By Mark Cardwell
The Port Authority of Saint John is doing it. So are its counterparts in Montreal, Sept-Îles, Halifax and other major ports in Eastern Canada. They’re rushing to expand and upgrade their facilities with multi-million-dollar projects that aim to attract and retain new and existing business.
Port of Saint John’s $205-million West Side Modernization Project passed an important milestone in January when two post-Panamax-sized gantry cranes went into operation at its container terminal. Operator DP World paid for the cranes as part of the public/private capacity-enhancing infrastructure project, which is slated for completion in 2021.
For its part, the Port Authority in nearby Halifax is in the assessment phase of an infrastructure improvement project that would enable two ultra-class vessels capable of carrying more than 10,000 TEUs to be simultaneously berthed and serviced. The project is being touted against the backdrop of a massive project announced last month by a potential competitor on the same seaboard turf: a privately-owned, billion-dollar container facility in Sydney, N.S.
“We are competitive and we are trying to be strategic,” Marlene Usher, CEO of the municipally-owned, non-CPA member Port of Sydney, said about the project, which is currently a greenfield site. If built, she added, the highly automated facility would offer both an alternative to Halifax and Montreal, and added capacity for the anticipated increase in container traffic under the new CETA trade deal between Canada and Europe.
The Ports America-led consortium behind the Sydney project announced in early December that it wants to create both the ability and the capacity for the port to handle the same ultra-large generation of container ships.
“That possibility doesn’t exist today with the existing port structure,” said Peter Ford, Chief Strategy Officer for Ports America, the largest terminal operator North America. “Here we have a great deepwater port opportunity close to the European trade lanes where these ultra-large ships are operated.”
A similar project is also being discussed for Port Hawkesbury. It may be interesting to note that the new highly automated facilities might have a sustainable competitive advantage if and when union-led activities on the U.S. east coast (see article on page 28) should be successful in thwarting the march to automate container terminals.
Though the size, focus, and timetables of all these projects vary, one common driver is the ports’ desire to differentiate themselves from the competition.
In Montreal, for example, the $197-million Viau container terminal project is designed to help retain the city’s positioning as the leading container port in Eastern Canada. Inaugurated in 2016 and featuring the Montreal model on-dock rail intermodal service, the facility will add 600,000 TEU to the port’s total capacity over the next few years, raising it to 1.5 million. “Containers are a key driver for us,” said Sophie Roux, Vice-President, Public Affairs for Port of Montreal. “We’re smaller but we offer an efficient intermodal chain with CN and CN right in our yard, and we’re are only two train days from the American Midwest.”
To ensure handling capacity, Roux said the port is now considering a project to build a new 1.2-million-TEU container terminal 50 kilometres downriver in Sorel. “Thinking ahead is the only way we can compete with giants like the port of New York City,” she said.
Though the expansion bug can be contagious, it does carry risks. Just ask Pierre Gagnon, President and CEO of Port of Sept-Îles. In 2012, when iron ore prices were at record highs, the port announced the building of a $220-million multi-user wharf in conjunction with government and five mining companies. Prices later tanked, however, pushing port partner Cliffs Natural Resources into creditor protection and putting development into a deep freeze at the Pointe-Noire sector where the new wharf was built. Delivered in late 2015 and now operational with a shipping capacity of more than 50 million tonnes of iron ore – more than double the port’s current capacity of 40-45 MT – the new facility has seen little use. However, with iron ore prices on the rebound, Gagnon is looking forward to the fall of 2017 when the first Chinamax bulk carrier ties up at the new world-class facility to take on a load of the mineral for Tata Steel.
“Canadian iron ore producers are small players who represent only 2 or 3 per cent of global demand,” he said. “But the quality of product from the Labrador Trough is higher and has less contaminants, meaning it’s easier to process, which provides our produces with some premium. “Being able to accommodate Chinamax vessels – something our competitors in Australia and Brazil can’t do – will add to that premium by reducing travel costs from 30 to 40 per cent.” That thinking was key, he added, when the decision to invest in the new wharf was made.
“In addition, we shared the risk with the miners,” said Gagnon. “It was a very clear-headed decision to build the infrastructure needed to supply the world’s largest ships with iron ore well into the future.” The abundance of port projects in Eastern Canada, he added, is essential for the development of more short and long maritime transportation, like in Europe. “They are far more advanced than we are,” said Gagnon. “We need more infrastructure because ports are the primary points of development for natural resource exports and imported goods.”
He added that there is little fear of infrastructure overlap and “no competition” between the federally-run ports in Eastern Canada because their Presidents work together through their regional caucuses. “Our development efforts are complementary,” said Gagnon. “Everyone has to adapt to their region and make project decisions that are based on their markets with input from their stakeholders. “At the end of the day we are working together to increase our capacity as a whole.”