By Jack Kohane
December 29, 2008
Stock market shock, credit crunch, fluctuating fuel costs and concerns about the security of global supply chains was the sombre back story of the 77th Annual I.E.Canada (Canadian Association of Importers and Exporters) Conference held recently in Mississauga, Ont. With headlines booming the bad economic news, most delegates to this year’s event also voiced their alarm about future prospects for international trade.
Questions from attendees abounded: How will the current economic upheaval impact marine port and terminal business? How can enterprise sustain a go green strategy in a climate of economic uncertainty?
In her opening remarks to the hundreds of delegates in attendance, Mary Anderson, I.E.Canada’s president, chose her words carefully to help allay their fears. “Governments and financial institutions around the world are working around the clock to fix the global credit mess to ensure businesses continue to operate and to grow,” she asserted, adding that this year’s conference speakers were selected to share their experiences, challenges and successes in today’s volatile global economy.
Addressing the event’s main theme, Maximizing the Value in Your Supply Chain, Joyce Hammock, publisher and editor of Canadian Sailings I Transportation & Trade Logistics, and panel moderator of the conference discussion forum focusing on Canadian ports and terminals, spoke to the importance of marine transportation in world trade. “About 70 per cent of all commercial trade is handled by ship; this number increases to 90 per cent when talking about international or intercontinental trade. And each and every port is chasing this cargo,” she said, pointing out that Canada’s major ports handle 280 million tonnes of cargo annually, valued at more than $140 billion.
Touting the traits of his trade, Al Soppitt, president and CEO of the Port of Saint John, Atlantic Canada’s major bulk and breakbulk seaport that handles an average of 27 million tonnes of cargo annually, set the tone of the discussion. “Our strength is in our diversity and cargo mix,” he said. “Our port is essential to New Brunswick’s petroleum, potash, forestry and aquaculture industries, to its import and export trade, and to the provincial tourism sector through increasing cruise business. We also provide the (East Coast’s) main marine gateway to global markets.”
Petroleum products represent the port’s highest volume of cargo at 25 million tonnes annually. And with one million tonnes of throughput per year, potash and salt are the port’s highest revenue cargo generators.
Capt. Soppitt spotlighted the port’s fastest growing sector – the cruise trade. In 2008, Saint John welcomed a record 180,000 cruise passengers to the city during its five-month cruise season, up more than 40 per cent over 2007 numbers.
“The 79 vessel calls contributed over $11.4 million (passenger and crew spending only) to the local economy, and 2009 is expected to be very similar in numbers,” Capt. Soppitt observed. “As the cruise industry increases its commitment to our port, we are reinvesting in our product, as witnessed by our (new) cruise terminal.”
A $20-million investment is helping to upgrade the port’s cruise infrastructure, including the Pugsley Cruise Terminal, consisting of a grand hall and mezzanine floor serviced by an elevated walkway, and Long Wharf, developed as a second cruise berth to accommodate two large cruise ships on the same day.
“The port is poised for future growth with projected increases in bulk cargo, the opening of an LNG terminal and increases in cruise,” Capt. Soppitt said. “Our port is positioning itself in the proposed Atlantic Gateway, aimed at increasing international trade through Canada’s East Coast and strengthening Canada’s competitive position in international commerce.”
Kevin Doherty, CEO of Montreal Gateway Terminals Partnership, owned jointly by Morgan Stanley and Hapag-Lloyd, told delegates that the Port of Montreal is the third largest North Atlantic container port, serving as a key entry point for trade between Europe and Montreal, Toronto and the U.S. Midwest.
“Operating year-round, we are strategically situated 1,600 kilometres inland from the Atlantic at the gateway to North American markets, efficiently serviced by both Canadian Pacific and Canadian National railways, which have direct links to major American railroads,” he said.
The Port of Montreal handled a record 26 million tonnes of diversified cargo in 2007, including more than 12 million tonnes of containerized cargo (up almost 9.5 per cent over 2006). Montreal’s container traffic has been growing at an average annual clip of 5.3 per cent over the past 10 years, and that growth is expected to increase, Mr. Doherty predicted.
“Our two anchor terminals, Racine and Cast, on the St. Lawrence River, cover 60 hectares combined and have 16 controlled access gates and expansive container parks,” Mr. Doherty said. “We have 1,537 metres of berthing space (equal to 15 football fields) where we can work six (depending on length) containers ships simultaneously.”
As a terminal operator, Mr. Doherty noted that his organization has invested more than $85 million in gantry cranes and other container-handling equipment over the past decade. “These upgrades are intended to meet the challenges of the 21st century, and we foresee investing another $35 million in the next five to 10 years,” he said.
Montreal Gateway Terminals Partnership has also installed a new device to bolster security protocols aimed at confirming worker identities and the delivery of cargo at its terminals. The Hand-Key 11 system is used to verify the identity of workers moving containers in and out of Racine and Cast terminals. “As a result, these terminals are among the most secure in North America,” Mr. Doherty declared.
Last April, the Port of Montreal unveiled an ambitious 12-year, four-phase strategic development plan designed to triple its annual container-handling capacity and more than double its impact on Greater Montreal’s economy.
Titled Vision 2020, the plan requires investments of at least $2.5 billion, including $150 million to redevelop the port’s Alexandra Pier into a tourism and cultural hub to attract more cruise ship business.
