Q: Why introduce a new vision revolving around the concept of sustainability?
It’s a culmination of a lot of thinking over a number of years. Balancing a healthy environment, thriving communities and economic prosperity through trade has always been at the core of our mandate as a Canadian port authority. As we worked through the process of figuring out what sustainability meant for the port, in consultation with our stakeholders, we arrived at a definition that identified in depth each of these three pillars.
So it comes back to an old theme, really, and about formalizing the idea that we have to make decisions in a balanced way, thinking about all of the components of sustainability defined in a gateway perspective to become a sustainable port. And now we’re in the process of really trying to embed that in how we make decisions in the organization.
Q: Concepts like the three-legged stool or triple-bottom line have been around for a while. What’s new about your three pillars of sustainability?
I think what’s new for us, firstly, is we put a lot more thought into exactly what the three pillars mean for us as a port. So rather than just saying something about economy, something about environment and something about community, we explicitly defined them as economic prosperity through trade, healthy environment and thriving community.
For each of the three pillars, we’ve mapped out 22 success statements in detail. It’s a question about being thoughtful and focused on each of the components but also in managing a balance between them. We can only be successful in this by actively thinking about all three in all the decisions we make.
An example would be our Low Level Road project on the North Shore, where we worked hard with the community to get permission from the municipality for the land we needed to build road and rail capacity in the area. In support of our neighbours, we added community amenities, stabilized an unstable slope and added bike paths to the road.
It’s the first project in the world involving a linear transportation structure to win an Envision award for sustainable infrastructure, which is the equivalent of a LEED award for buildings. It recognizes that the project balanced the creation of economic capacity and delivered it in a way that didn’t overly impact the environment, while creating additional benefit for the community. So it’s a good example, I think, of how we can be successful in our mandate through delivering a balance between our three pillars.
Q: How can you resolve competing needs?
We consult with stakeholders to make sure we have a full understanding of their concerns. Although there might be some stakeholders who are more focused on one particular part of the sustainability piece who say we haven’t done enough, we work to find a balance. But that’s the difficult decision we need to make. We have to consider all issues and find the right balance.
The ECHO program is a really interesting example of how we’re working to balance several of our sustainability success statements through our programs and initiatives. We see the need for trade to increase through this gateway, which will mean more cargo carried on ships, and this may have negative impacts on whales. To be able to continue developing trade and protecting whales in the environment around us, we decided that we needed to be proactive. So, wanting to have science to inform our decision-making, we pulled together a very large group of stakeholders to start researching the issues so that we can begin to identify solutions. We’re also starting to think not only about development of regulation, but also how best to provide incentives to support those solutions.
We’d much rather be out there working to find a solution than wait for a solution to be given to us. We strongly believe that if we get the right people around the table, including NGOs, First Nations and government bodies, among others, we can find solutions that better balance these complex and potentially conflicting drivers.
Q: Can you comment on the mid-year stats?
The volume of total cargo moved through the port declined in the first half of the year primarily due to softening in the global economy. There have been significant slowdowns in steel-making coal and potash exports which is broadly related to a slower economy and pricing challenges in Asia. Grain is continuing to grow and a large harvest is expected this year which will contribute to increased exports of this commodity leading to grain as potentially the only commodity that will show growth this year.
On the import side, we’ve seen containers go down compared to this time last year and there are several reasons for this. If we look at the Bank of Canada statistics, Canadian consumers are still spending money in stores, but with the softer dollar, spending has been a bit more domestic than in previous years. We’re also seeing that the surge of container volume last year due to U.S. West Coast labour disruptions has somewhat returned to the U.S. Earlier in the year, construction work at our Deltaport terminal caused short-term capacity constraints; however, this project is expected to be complete by 2017. Overall the softening of volumes is a result of a combination of shorter-term issues rather than a trend.
Q: What is your forecast for the second half of 2016?
It is possible that we will end up slightly down on volumes this year, as we were at the half year. As mentioned earlier, there’s an opportunity to see more grain, depending on how the harvest goes in the prairies. There are some signs in the steel-making coal market that things may be firming just a little. Currently there is no indication that the Canadian economy will recover quickly so it is unlikely that we will receive a rush of containerized imports. We might see a little bit of closing up of the gap as we come in to the Christmas season, but I’m really expecting more of the same. I think we are in a slower period that looks like it will continue for another twelve months at least.
Q: Is this year’s slump indicative of a long-term trend?
I think it’s a medium-term trend, not a long-term trend. Shippers are continuing to express confidence in the Port of Vancouver and we continue to see investment projects moving forward in the gateway. We are expecting another three million tonnes of potash coming in through our Pacific Coast Terminal. We know that Richardson now has the capacity to handle a lot more grain. We have Viterra, and also Cargill, investing in grain. These investments give us further confidence, as we look out over five years, that we will be back in a growth cycle. But I think we’re talking about five years, as opposed to 12-18 months.
Q: What are your medium and long-term expectations for growth?
We expect to see growth. Not at the rates we saw back in the 1990s to the early 2000s when we were seeing growth of six, eight, or ten per cent. We’re expecting medium-term growth of three to four per cent with GDP hopefully ending back in the two per cent and up range. So perhaps not the three times GDP growth as was in the past but closer to one and a half to two times GDP growth. Independent forecasts show continued long-term growth in container trade and we are expecting and planning to ensure we are prepared for growth. If we look at the exports, the picture is equally robust for different reasons. Assuming the global economy continues to grow, countries such as China and India are going to continue to develop their middle class and grow their cities. As part of this overseas urbanization, we would expect an increase in steel-making coal exports. In addition, as the world population continues to grow, we are expecting the strong growth in the demand for potash and grain. You have to look at each of the commodities separately, but we would say that growth fundamentals are still there.
We then look at what’s happening in the gateway and see those who know even more about commodity flows investing in our port and that reinforces our confidence. Almost whichever segment we look at, we see investors in the gateway who spend their lives and their businesses in those segments, having the same confidence about growth. I think we’re all recognizing that growth will still be there, just not at the rates we saw in this commodity supercycle over the last decade.