New era for Montreal Gateway Terminals

Strategically located at an inland gateway with excellent intermodal connections to substantial markets in Canada and the United States, Montreal Gateway Terminals has entered a new era under changed ownership. This is coinciding with the growing trend of shippers looking at container ports on the East Coast of North America as alternatives to West Coast ports beset by labour and congestion issues. Such a pattern is not lost with a Canadian consortium which is the latest example of infrastructure investment groups attracted globally to terminal operations offering steady and stable revenues.

In March, Morgan Stanley’s infrastructure investing entity agreed to sell Montreal Gateway Terminals (MGT) to a consortium led by Montreal-based Fiera Axium Infrastructure Inc. in a transaction evaluated at about US$650 million. Fiera has US$1.2 billion in assets under management in the U.S. and Canada. The transaction also marked the return of the large cargo-handling enterprise to control by Canadian interests. Partnering with Fiera in the acquisition are units of Manulife Financial Group, Desjardins Group, Industrial Alliance Insurance and a Quebec labor fund. The terminal operation was once owned by CP Ships, which was acquired in 2005 by Germany’s TUI AG group and parent of Hapag-Lloyd. Two years later, Morgan Stanley acquired an 80% interest in MGT that was bumped up to total control in 2013.

Commenting on the latest structural development, Michael Fratianni, chief executive of MGT, told AJOT: “We see this as a strong vote of confidence in the company by a group of local, very highly-regarded investors. “Morgan Stanley was a solid and cooperative shareholder,” Fratianni continued. “The MGT team worked closely on many initiatives with Morgan Stanley during their tenure.” Negotiations between the parties had dragged on for months. They resumed, after breaking off briefly late last year, following a long extension granted on a 25-year MGT contract with the Montreal Port Authority. “With the sale process over, we have turned the page and are absolutely delighted with the outcome,” Fratianni said, alluding in particular to the long-term outlook of the new owners plus “their appreciation of the strategic importance of MGT in the overall supply chain and the positive impact on regional economic prosperity.” When the acquisition was announced, Stéphane Mailhot, president and CEO of Fiera Axium Infrastructure, stated: “This investment fits well within our core investment strategy as Montreal Gateway Terminals represents an essential infrastructure asset. Our consortium is comprised of partners with a long-term investment horizon and vested interests in the economic development of Greater Montreal, Quebec and Canada.” MGT is the largest container operator at the Port of Montreal, running two separate facilities (Cast and Racine) that accounted for 800,000 TEUs out of the 1.4 million TEUs handled by the port in 2014. These facilities reportedly have the capacity to accommodate up to 1.3 million containers without major expansion. “MGT is coming off a strong year, with growth up almost five percent over 2013, and we anticipate a similar advance in 2015,” said Fratianni. He estimates that a new Canest Transit grain-handling terminal in the former elevator No. 3 will spark an additional 4,000 to 5,000 containers a year alone. Looking ahead at the current outlook, he declared: “I’m very optimistic. The lower Canadian dollar will make Montreal more attractive. There is plenty of optimism among the shipping lines as well. Montreal is a premier North American gateway to have cargo come through: it is fluid, customer-centric, efficient and cost-competitive.”