Chris Badger is worried about competition from both coasts of North America.
The operations chief at Port Metro Vancouver, Badger expects ports along the U.S. West Coast to increase their cargo volumes after the Panama Canal’s expansion is completed in 2014. Although Asia volume moving through the canal to Canada’s Pacific Coast now is small, Badger anticipates a big push from U.S. West Coast ports for more Asia-Pacific trade as they fight off potential losses to East Coast ports. And this could affect cargo growth at Vancouver.
British Columbia’s Port of Prince Rupert, just below Alaska, and Vancouver plan to improve port infrastructure and operations, and go after U.S. West Coast container trade for Vancouver, and target the Alaska-Tacoma/Seattle trade for Prince Rupert.
The investment comes in what is turning out to be the liveliest period for Canadian ports in years, with sites on the East Coast addressing changes in the mix of their business while West Coast ports see the competitive balance tip in response to changing global trade patterns and the potential impact of the Panama Canal expansion.
Canada’s Atlantic Coast ports have seen traffic changes this year. Cargo volume at the deep-water Port of Halifax grew more than 35 percent in the first half of this year over a year earlier. Much of the increase has come from new trade carried on huge ships coming from Asia through the Suez Canal.
George Malec, vice president of operations at the Port of Halifax, sees a big-ship future for Halifax, with traditional North Europe services moving to the larger vessels and additions to the two Asia-Halifax services now calling at the port.
And the composition of trade at the Port of Montreal has changed dramatically. No longer 50 percent U.S. destination cargo, about 23 percent of Montreal’s annual 1.3 million TEUs is for the U.S. Midwest and 5 percent is destined for the New England region. Canada now is the destination and source of 70 percent or more of Montreal’s cargo. North Europe used to provide 80 percent of import containers at Montreal; now it provides 49 percent. Goods from China and Southeast Asia, from the Middle East and Africa, via the Suez and Panama canals, make up about 27 percent of Montreal’s traffic.
Badger said Port Metro Vancouver expects to face “competitive changes in the near future, from the Panama Canal and its domino effect . . . our U.S. competitors may go after Canadian cargo.”
Nearly 95 percent of Vancouver’s traffic — 2.15 million TEUs in 2009 — is Canadian trade, and much of that has been won back from U.S. ports and railroads over the years. Vancouver wants to expand the 5 percent-plus that is U.S. cargo. “We want to improve our U.S. market share,” Badger said, “not by a huge amount, but by enough to make us a full-service gateway.”
To win U.S. shipments, Vancouver needs to improve productivity. Container dwell times are longer than at competitor U.S. ports. The goal is a three-day dwell time for 90 percent of import containers, and “we are at about 50 percent,” Badger said. About 75 percent of containers are off the dock and onto railcars or trucks within four days and 80 percent within five days. CEO Robin Silvester said that’s not good enough.
An industry innovation started in Halifax is helping to improve transit times in Vancouver. Port stakeholders sign commercial “level of service” agreements complete with measurable performance standards and sanctions enforced through agreed arbitration of disputes. The port authority has one with stakeholders, Canadian National Railway has one with the terminals, and a Canadian Pacific accord is in the final draft stage.
On the downside, dockworkers and the Maritime Employers Association are at an impasse over a new contract to replace an expired collective agreement at Vancouver, threatening port productivity. The two sides await the outcome of a report mediators have sent to the federal labor minister in Ottawa. However, the port is attracting new business at a recently completed third container berth at the largest terminal, Deltaport, and capacity has been upgraded at the Vanterm and Centerm terminals.
Port Metro Vancouver at midyear reported 11.8 percent year-over-year growth in containerized volume, to 1,163,959 TEUs, on higher Canadian exports to Asia. Silvester said prospects are for “a return to 2008 pre-global economic downturn levels possibly as soon as 2011.”
Prince Rupert didn’t see the loss in cargo other ports experienced in 2009. The port handled 12.2 million metric tons of cargo last year, up 15 percent from 2008, its first full-year of business. The container terminal handled 265,259 TEUs, up 45.9 percent year-over-year. Bulk cargo, mostly wheat, coal and wood pellets, was up 35.1 percent.
This year, “I think we’re headed for a record year overall in tonnage, from growth in container traffic and with coal for China, Japan and Korea on track for a record year,” said Shaun Stevenson, operations vice president for the Prince Rupert Port Authority. Container volume this year should reach “the high 300,000 TEUs, close to 400,000,” he said.
