By Keith Norbury
Judging from recent expansions at Canada’s major ports that include additional infrastructure for handling refrigerated containers, the country’s cool cargo business appears to be growing. Figures to quantify that growth are difficult to come by, however. The most recent Statistics Canada report on the seaborne reefer trade is seven years old.
“I think everyone’s preparing the ground,” said transportation consultant Jame Frost, President of Halifax-based Marinova Consulting Ltd. “They’re getting ready and they’re chasing opportunities all over the place. The ports are building or installing new or have installed lots of reefer plugs. And all these big new ships are coming out with lots of reefer plugs and I assume they’re investing in reefer equipment.”
Two years ago, Mr. Frost co-authored an article with Victoria-based transportation consultant Darryl Anderson in which they took the temperature of Canada’s refrigerated cargo trade. In doing so, they cited 2011 Statistics Canada data on this country’s seaborne reefer market as being the most recently available. That’s still the case. The best guess is that seven years later, the 1.6 million tonnes of seaborne reefer exports and 700,000 tonnes of imports has increased. “The places that are buying our stuff are getting richer and, as the middle class grows, they tend to buy more expensive commodities — fruits and vegetables being some of them,” Mr. Frost said.
Farm and fishing exports rise
Other Statistics Canada figures can serve as proxies for the reefer trade. For example, total exports for farm, fishing and intermediate food products rose steadily each year from 2013 to 2017. Their combined value for 2017 totalled $33.18 billion, compared with $27.85 billion in 2013.
Figures chained to the 2007 dollar, show a more or less steady increase in those exports dating back to 2003. In 2017, such exports totalled $25.88 billion (in 2007 dollars) compared with $19.51 billion in 2011 and $11.87 billion in 2003.
Globally, the cold chain market is estimated at US$189.92 billion in 2018, according to a news release this April from Research and Markets to promote a market forecast report. The Dublin, Ireland-based research firm projects the market to grow by 7.6 per cent a year, reaching US$293.27 billion by 2023.
Breakbulk reefer fleet shrinks
While container ship reefer capacity keeps growing to keep pace with world demand for refrigerated cargo, the fleet of breakbulk reefer vessels continues to shrink. For example, at Port of Montreal, the container reefer trade has completely replaced reefer ships, said Tony Boemi, the Port’s Vice-President of Growth and Development. It’s the same story for Vancouver and Halifax, Canada’s two other major ports for refrigerated cargo.
“If we start from a West Coast perspective, we’ve never really been a reefer ship type of market,” said Mr. Anderson, Managing Director of Wave Point Consulting.
While he hasn’t examined the phenomenon closely since 2016, Mr. Frost said the traditional breakbulk reefer fleet is still struggling, with the exception of a few niche carriers. “It’s due to the massive reefer capacity that the large shipping lines have introduced just as part of their new building programs,” Mr. Frost said. “So they’ve driven down rates and kind of made life miserable for the breakbulk operators.”
In January 2016, Shereen Zarkani, global head of reefer management at Maersk Line, told shippingwatch.com that low oil prices had resulted in a bit of a comeback for specialized reefer vessels, although she expected it to be temporary. “I would have thought it would be reverse,” Mr. Frost said. “Low fuel prices make those huge container ships unbelievably cost-efficient.”
Trucking carries freight south
Trucking forms a large part of Canada’s transportation cold chain, particularly with the United States, which still accounts for about three-quarters of this country’s international trade. However, Mr. Anderson noted, there are strong regional differences for exports — especially in ocean shipping. Halifax, for example, has a huge trade in lobsters.
“Certainly, once you get into the Canadian Prairies and Manitoba and even parts of Ontario, you’re going to see a lot more cross-border truck movement, partly because there are trucks going both directions,” Mr. Anderson said. “Sometimes a refrigerated truck will haul goods (and) the back haul is Canadian goods going into the U.S. that don’t need refrigerating but they can use that trucking capacity.”
Halifax adds reefer plugs
Following a 2017 expansion, Port of Halifax now has 615 reefer plugs at the Halterm container terminal and about 500 reefer plugs at the Ceres container terminal. Remote terminal monitoring software was also installed. “Due to the work and relocation of plugs at Halterm, some of the existing reefer plugs were eliminated to ensure that electrical capacity matched physical capacity,” said an email from Lane Farguson, communications advisor for Port of Halifax.
