By Tom Peters
Rail freight rates make up the largest part of moving cargo containers to and from inland markets, and CN is constantly working to keep those rates down and help keep Port of Halifax competitive, said Claude Mongeau, President and CEO of CN. “We are doing everything possible to be as cost-competitive as we can be because if we are not, we lose all of the traffic,” Mongeau said in an interview following his keynote address to delegates attending the Halifax Port Days luncheon. “We do have costs to cover and we try to be as efficient as possible. We are looking at our own operation, looking at ways to save costs and working with our partners and the shipping lines so in the end we have an end-to-end supply chain that is more competitive than the competition. If we succeed, it is good for Halifax and it is good for CN. If we fail, it is bad for CN and it is bad for Halifax,” he said.
Halifax Port Days focused on the port as the East Coast Asian Gateway and panelists in two business sessions discussed issues pertaining to the food value chain and innovative trade and cargo. One of the issues raised was keeping Halifax competitive with New York, with New York cited as a major competitor to the Nova Scotia port. Ashley Dinning, President and CEO of Halterm Container Terminal Ltd., operator of Halifax’s Southend Terminal, said in the discussions on the food value chain, that shipping lines and terminals require volume, and for Halifax there needs to be a stronger effort to shift “cargo away from New York to Halifax.”
Dinning said in an interview that moving cargo over Halterm can be very competitive with New York. He said Halifax is an excellent alternative to cargo owners because “70 per cent of the cargo through Halterm is loaded onto a train within nine hours,” and moving toward its market. He said in New York, even though it may be served by more shipping lines and more railways, the port is congested and cargo destined for inland markets sits on the dock for three and or four days, possibly more, before it is loaded onto a railcar. Dinning said he is working with Halifax Port Authority’s Susan Nathan based in Chicago, talking to cargo owners and shipping lines to encourage the switch to Halifax.
Following a similar thought-process, Mongeau said CN agents are working in Asia and India to develop business in those countries for CN and Port of Halifax but there are challenges. “Our biggest issue is mind share especially when we are looking at traffic going to the U.S. Midwest. If you are in Bangalore (India) or Vietnam and you are trying to move a container to Detroit or Chicago, your normal thought process would gravitate to New York. We think Halifax is a very viable gateway to get to the same end market. So how do we raise awareness that we are a good solution and that potential customers should inquire about: this is the what the role of the agents is all about. They make it known that we have a good supply chain and the more they do that, the better chance we have of a commercial opportunity presented to our shipping line partners so our terminals here and CN can benefit in the end,” he said. Mongeau told delegates that CN’s agenda is to be “a true supply chain enabler. We are an industry leader in rail and we believe in engaging our customers and helping them grow by partnering to look for opportunities.”
He said the railway works for the benefit of its suppliers, and CN and Halifax are good example. “We had the first service level agreement with Halifax and now we have those service agreements across the country,” he said. The agreements are a measure of CN’s performance at every port and a report is given to every port, which helps to enhance the supply chain, he said. Mongeau said Halifax is important for CN. The rail line moved 200,000 containers through the port last year and plus CN operates the Autoport which handles over 100,000 cars annually. He believes Halifax has room to grow but needs to focus to improve because there is a lot of competition from other supply chains.
The CN President briefly touched on railway safety referring to the July rail disaster in Lac Mégantic, Quebec. “Safety is the bedrock of CN operations,” he told port days delegates. The whole rail world was shocked by Lac Mégantic, he said, and in moving dangerous goods, CN’s record is “exceptional and it is incumbent on us to focus on safety. Mongeau said accidents can happen but CN is focused on safety. “We have a commitment to all communities,” he added.
In the session on innovative trade and cargo, Yuen Pau Woo, President and CEO, Asia Pacific Foundation of Canada, pointed out that new sources of demand for products in 20 years or so will be from Asia itself. That, he said, is a “compelling reason for industries to stay in Asia. Forty percent of industry in Asia now serves Asia products not for export.” He said with these new emerging markets, Canadian companies should be looking at a strategy for Asia and building ties with Asian companies.