Counting capacity at BC Ports

Published originally in World Cargo News, January 2016

Does British Columbia need additional capacity at both Vancouver and Prince Rupert?

British Columbia’s (BC) container ports could be a bright spot in what is shaping up as a bleak year for the Canadian economy in 2016. The country’s economic growth is expected to be less than 1.7%, as the falling price of oil undermines its main export commodity. Demand for imports is expected to be subdued, as the Canadian dollar had fallen from parity with the US dollar in 2013, to under 69 cents by mid-January, its lowest level in 13 years. The upside of a weaker currency is that it makes container terminal charges in Vancouver and Prince Rupert much lower than US gateways. Coming at a time when carriers are desperate to cut costs, this should be a significant boost to cross-border intermodal volumes”.

Going for growth

Container traffic through Vancouver in the year to the end of November 2015 came in at 5.9%. Volume reached 2.82M TEU and the port was on target to top 3M TEU in 2015. Prince Rupert handled 776,000 TEU last year, up 25% on the 618,117 TEU it recorded in 2014. With four cranes on one berth, Prince Rupert is approaching its approximate capacity of 800,000 TEU. An expansion to add another berth, four more quay cranes and increase capacity to 1.3M TEU is currently underway, and scheduled for completion in mid-2017. A further increase is also being planned. Since it took over the facility from Maher Terminals in 2014, DP World has signed an agreement to study the larger Phase II South expansion to “align the project with market demand”. Maksim Mihic, DP World Canada Group general manager, said: “Phase II South, which could potentially be delivered within the next three to five years, depending on demand, would increase the total capacity of Fairview Container Terminal to in excess of 2M TEU, and would provide capacity to meet Canada’s Pacific container terminal capacity requirements for decades to come, in a costeffective and environmentally responsible manner.”

Vancouver and T-2

Mihic’s comment about meeting Canada’s capacity requirements on the Pacific coast highlights a growing tension in BC over where and when additional port capacity should be built. Port Metro Vancouver (PMV) has, for some time now, been in the permitting process for a new terminal at Roberts Bank, adjacent to Deltaport. Called T-2, the facility would have three berths and add 2.4M TEU capacity to Vancouver. There is significant community opposition to the new terminal, and the expansion at Prince Rupert adds weight to the argument that T-2 is not required. PMV’s position is that Prince Rupert is predominately a gateway for US trade, whereas “cargo through PMV is primarily Canadian cargo for Canadian businesses”. It argues that historical data and trade/cargo forecasts show the west coast of Canada will “require additional capacity by the early 2020s, as well as improvements to existing terminals”. Depending on a successful permitting outcome, construction could begin in 2018.

Shortlist

In November, PMV shortlisted the following five “qualified teams” to participate in the RFP stage: Abu Dhabi Terminals, Grup TCB/Mitsubishi Corporation, Ports America, PSA International and Terminal link CMHI (China Merchants) consortium. T-2 faces environmental opposition to both the marine terminal and a subsequent increase in port activity in the area known as the “Lower Mainland”, around Delta. Robin Silvester, CEO of PMV, recently identified “the shrinking supply of trade-enabling industrial land as the largest threat facing the Vancouver trade gateway and the region’s continued liveability”. The port has released a study that concluded the supply of vacant land suitable for trade and goods movement “will likely be exhausted within the next 10 years”. Delta Mayor, Lois Jackson, by contrast, does not want to see more industrial and farm land in Delta taken up for port purposes, and is pushing for PMV to look at other hinterland options, including a new inland terminal in Ashcroft.

Inland option

Privately owned and established in 1999, Ashcroft Terminal is a 320-acre site, approximately 330 km east of Vancouver. Speaking with WorldCargo News, VP corporate development Kleo Landucci said the terminal has three parts to its business: rail car storage, bulk logistics, and now truck-to-container transloading. All empty containers that are returning west by rail across Canada to Vancouver pass through the town of Ashcroft. The terminal now has a direct connection to the CP railroad network, and is trying to establish a service where empty containers heading back to Vancouver are stopped, loaded with forest products, and then re-loaded to trains heading to PMV terminals. Landucci explains that this avoids trucking the cargo to the Lower Mainland, and the associated logistics of trucking empties from terminals or depots to loading points. Ashcroft is ideal for building unit trains, as it is already a storage point for rail cars. It can assemble trains for a “direct hit” into PMV’s on-dock facilities.

Big Potential

The potential for Ashcroft is significant. Its current operations occupy only 10% of its 320- acre site, which has the potential to accommodate 40 km of rail track. The inland location puts the terminal in the heart of BC’s lumber and wood pulp industries, which accounted for 47% of all containerised exports through Vancouver in 2013. In container terms, this is around 460,000 FEU, without even considering agricultural exports. Landucci stressed that transloading at Ashcroft is “not for everyone” but a study by Cargo Velocity Inc, CH2M Hill and InterVISTAS found that, even under a conservative scenario, the inland terminal could be expected to eliminate 360 daily one-way trips to and from container terminals on the Delta by 2031 – the equivalent of 217,000 trips annually. Considering a moderate scenario, 1,080 daily truck trips could be eliminated, equivalent to 650,000 trips annually. Perhaps surprisingly, Ashcroft is not getting a ringing endorsement from PMV. “Locating such facilities [inland ports] far from the port, and even outside the Lower Mainland, would mean increased truck traffic, more congestion, higher consumer prices and environmental impacts, in addition to lost jobs,” Sylvester said recently. In a statement to WorldCargo News, PMV softened that stance somewhat. “We recognise opportunities may exist for exporters for importers to develop business cases to utilise services provided by inland terminals,” it said. “We support opportunities to increase the effective and efficient use of inland ports to serve marine terminals, where supported by a business case”.

Qualified Support

The port said it supports new infrastructure initiatives “where they add capacity, improve efficiency, are approved through a proper environmental process, and supported by a business case”. Landucci said that it is not really an option for a private business such as Ashcroft Terminal to spend hundreds of thousands of dollars on business plans and consultant studies, in an attempt to convince PMV it has a business case. Ultimately, Ashcroft is a private sector business, and its success or failure will be decided by the market. The inland concept was tested in a pilot project last July involving CP. Ashcroft found the cargo and invested in mobile handling equipment, and CP brought in the empty containers. The railroad, she said, was “ecstatic” about the result, and shippers readily agreed to support the next phase, which is a weekly service loading about 120 containers a week, set to begin in Q1. Landucci acknowledged that shippers take some convincing that the concept is more efficient than trucking, and Ashcroft Terminal is deliberately starting slowly and addressing concerns one at a time. Its major draw is that the rail service can save money and, for some customers, give them more control over loading their cargo.