A 2017 economic impact report estimated that the average export container of Nova Scotia seafood was worth $73,650 “in direct and spinoff economic benefits to the economy of Nova Scotia,” Farguson said. That was nearly triple the $25,000 average for a container of other goods. “This underscores two things — the importance of the seafood industry in Nova Scotia, and the importance of having a convenient and efficient way of getting that product to international markets,” Farguson said.
Halifax handled 56,660 TEUs of reefer cargo in 2017. But it wasn’t all seafood.
“Thanks to advancements in the cold storage supply chain, high-value food products including pork, beef, seafood, blueberries, potatoes as well as food-grade lentils and grains can be shipped anywhere in the world from Atlantic Canada,” Farguson said.
Tropical Shipping changes port
More and more of those Halifax shipments are going to the Caribbean, following the introduction in early 2017 of service from reefer cargo specialist Tropical Shipping. “Basically we sailed one week out of Saint John and two weeks later we sailed out of Halifax,” said Gordon Cole, Tropical Shipping’s Assistant Vice-President for Canada, Hispaniola and Virgin Islands trades.
Tropical, which still has its Canadian office in Saint John, switched its shipping to Halifax because of its better connectivity opportunities, Mr. Cole said. Halifax also has more space and cranes than Saint John, he noted.
“Of course, we value all of the ocean carriers calling on Halifax,” Mr. Farguson said. “Tropical has been an excellent addition to the lines calling our port, and the service has been well-received.”
This year, Tropical Shipping will introduce two purpose-built 1,100-TEU capacity container vessels to its fleet. The ships, which will have 270 reefer plugs each, will replace chartered vessels. The first of the Chinese-manufactured ships will arrive in September with the second coming in November. Together they’ll carry 500 brand new 40-foot refrigerated containers. “This’ll be the first time in 16 years, since we bought Kent Line, that we’ve actually had our own company-owned vessels serving the market,” Mr. Cole said, adding later that Tropical has served Canada for over 30 years.
A niche carrier, Tropical has 18 vessels in its fleet. It serves most of the Caribbean islands, from the Bahamas to Guyana — with the notable exceptions of Cuba and Jamaica. The fleet includes multi-use vessels with roll-on, roll-off ramps, as well as container ships. They are built specifically for the shallow draughts, of as little as 12 feet, of many Caribbean ports.
Caribbean trade mostly one-way
“So, we’re the carrier that will deliver it to Dominica or St. Kitts or any of these small places because big carriers can’t get into these places,” Mr. Cole said.
Most of the cargos are food stuffs from Atlantic Canada — such as fish, french fries, potatoes, pork, and chicken. In comparison, very little cargo returns to Canada, and what does, such as spices and juices, goes to Montreal or Toronto.
In recent years, Tropical’s business has been increasing, especially with the Caribbean islands rebuilding after a pair of devastating hurricanes in 2016.
“Making the decision in 2016 to build these new ships was a very good decision because the volumes are definitely increasing,” Mr. Cole said. “And we’re expecting it to be that way for the next couple of years as we rebuild the Caribbean.”
In addition to its reefer business, Tropical is helping with that rebuilding by, for example, transporting 7,000 utility poles recently to the U.S. Virgin Islands.
“We’re excited about the new ships and being able to service the Canadian market with an even better service,” Mr. Cole said.
Mr. Cole confirmed that much of the cargo Tropical carries to the Caribbean is trans-shipped for other destinations in Europe and Asia. The company also transloads shipments from New York to Halifax for the Caribbean. “That was one of the opportunities that we saw working in Halifax,” Mr. Cole said.
Tropical also has connecting carrier agreements with larger carriers that will drop off containers from Asia at larger ports such as Caucedo in the Dominican Republic for Tropical to distribute to the smaller ports, he said.
Mr. Anderson said the recent Panama Canal expansion has also resulted in more cargo from Asia being trans-shipped in the Caribbean en route to Montreal. “Montreal used to be primarily a northern European container port and more and more of their traffic is actually coming from trans-shipment and even the Indo-Pacific basin and southeast Asia,” Mr. Anderson said.