Now underway until 2011, the plan’s initial phase entails improvements in operating efficiency and removal of bottlenecks to allow container-handling capacity to increase to two million TEUs (20-foot equivalent units) from the current 1.5 million units. The fourth phase (from 2018 to 2020) will add the final increment of container capacity and bring total capacity to 4.5 million units.
Mr. Doherty sees Vision 2020 as key to the Port of Montreal’s ongoing sustainability. “It is encouraging to a see a progressive, visionary approach for building the port’s future amid serious competition on the U.S. eastern seaboard,” he remarked.
Scott Galloway, director of trade development for Port Metro Vancouver, the country’s largest port and the prime entry point for the Asia Pacific Gateway into the Canadian heartland, offered delegates his vision of the challenges and opportunities faced by West Coast ports. “After years of great business, our customers’ profit margins are currently tight,” he said. “These are also mobile assets that under financial and economic constraints will look for the best possible route for them. Gateway selection is driven by operational and cost factors. We continue to believe we need to be a major North American gateway.”
Port Metro Vancouver, representing a new amalgamation among Vancouver, Fraser River and North Fraser, is now better positioned to compete on a global scale, Mr. Galloway said. With a total of 28 terminals, Port Metro Vancouver is Canada’s busiest port. Port-related activities generate an estimated $10.5 billion in GDP.
PMV has many natural strategic advantages: it is serviced by CN and CP railways, as well as by Burlington Northern Santa Fe, BC Rail and Southern Railway of BC. The port also offers easy access to the Trans-Canada and U.S. Interstate highway systems with interconnecting service provided by major trucking lines.
Vancouver International Airport is approximately 25 minutes from the port’s inner harbour facilities. The port carries with it capacity and efficiency for sea-air cargo and connects passengers to the popular Vancouver-Alaska cruises.
As of June, 94 per cent of PMV’s container business was the Canadian market (about six per cent of PMV business is to and from U.S.).
“We are also leading the way in terms of sustainability and environmental protection,” crowed Mr. Galloway, who provided the audience with details of the port’s commitment to environmental stewardship, including the Northwest Ports Clean Air Strategy. “This is a partnership with the ports of Seattle and Tacoma to address port-related contributions to air quality and climate change in the Georgia Basin-Puget Sound airshed,” he stated.
Created to reduce port-related diesel emissions in the Georgia Basin-Puget Sound region via voluntary, collaborative means, Mr. Galloway pointed out that the ports are working in conjunction with regulatory agencies leading to decrease greenhouse gases and diesel particulates emissions in the region, thereby pre-empting the need for a regulatory framework. “The plan will focus on actions allowing for continuous improvement within the growth trajectory of the ports,” he said.
Other initiatives include shore power, an emission-reduction measure being considered at PMV, in partnership with Princess Cruise Lines, Holland America, BC Hydro and the Province of British Columbia. Port Metro Vancouver will undertake implementation of shore power for cruise vessels at Canada Place. All the port’s new terminals and redevelopments will offer ducting for shore power; the main objective is to reduce air emissions of ships while at dock.
“Reducing emissions of GHG will reduce contributions to climate change and help to maintain and improve air quality,” Mr. Galloway said. “Shore power, by virtue of shutting down engines to reduce emissions, also reduces noise associated with operation of those engines. As a result, shore power contributes to improving public health, the environment and the economy.”
PMV also introduced a new truck licensing system last April, setting out minimum and increasingly stringent safety enforcement and environmental requirements for container trucks operating on port property. “This new environmental standard requires cleaner and more modern engine technology by phasing out the use of older container trucks,” Mr. Galloway said. By early next year, the port will prohibit access to container trucks older than 1994 unless they meet more rigorous, defined emission standards.
Mr. Galloway summed up: “Our purpose is to reduce maritime and port-related air quality impacts on human health, the environment and the economy, to reduce our contribution to climate change through co-benefits associated with reducing air quality impacts, and to help the Georgia Basin-Puget Sound airshed continue to meet air quality standards and objectives. Our goal is to encourage ongoing innovative instead of mandated solutions.”
Lauding the environmental/sustainability initiatives spearheaded by PMV and other Canadian ports, Keith Evans, a supply chain and operations planning consultant with London, England-based Arup, a firm specializing in logistics planning, stated that despite the current worldwide economic volatility, the greening of the supply chain remains a top priority in today’s enterprise management.
“Sustainability has come to mean more than simply going green. It is now about responsible strategy throughout the supply chain,” said Mr. Evans, characterizing sustainability as the balance between the “triple bottom line”: companies should not just focus on their economic bottom line, but also consider their social and environmental responsibilities. “This blend of social, economic and environmental balance will ultimately lead to a more sustainable future … by investing economic gains to improve the lives of people without destroying the environment on which we depend for our survival,” he said.
Hopefully, the big takeaway for all I.E.Canada conference delegates, Mr. Evans concluded, is that sustainability is about implementing improvement programs and initiatives that continue to consider how better to meet customer needs and drive better economic performance while engaging stakeholders in the business (be they employees, customers or shareholders) and implementing performance improvements, including environmental responsibility.”
To wrap up the conference’s sustainability forum, Ms. Hammock emphasized that Canadian ports and terminals “continue to make large capital investments in infrastructure and new equipment – environmentally friendly equipment or big green machines – to meet the growing needs of stakeholders as trade continues to grow.”