Report on Cargo Logistics Canada Expo and Conference
Published originally in Canadian Sailings Magazine, March 14th, 2016
Canada remains a positive growth market, according to Mediterranean Shipping Company (MSC), with container traffic projected to increase by 900,000 TEUs to 6.7 million TEUs by 2020, said Najim Shaikh, MSC Vice-President Commercial Import. Mr. Shaikh made the forecast during his keynote address at the third annual Cargo Logistics Canada Expo and Conference in Montreal on February 17.
Mr. Shaikh noted the large amounts of infrastructure spending taking place at the ports of Vancouver, Prince Rupert, Montreal and St. John where MSC offers a combined eight calls a week, including four independent services, up from three vessel calls a week seven years ago. In the next 2-5 years, Prince Rupert will add 500,000 TEUs of capacity, Vancouver 600,000 TEUs, Montreal 450,000 TEUs (with a further 1.15 million TEUs planned) and St. John 200,000 TEUs. Trading patterns have also shifted, he pointed out, with Asian traffic now accounting for 91 per cent of Vancouver’s volume versus 93 per cent in 2008. In Montreal, 77 per cent of the port’s activity was with Northern Europe in 2005. Today, that has dropped to 44 per cent, with Asian trade accounting for 17 per cent of volume while it was negligible in 2005. “Asian goods coming through Montreal are not predicated on the expansion of the Panama canal. The expansion will serve the New York gateway which doesn’t affect Montreal.” Mr. Shaikh also alluded to the company’s growing cruise ship business, now the fourth-largest in the world with 12 vessels and seven newbuilds on the books.
Another session entitled, The Importance of Rail to Port Productivity, featured panellists Tony Boemi, Vice-President, Growth and Development, Port of Montreal, Bob Landucci, President and CEO, Ashcroft Terminals and Lonny Kubas, CN Director of Marketing.
“Montreal is the only port to have its own on-site rail service which is directly connected to the CN and CP networks,” noted Mr. Boemi. “In terms of efficiency, you hear horror stories about West Coast ports with congestion, which you don’t get in Montreal. Our dwell time is less than three days. We’re also a balanced port with 49 per cent of business coming from exports and 51 per cent from imports.” The port’s new Viau Terminal is an example of managed growth with the addition of 1,000 feet of new tracks added in 2015 and a goal of 2,000 feet of new track when fully built, he noted. The biggest challenge ports will face on a macro level will be the potential arrival of megaships dumping 15,000 TEUs in one shot, he added. “We’ve gone from one ship a day seven days a week to one ship a week seven times the normal size.”
The Ashcroft transloading and rail car storage terminal is located in the BC interior where CN and CP joined forces in 2000 for joint cooperation at the 320-acre terminal, noted Mr. Landucci. The terminal offers fleet management, a cleaning system and will offer full Class C repairs in 2017. Currently, any chemical car that needs cleaning must travel to Dallas at a cost of roughly $12,000. That is business Ashcroft is going after.
There are four players involved in the transportation cycle, namely the producers, shipping lines, railroads and docks, Mr. Landucci pointed out. “The producers are the key, such as the mines, mills, oil and gas and coal producers which come from small towns. So the jobs created in Vancouver are due to these producers. Our job is to get their costs down.”
While the railroad in Canada is often a monopoly in some areas, it does move product efficiently, which is not always easy when it can reach -40 C on the Prairies, Mr. Landucci noted. “If the railroads can operate more easily at our facility, then the producers can also operate more easily.”
Asked about congestion at the Port of Vancouver, he said it could be reduced by adding more tracks at the docks and since the federal government owns the land, they should build the tracks.
CN focuses on the importance of rail to port productivity on a daily basis, according to Mr. Kubas, noting CN plans to invest $2.9 billion this year on infrastructure and fleet upgrades, including 90 new AC locomotives and $400 million in the U.S. for a government mandated anti-collision safety system called Positive Train Control.
“Supply chain success does not come by going it alone. For example, we are working with our port partners, including Mobile, Alabama, where a new dock facility is expanding by 125,000 TEUs. A port’s success in tied to our success. We continue to focus on safety, double tracking and new equipment.”
CN is evolving from railroad thinking to supply chain and round-trip thinking, resulting in a 20.6 per cent drop in port dwell time across its network in the fourth quarter of 2015 from a year earlier.
And a strong U.S. dollar has a positive impact on Canadian port costs, noted Mr. Kubas. “Canada can really compete much more aggressively with U.S. ports with a terminal cost advantage of U.S. $200-$250 per unit.
The Promise of North America’s Waterways was another session that looked beyond deep water ports and at inland ports and brown river ports on the Mississippi. The connectivity of the North American transportation system is illustrated in the North America’s Commodity Constraints Study prepared by Informa Economics, Memphis, TN. The study points out that while the continent’s agriculture and energy commodity markets are growing, transportation and infrastructure are racing to keep up and in some cases falling behind in moving those supplies to market.
“Less transportation capacity results in higher freight rates. Infrastructure is at the core of everything we do,” said Bruce Hodgson, Director, Market Development, The St. Lawrence Seaway Management Corporation. “As for budget cuts, is this the time to cut back infrastructure spending before the economy bounces back?”
The industry is improving its carbon footprint with fleet renewals taking place at CSL, Algoma and Fednav, among others. The Canadian Seaway is also investing $500 million on infrastructure over a five-year period, while the U.S. Seaway is spending $92 million. “We have multiple stakeholders but we have one number to call for shipping inquiries and that information is passed on to stakeholders as required,” said Mr. Hodgson.
The situation south of the border is somewhat different with old infrastructure that needs to be updated, said Washington lawyer John Jaskot at Johns Walker, representing the Waterways Council. “There are 250 locks and dams in the U.S. with 57 per cent beyond their economic life. Most were built in the 1930s and 40s.”
The aging infrastructure needs to be modernized or else the inland waterways system will no longer provide reliable freight transportation, according to the National Waterways Foundation.
In 2002, there was $412.6 million sitting in the Inland Waterways Trust Fund not being used for infrastructure upgrades. The following year the Waterways Council was formed to put pressure on the Fund to make sure its assets were used for its intended purpose. The fund in now down to $52 million. In addition, a diesel fuel user fee was increased by nine cents a gallon in 2014, significantly raising funding for priority navigation projects throughout the system. “The inland waterways system is promising, but we need to fix the things that need fixing now,” said Mr. Jaskot.
“We are currently operating below capacity,” said Mr. Hodgson. “We see opportunities in cargo diversification, but we have to get Ports on board to have the infrastructure in place.”
It was the first time the two-day conference and expo was held outside of Vancouver where it will return next year. It will be back in Eastern Canada in 2018, possibly in Montreal, according to Peter Hurme, the San Francisco-based Show Director. “We were really happy with the Montreal show. When we launched the show in Vancouver, it was successful right out of the gate as it’s the only multimodal show in North America.
“The Vancouver shows averaged 2,500 attendees, but we knew it was imperative to move the show east to attract a newer and wider audience. We’re glad we did, because we had about 2,000 attendees and some 150 exhibitors which was not that much less than Vancouver, and the level of sponsorship support was equally encouraging. There is also a robust ship port, shipping and logistics community here.”