The addition of Tropical Shipping is “an important development for Halifax,” Mr. Anderson observed. “The reason that shipping service is important is that the north-south trades, particularly on the eastern seaboard, benefit from access to South America, which has a growing season different from ours, the Caribbean, and the U.S. East Coast,” Mr. Anderson said.
Asia covers half of Halifax trade
Halifax doesn’t break out statistics on refrigerated cargo. But Mr. Farguson noted that in 2017 Asia accounted for 49 per cent of import and export container activity at the port. Europe accounted for 37 per cent, while Latin America and the Caribbean combined for 13 per cent. “I can say that the Caribbean is a major destination for reefer cargo, as is Europe,” Mr. Farguson said. “Thanks to CN’s CoolCargo rail capacity, we see reefer cargo moving over rail to and from central North American markets.”
On the import side, refrigerated or temperature controlled cargo coming into Halifax includes seafood from northern Europe, frozen shrimp from Asia, wine and beverages from southern Europe and the Mediterranean, and specialty fruits and vegetable products from Europe and North Africa. Much of that moves to inland markets such as Toronto and Montreal by CN’s intermodal service.
“Temperature-controlled cargo is a very important category of cargo for the port of Halifax. The agri-food and seafood export industries contribute significantly to the economic output of Nova Scotia and Atlantic Canada,” Mr. Farguson said.
Access to international markets is key component in the growth of Nova Scotia’s seafood industry, he added.
More plugs planned for Saint John
At Port Saint John in New Brunswick, the DP World container terminal has 286 reefer plugs. However, the port plans to expand that to 400 reefer plugs by 2023 as part of a $205 million terminal expansion that is now underway, Andrew Dixon, the port’s Senior Vice-President of Trade and Business Development, said by email. Mr. Dixon didn’t provide an estimate for the value of a container of seafood or other commodities, noting that it is “typically commercial sensitive information.” But he did say that “by and large, goods in refrigerated containers frequently have a higher value than goods in other containers.”
Nor did he note what types of refrigerated cargo go through the port, although he did say that major destinations and origins are the Caribbean, South America, and the U.S. East Coast.
“Refrigerated cargoes are important overall,” Mr. Dixon said. “For exports, New Brunswick and, indeed, Atlantic Canada, are world class manufacturers of frozen foods. For imports, we are well-situated geographically as an entry port with major road and rail infrastructure to quickly and easily reach the marketplace in central Canada.”
Refrigerated cargo is also a “category of interest” in a business development strategy that Port Saint John is “heavily involved in” and which is encouraging bilateral trade between Canada and Central and South America, he said. “We’ve been handling refrigerated cargo as a very important and significant component of our container business trade for many years now,”Mr. Dixon said. “We anticipate this to continue and grow and that is why expansion of our reefer capability both in terms of plug-ins and, potentially, warehousing services, are part of our West Side Modernization Project plan.”
In January 2018, Port Saint John reported that overall cargo had increased by 15 per cent in 2017 compared with 2016. In 2017 the Port suffered a loss of containerized cargo volumes, following the relocation of Tropical Shipping from Saint John to Halifax. However, the loss was subsequently mitigated by the introduction of a new weekly container service by CMA CGM in 2017. “It would be a fair statement to say that, while we cannot provide specifics, the overall decline in container volumes was more strongly reflected in the refrigerated category,” Mr. Dixon said.
Montreal reefer trade has grown
Port of Montreal handled more than 60,000 refrigerated containers in 2017, an increase of 35 per cent since 2014, according to figures provided by email from Tony Boemi, the Port’s Vice-President of Growth and Development. The port now has 1,300 reefer plugs at its five container terminals. That includes 384 added in 2016 at the Viau terminal operated by Termont Montreal Inc. Termont also has 288 reefer plugs as well as 102 diesel generators at its Maisonneuve terminal. Montreal Gateway Terminals Partnership, meanwhile, has 418 reefer plugs at the Cast terminal, and 280 at the Racine terminal. Bickerdike terminal, which handles domestic traffic mainly between Montreal and St. John’s, NL, has 100 reefer plugs.
