Perfect Match

Published originally on CanadianShipper.com

Fueled by a new partnership, Ashcroft Terminal is looking to extend its international reach.

While a marriage of convenience may not be the best way to build a healthy longterm relationship between two people, when it comes to business partnerships, both sides getting something they want out a of a deal is essential.

On the heels of a planned $28.2 million expansion, Ashcroft Terminal announced that PSA International, one of the world’s biggest container port operators, acquired a majority interest (60 per cent) in B.C’s largest inland cargo terminal.

Kleo Landucci, formerly Ashcroft’s managing director and now the chief commercial officer, overseeing sales and marketing, told Canadian Shipper that as a family-owned entrepreneurial group, they had been aware for several years that for the company to achieve its growth potential and vision “we needed a globally focused partner.” PSA, she said, “has the expertise to understand how to develop international ports at a whole new level, so we are pretty excited about that.

“With 74 million TEU in 40 ports, PSA will give us the global reach,” she added. PSA has operations in 16 countries in Asia, Europe, and the Americas, but none in Western Canada.

By comparison, Dubai-based DP World, which operates Vancouver’s Centerm and Prince Rupert’s Fairview container terminals, operates 78 marine and inland terminals and handled 70 million TEUs in 2017.

Ashcroft Terminal chief commercial officer Kleo Landucci (left) and CEO Kelvin Tan, are leading the charge in the wake of PSA International acquiring a majority stake in B.C.’s largest inland cargo terminal. (PHOTO: Ryan McLeod)

At the same time that the Landucci family were evaluating their options, PSA was embarking on a transformational journey of its own, according to Kelvin Tan, Ashcroft’s newly appointed CEO, who will be taking over from Kleo’s father Robert, the company’s driving force since founding Ashcroft Terminal in 2001, who will now serve on the board of directors.

“As a port and terminal operator, we started to think about how we could improve our service to customers and as a result we started to understand that in order to do that we had to get into the logistical space of the supply chain,” said Tan. The opportunity to partner with the Landucci’s was the first deal in North America that made sense for PSA, said Tan, adding that the company has evolved since he joined in 2001, from a Singapore-centric operation to one that now has a large strategic global presence.

“If you look at the model of Ashcroft, it makes sense,” he said. “A single facility where you have both mainlines [CN and CP] crossing, literally right next to each other.” The Ashcroft acquisition is PSA’s first foray into Canada, Tan Chong Meng, the company’s group CEO, stated when the deal was announced in July. “[It] offers us an entry point into the hinterland supply chain for the North American market, as well as an opportunity to increase our capabilities in intermodal and inland container depot operations.”

He added that the terminal’s strategic location allows PSA to establish a common user ICD and provide greater options to cargo owners and consignees. “We will partner with shipping lines, rail operators and trucking companies to implement a more robust, efficient and cost-effective supply chain solution to serve the needs of major exporters in Western Canada.”

For his part, Ashcroft’s founder feels the future of the inland port is in good hands. “PSA’s expertise as a world-leading port operator, coupled with Ashcroft Terminal’s current service to Canadian producers, established relationships with key stakeholders and Ashcroft Terminal’s in-depth knowledge and experience in rail operations will put the terminal in good stead for future growth,” said Robert Landucci.

Location, location, location

Located 340 kilometres east of Vancouver, in the Thompson Okanagan region, the 320-acre Ashcroft Terminal is the only inland port in Canada that has both Canadian Pacific Railway and Canadian National Railway mainlines running through it. As an inland terminal, it can help alleviate congestion around Metro Vancouver by handling import and export rail cargo offloaded from or destined for container ships docking at the Port of Vancouver. Transportation congestion in the lower mainland continues to be a major issue for cargo and commuter movement, so much so that the Canada Transportation Act review report identified it as one of the main obstacles to economic growth over the next 20 years.

Ashcroft currently services all sectors of the natural resource industries, which include agriculture, mining, forestry and oil and gas; by providing transloading, fleet management, railcar storage and logistics solutions.

For Landucci, PSA’s investment in Ashcroft underscored the upside the multi-national company sees in inland port terminals, especially in Canada, which has lagged behind other regions in their development.

“The key is to do whatever you can do inland for efficiency and cost effectiveness to make your marine ports more efficient,” she said. “So you can really do the more inefficient work inland and increase throughput on your marine terminals—make your marine ports as efficient as possible on the more constrained footprint that they have. And that’s really what the job of an inland port is as part of the supply chain ecosystem, and PSA, with its investment is really validating the importance of that.” Added Landucci: “We happen to have a very strategic location, and we are looking forward to maximizing our capacity with our new partners … Having a global impact is what we’re after.”

Key in helping Ashcroft reach its potential as an inland port for Vancouver is the slew of expansion projects announced last spring totalling $28.2 million—$9.2 million of which is coming from federal funding under Canada’s National Trade Corridors Fund —which will add a new rail link to the CN mainline, additional rail track of existing – infrastructure, an internal road system and a multi-commodity storage facility. The projects are scheduled for completion in the summer of 2021.

“This is a huge deal for us,” said Landucci. “It will allow us to build in track and connect directly to the CN mainline where we will have direct access with a lead line and ancillary transloading, marshalling and storage tracks.

“It is significant for us, so much so that the day of the announcement we had customers—potential and existing—calling us to find out when they could send us rail cars.”

Landucci explained that the expansion will double Ashcroft’s track infrastructure. “As far as our geographic footprint, it will only take us to being twenty per cent built out. We have a lot more we can do, which is very exciting.” For the relaunched container program, Landucci said commodities will arrive at Ashcroft via bulk rail or truck. The products will be transloaded into marine containers for the journey to the Port of Vancouver, giving Ashcroft more control over supply chain costs, according to Landucci.

Initially, the resources to be transloaded are expected to be sourced in Canada, although the CN and the CP networks extend to Chicago and locations to the east and south either directly or through interlining with eastern railroads. Either way, according to Landucci, Ashcroft will provide greater export opportunities for Vancouver and two-way hauls for the railroads. Vancouver in 2017 ranked 47th among global ports with 3.25 million TEU, an increase of 11 per cent over 2016, and by mid-year 2018 had seen an increase of five per cent to record 1.64 million TEUs. Ashcroft’s built-in advantage goes back to its days as a transportation centre of goods and people travelling north in search of gold during the late 19th century. First Canadian Pacific built on what it felt was the easier side of the Thompson River, and then Canadian National came along a few years later, and built their line on the north side, but before reaching the town ran into difficult terrain just south of where Ashcroft Terminal sits and was forced to build a bridge, leaving both railways on the same side.

When Vancouver businessman Robert Landucci, who had started his own lumber company, arrived on the scene he couldn’t believe his good luck of finding a piece of property with both railway mainlines within it boundaries.

That good fortune continues. With the backing of its partner, PSA, Ashcroft Terminal will focus on building the services that support its primary business streams of transloading, bulk storage and containers, while working with its customers, locally, nationally and internationally, says Landucci.

“The key for us is having the dual access at such a strategic location in the gateway to smooth out fluidity and create that capacity and release valve outside for the lower mainland.”