PORT OF MONTREAL SPECIAL REPORT
By KATHLYN HORIBE
November 17, 2008
In October, the board of directors of the Montreal Port Authority approved the MPA’s five-year business plan for the period 2009-2013. “We can now commit the necessary funds to carry out Phase 1 and 2 of Vision 2020, our major expansion project,” said Patrice M. Pelletier, president and CEO of the MPA. “It is the port’s first expansion in decades.”
The aim of Vision 2020, the port’s four-phase, 12-year strategic plan, is to more than double its container demand from 1.5 million to 3.5 million TEUs by 2020. The plan was unveiled in April at a well-attended luncheon hosted by the Board of Trade of Metropolitan Montreal.
With containers the primary source of growth, the expansion plan will triple annual container capacity from 1.5 million to 4.5 million TEUs by 2020 as well as enhance Montreal’s appeal to cruise line operators. The ambitious project will require total investments of $2.5 billion from both the public and private sectors, including from the port’s own cash reserves. However, changes to the Canada Marine Act should open up new financing opportunities for Montreal.
Preliminary estimates for the projects, Mr. Pelletier said, will require government support of $450 million to $650 million for infrastructure construction, safety and security enhancements and environmental improvements. With the appointment of John Baird as minister of transport, infrastructure and communities, replacing Lawrence Cannon, the port will have to present its proposal for federal financing to the government once again. However, Mr. Pelletier is confident the proposal will be well received.
“The financial outlook remains good with potential investors despite the global financial crisis,” he said. “The four-phase project extends over 12 years and the borrowed sums will be invested in port infrastructures. These assets are financed long term and, consequently, have low exposure to short-term market fluctuations.”
In addition, the business community and public authorities continue to support the project, he added, “as the economic prosperity that Montreal brings to the region is considerable.” By 2020, the port’s annual economic spinoffs will increase from $1.5 billion to $3.4 billion and the number of direct and indirect jobs from 18,200 to 41,400.
“The Vision 2020 plan has been developed to ensure that Montreal remains a port that is vitally important to North America for freight transportation,” Mr. Pelletier said, “while improving and stimulating the local communities in which the port operates.”
The Great Lakes-St. Lawrence River system is one of Canada’s most important trade corridors, he added, and a vital North American trade link to Europe and the Mediterranean.
The Port of Montreal must act now, he said, to secure a greater share of international container traffic and remain competitive with U.S. ports such as NewYork/New Jersey, Virginia’s Hampton Roads and Georgia’s Savannah. To capture more container traffic, these East Coast rivals have already invested billions of dollars, supported by their state governments, to improve infrastructure and rail and road links.
“Since the early 1990s, world container traffic has grown almost three times faster than the GDP,” Mr. Pelletier said. “By 2020, container traffic is expected to grow by nearly 7 per cent a year. Everyone is getting set to capture a share of this traffic.”
The majority of the port’s container traffic originates from Northern Europe and the Mediterranean, with other traffic from Africa, South America and Asia. Other sectors Montreal is targeting are petroleum, grain, dry and liquid bulk products and non-containerized goods, which are also important drivers for the MPA.
The Vision 2020 plan is designed to promote further growth by capitalizing on Montreal’s key strengths, such as balanced import-export container volumes and competitive transit times from the U.S. Midwest. For example, Chicago/Montreal to Bremerhaven, Germany, takes eight days compared to nine days from Chicago/New York and 11 days from Chicago/Virginia.
“Already ships sailing from Asia are using the Suez Canal for exports to North America via Europe,” Mr. Pelletier added. “The Panama Canal is being widened to handle the biggest ships sailing from Asia. Starting in 2015, it will be a preferred route for maritime traffic between Asia and North America, rivalling that of the Suez Canal.”
Four-phase project
Already underway is Phase 1 of the port’s four-phase project. This phase, valued at $195 million in 2008 including equipment, will optimize existing terminal facilities, such as re-positioning equipment, moving buildings, resurfacing areas, lengthening the Cast berth and adding rail lines to the port’s rail network.
“Increased capacity requires more rail lines,” Mr. Pelletier said regarding the port’s 100-kilometre network. In the first nine months of 2008, container tonnage at Montreal rose 10.1 per cent compared to 2007 and facilities are operating at near capacity. By the end of Phase 1 in 2011, capacity will be boosted from 1.6 million to 2 million TEUs and operational efficiency will be augmented.
Phase 2 involves the reorganization of the Hochelaga-Viau Terminal and the transformation of existing lands into container terminals by 2013. This initiative will increase capacity from 2 million to 2.5 million containers and involve displacing bulk cargo currently handled in the area, Mr. Pelletier said.
Phase 3, evaluated at $383 million to $470 million, increases capacity to 3.5 million TEUs from 2.5 million boxes between 2014 and 2016 by building a new terminal in the east end of Montreal or at Contrecoeur. A container facility at Contrecoeur would require a “dual rail strategy” with both Canadian National and Canadian Pacific serving the terminal. At present, CN is the only rail line at Contrecoeur.
Phase 4 to augment capacity from 3.5 million to 4.5 million TEUs would start in 2013. The $500-million to $600-million endeavour would aim for completion between 2018 and 2020.
Additionally, the cruise terminal at Alexandra Pier will be rebuilt and developed into a unique recreational, tourism and marine landmark area in the heart of Montreal’s waterfront. This year, some 25 cruise ships, with 32,100 passengers on board, called at Montreal compared to 29 ships with 28,688 passengers in 2007. In 2009, the number of passengers will increase to 34,000.
“Our vision is to be the preferred maritime gateway on the North American continent,” Mr. Pelletier said, “offering our clients a reliable, safe and integrated, competitive suite of services implemented by a dedicated team of professionals.”