Montreal’s reefer trade favours imports over exports by 55 per cent to 45 per cent. Among imports, food from Europe dominates, including seasonal fruits from the Mediterranean, Mr. Boemi said, as well as fruits, cheeses, wine, and meat products. Among the major exports are pork, beef, poultry, berries, and seafood. Montreal’s primary destinations for reefer exports are in Europe. However, exports to North Africa, the Middle East and Asia are growing.
CETA boost anticipated
The Canada-European Union Comprehensive Economic and Trade Agreement, a.k.a. CETA, is expected to increase trade in refrigerated cargo between the parties. Provisionally in effect since September 2017, the agreement now eliminates 98 per cent of the tariff lines on Canadian goods, and will eradicate 99 per cent when it takes full effect. “It’s too early right now to place an exact figure on the impact CETA has had or is having on cargo moving through our international gateway, but what it does do is creates potential and opportunity for those importers and exporters, in Atlantic Canada and internationally, moving goods through the Port of Halifax,” Mr. Farguson said.
Mr. Frost had a similar assessment of CETA but he noted that cargo volumes have already increased at Halifax and Montreal. “Everybody I think is optimistic in positioning themselves to take advantage of it,” Mr. Frost said. “They’re making the infrastructure investment. Everybody’s super keen and I think quite optimistic that they’ll see some dividends.”
Port Saint John is also excited about the CETA agreement and expects it will mean more activity and additional services in the future, said Mr. Dixon. At present, most of the port’s container service goes north-south, such as to Caribbean destinations.
“We anticipate CETA to play a major role in reefer growth. Mostly on the exports of Canadian meat and transformed food products, and on the imports, also transformed food products and dairy products,” said Mr. Boemi at Port of Montreal. Terminal operators are considering investing in more electric reefer plugs in response to growth expected from CETA, he added.
Deltaport adds rail capacity
On the west coast, at Port Vancouver, Global Container Terminals Canada has a combined 1,380 440-volt reefer points at its Deltaport and Vanterm terminals. Of those, 1,020 are at Deltaport, which is 35 kilometres south of Vancouver. GTC Canada spokesperson Louanne Wong said that the company “has overall terminal capacity expansion plans” but didn’t specify any specific plans for reefers. The company recently completed a $300 million expansion of its intermodal rail yard at Deltaport that increased capacity by over 50 per cent “within the existing footprint.” The new rail capacity totals 1.9 million TEUs annually. “The new arrangement separates our mobile equipment from trackside operations, allowing us to seamlessly operate the terminal and rail yard 24 hours a day, seven days a week,” says voiceover on a video about the expansion.
It is also expected to reduce dwell times.
Transportation consultant Darryl Anderson praised GCT Canada for providing a “phenomenal amount of expansion of rail capacity” at Deltaport. “Everybody benefits — both CN and CP. And if you take a look at that overall traffic volume, those kind of things are really important for cool and refrigerated cargo because the rail velocity is improved so substantially,” Mr. Anderson said.
Timing crucial for cool cargo
Speed isn’t the only critical factor in moving temperature-sensitive cargo. Timing can be just as important. “For instance, bananas are brought into designated warehouses to ripen,” Mr. Anderson said. But once they reach a certain stage, they have to get to the store within a short window.
“And a lot of refrigerated specialized cargos also tend to move around special events,” Mr. Anderson added, citing the example of New Zealand spring lamb, an Easter favourite. “The supply chains are designed for you to get that product at the right time to the customer and that is where you don’t want a hold up on the rail on the marine terminal because then there’s no value added there,” Mr. Anderson said. The good news is that temperature-controlled units are now of such a high-quality that products don’t degrade as quickly as they would a decade ago, Mr. Anderson pointed out. “The problem is when it’s not on the store shelves when you need it or it’s not in the restaurant when you order it,” Mr. Anderson said, adding later that in “any kind of logistics there’s always a trade off between service frequency and cost.”
Certain medicines or organs for transplant need to be delivered within hours. Frozen foods can last days or weeks without much deterioration. Fresh flowers, though, often require air transport because of their sensitivity. “Then again flowers tend to be around special events,” Mr. Anderson said, noting that being 12 hours late for Mother’s Day is “just the wrong answer.”