Fairview Terminal’s design capacity of 500,000 TEUs is to be extended to 700,000 TEUs, before the second phase of container terminal expansion (to 2 million TEUs) is built by perhaps 2014. A decision on whether to proceed with the expansion will be made by the German owner of New Jersey-based Maher Terminals “when the market dictates that expansion is needed,” Stevenson said. That is a more fluid position than the 2014 opening date expressed previously.
Prince Rupert is served only by the same CKYH alliance — Cosco, “K” Line, Yang Ming and Hanjin — that began with weekly calls in October 2007. In mid-2009, Cosco doubled its weekly calls, adding a second service. Now, Stevenson said, “Cosco is testing a third weekly service, calling at Prince Rupert on the way back to Asia to support the export demand there.”
Prince Rupert is in talks with Alaskan retail exporters and importers to claim from Tacoma and Seattle some of Alaska’s trade in chilled seafood products to Asia and retail goods for Wal-Mart and others from Asia. Stevenson said the port is promoting its closer location to Asia and direct shipping to and from Asia rather than transshipping at Tacoma and Seattle. He claims “a number of south Alaska firms are interested.”
Halifax has been squeezed since 2005, its 550,462 TEUs in that year falling every year since, to 344,811 TEUs in 2009. Overall tonnage plummeted from 13.6 million metric tons in 2005 to 9.6 million metric tons last year.
However, in midyear 2010, the port recorded 205,178 TEUs, compared with 52,713 in the first half of 2009. The improvement comes largely from two liner alliances with Asia-Halifax services in post-Panamax vessels through the Suez Canal and Strait of Gibraltar.
Last year, the CKYH alliance began calling at Halifax with 4,000-TEU vessels. This year, “they have retonnaged that service with post-Panamax ships and changed routing so that they come from Singapore directly to Halifax,” Malec said. This “Green Alliance” — the CKYH partners and MOL — is complemented by another Asia-India-Halifax service, the Grand Alliance of Hapag-Lloyd, OOCL and NYK Line.
Malec says Halifax is the only East Coast deep-water port able to handle fully laden post-Panamax ships. Apart from India and the China-Vietnam nexus, “we see an increasing number of 6,000- to 8,000-TEU ships being introduced into North Europe trade,” he said.
Halifax is promoting its location, its unlimited water depth, and its five super-post-Panamax cranes at the two container terminals. One terminal, Halterm, is building out a second post-Panamax berth, to give Halifax four. It will be able to accommodate two of the largest vessels, fully laden, at one time. “Our strategy is to provide a full-service port, with bunker and first-last port services, taking them at full draft,” Malec said.
In April, CN, the Halifax Port Authority and the port’s two terminal operators pioneered a commercial level of service agreement setting out “clear and defined performance standards” for each partner, including “CN transit times to key markets in central Canada and the U.S. Midwest.” This provides sufficient railcars for the
12 to 15 percent of traffic transported to or from the U.S. Midwest.
In Montreal, “the markets have changed,” Boemi said, in something of an understatement.
“It used to be that 50 percent of our traffic was U.S. cargo and that got as high as 65 percent. It was coming from North Europe and the western Mediterranean. Today, with the evolution of the hub-and-spoke networks, with the hubs that have sprung up in the Mediterranean and Caribbean, we are seeing cargo coming in from markets that historically did not come to Montreal. And the Canadian share of our traffic has risen to about 72 percent, and the American share now is about 28 percent,” he said.
“The U.S. Midwest is certainly significant for us, about 23 percent of our traffic, but the hubs, in the Mediterranean for traffic through the Suez and in the Caribbean for the Panama, are giving us more diversification.”
North Europe trade made up 49 percent of Montreal’s volume in the first quarter of 2010. The Mediterranean accounted for 15 percent; Asia, 13 percent; the Middle East, 10 percent; Africa, 4 percent; and Latin America, an emerging market for Montreal, 8 percent.
Montreal’s container traffic, more than half of the port’s business, rose 12.5 percent in tonnage in the first half of 2010 to 6.1 million metric tons, and in TEUs by 8.1 percent year-over-year to 669,889 TEUs. Still, it has a way to go to reach the 2008 peak of 1.5 million TEUs.
Contact Courtney Tower at email@example.com.