be required, highlighting the need for the Roberts Bank Terminal 2, a proposed new three-berth container terminal that would provide the space needed to meet forecasted demand for trade of goods in containers.”

At the Port of Prince Rupert, with the first quarter container numbers showing a 28% increase, newly-named president Shaun Stevenson, predicted that “assuming a sustained trend and the continuing confidence of our customers, we are on track for another record year and should easily exceed one million TEU in 2018.”

Certainly stimulating more traffic will be the new weekly service announced in April by Yang Ming and its partners in THE Alliance, Hapag-Lloyd, and Ocean Network Express.

In 2017, Prince Rupert’s container throughput soared by 26% to 926,540 TEU. The expansion last fall of the Fairview Container Terminal increased its capacity from 850,000 TEU to 1.35 million TEU.

In the most recent related development, the Prince Rupert Port Authority and DP World agreed in June on the terms of launching the next phase of the terminal expansion. The Phase 2B expansion will increase annual capacity at the terminal to 1.8 million TEU when completed in 2022.

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American Journal of Transportation