Pre-tripping cool containers
Port Vancouver has two other on-dock container terminals — Centerm, operated by DP World on the south shore of Burrard Inlet; and Fraser Surrey Docks. According to the DP World website, its Vancouver terminal has 546 reefer plugs. Fraser Surrey also has power plug-in points for refrigeration containers.
Canada’s busiest port, Vancouver has more than a dozen transloading facilities as well as five that specialize in container storage and maintenance. Among the latter is Harbour Link Container Services Inc., which has 50 reefer plugs at its off-dock container terminal on Tilbury Island in the Fraser River, about 20 kilometres from Deltaport. “The reefer plugs we have are used primarily for what we call pre-tripping of a refrigerated container after it comes in from import,” said Harbour Link President David Payne. A standard procedure used globally, pre-tripping involves powering up a container, performing diagnostics to ensure there are no faults and then setting the temperature “so it can be released on an export booking,” Mr. Payne added.
The company, which has 105 trucks and a fleet of chassis, does drayage for five of the approximately 15 ocean container carriers serving Vancouver. “We’re providing seamless transportation from the port, on an import basis, to the customer’s door or to their nominated cold storage facility,” Mr. Payne said. “It gets destuffed and then we return the empty back to the steamship line where in most cases, depending on if it’s my location or other locations, they’ll be pre-tripped for the next export. And the reverse of that, on an export shipment, our customers will contract with us, we’ll pick up the empty refrigerated container, take it to the exporter or their nominated cold storage facility, and they’ll load it and then we’ll take it the port.”
Rupert adds reefer racks
Up the coast, at Port of Prince Rupert, the Fairview Container Terminal, operated by DP World, now has 120 reefer plugs. They were constructed in two “reefer” racks on the dock as part of a 2017 terminal expansion. That expansion increased the terminal’s overall capacity by 60 per cent to 1.35 million TEUs. In 2017, the terminal handled 926,540 TEU of all cargos. “To date our refrigerated cargo has all been outbound in small quantities of frozen meat, seafood and vegetables, representing over 200 reefers in the last few months,” said Kris Schumacher, Communications Coordinator at the Port.
Prince Rupert is also looking to increase reefer exports through its existing marine services — such as China, South Korea, Japan, and Southeast Asia. The Port has long planned to increase its container capacity to two million TEUs. Schumacher said that is still “very much a consideration to meet growing demand for reliable trans-Pacific intermodal service.” However, he didn’t say how much additional reefer capacity that might involve. “Port of Prince Rupert is engaged with DP World to better understand the forecasted market demand and feasibility of a next phase of capacity expansion,” he said.
In March, Prince Rupert launched a $250,000 export development fund “to assist eligible organizations in developing new export opportunities across Canada’s northwest trade corridor,” said a news release. Schumacher said that refrigerated cargos could benefit from the fund. “Hopefully there are opportunities for economic development to grow the seafood, meat and vegetable exports from Western Canada,” he said.
Cool deal or cold war?
An emerging issue for West Coast ports will be the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that Canada recently signed with 10 other Pacific Rim nations, Mr. Anderson said. He predicted it could open more trade in temperature-controlled cargo. Vietnam and Malaysia are among the growing economies that represent opportunities. Japan and Australia are also in the mix. “So I think over time that trade development will actually have more impact than the expansion of T2,” Mr. Anderson said, a reference to the proposed Terminal 2 container port near Deltaport. (See related story).
Mr. Frost said a trade war might reduce trade, but also open up opportunities for Canadian exports. “The thing is, though, how much extra production capacity do we have to fulfill demand that’s being filled (now) by U.S. producers?” Mr. Frost said. “Do we have that extra capacity? And if we don’t, are we going to get a better price in China than where we are presently selling it?” All in all, Mr. Frost is optimistic than the cold cargo trade will keep growing in the coming years. “The big worries are Trump and China,” Mr. Frost said. “Mr. Trump is so unpredictable. But the amazing thing is that the economy has sort of held up, and the markets are relatively strong even in the face of uncertainty and instability.”