Canada's moment

Canada's moment

The strong container volume flowing through ports from Vancouver to Halifax brings new challenges requiring infrastructure investment, innovation, and the Canadian emphasis on collaboration. Over the last seven months, Canadian shippers and forwarders got a taste of what happens when that formula falls short.

Harsh winter weather and a surge of imports, for domestic and US markets, flowing through Canada in the peak season caused delays at the ports of Prince Rupert, Montreal, and Vancouver. Western ports have since returned to normal rail fluidity, while truck turn times on average at Montreal have fallen below one hour. Lessons were learned. Stakeholders at the ports of Prince Rupert and Vancouver are investing to prevent a repeat peak-season performance; Montreal’s marine terminals are collaborating on a pilot program extending truck gates.

Canada — one of the hottest container shipping markets

The pressure isn’t letting up. Canadian container volume rose 7 percent last year, and Maersk Line expects growth to at least equal that this year. US container volume, comparatively, will rise between 2 and 4 percent, as the market grapples with a “trucking crisis,” rail infrastructure needing improvement, and a lack of terminal competitiveness when compared with other advanced markets, according to Omar Shamsie, president of Maersk Line North America.

“Meanwhile, the outlook is more positive for Canada, which promises to be one of the fastest-growing markets in terms of container trade across the Americas this year,” he said. It’s going to be a close race with Mexico.

To handle the short-term and longer-term growth, the ports of Vancouver and Montreal are expanding terminal and rail capacity, while Prince Rupert is fresh off a project that added 400,000 TEU of annual capacity. Meanwhile, Canadian National Railway is investing hundreds of millions of dollars to build capacity and add daily trains from the west coast to Toronto and Chicago.

But questions remain of not only where capacity is needed, but whether environmental regulators will allow it to come online. The most glaring example of the latter is in Vancouver, where the port authority’s proposed Roberts Bank Terminal 2 Project has been deemed potentially harmful to western sandpipers by Environment and Climate Change Canada, as reported by the Financial Post.

“Without Terminal 2, Canada will run out of capacity on the west coast. There is nothing else anywhere in the planning and permitting process that could deliver capacity for demand by the mid 2020s,” Port of Vancouver CEO/president Robin Silvester told the local newspaper. Prince Rupert notes it can still add millions of annual TEU capacity to the West Coast.

The port of Quebec’s plan to build a container terminal has sparked debate on the feasibility of the project and other greenfield proposals aimed at adding more mega-ship handling capacity to eastern Canada. Montreal, the second-largest Canadian port to Vancouver, can only handle ships up to 5,000 TEU. That, however, hasn’t stopped Maersk Line from adding a trans-Atlantic service to Montreal and Halifax. The carrier has high expectations for Canada-Europe trade as a result of the Comprehensive Economic and Trade Agreement.

Dedicated freight fund to upgrade infrastructure is a start

Unlike the United States, Canada has a dedicated freight fund of C$2 billion ($1.54 billion) to support infrastructure projects, and that will help, but only the most-needed projects will be able to fill the gaps by attracting private investment. In addition to the National Trade Corridors Fund, the Canada Infrastructure Bank plans to invest at least C$5 billion on projects supporting trade and transportation.

It’s going to take more than money; it’s going to take new, collaborative approaches. Innovation can come in many forms. Global Container Terminals Canada is launching its six-month pilot project at its Vanterm and Deltaport terminals that reduces the $50 flat fee for making daytime appointments to a flat fee of $35 on all appointments, day and night. That’s an effort to head-off driver dissent that led to crippling portwide strikes in 2005 and 2014. The port authority, government ministries, and the container trucking industry have separately agreed to raise driver rates 2.6 percent.

Technology is driving much of the innovation. Vancouver is using GPS-tracked trucks and electronic transmissions from rail track readers to better identify rail and road bottlenecks, prioritize infrastructure projects, and optimize existing operations. At the Port of Montreal, efforts are under way to implement predictive analysis to provide predicted truck turn times to drivers and dispatchers. The port is also working to enhance its trucking app, showing turn times at terminals in real time, to give advance notice of rail shunts so drivers can plan ahead.

Cargo M — a group of federal, provincial, and municipal leaders; the port authority; supply chain partners; shippers; and industry associations — supporting the Montreal effort is an example of the collaboration needed throughout Canada, said Logistec CEO/president Madeleine Paquin, who is also vice chairman of the group. Paquin, who will deliver the keynote address on June 20 at the Canada Trade Conference in Toronto, said the Canadian logistics industry is moving in the right direction, with a greater willingness to improve visibility, create metrics, and team up to boost gateway fluidity.

“We need even more collaboration going forward,” Paquin said. “This would include collaboration on strategic infrastructure investment, technology introduction, environmental efforts, and most of all on talent from the education to workforce development. Canada’s competitiveness depends on it.”

Contact Mark Szakonyi at mark.szakonyi@ihsmarkit.com and follow him on Twitter: @szakonyi_joc.