By Theo van de Kletersteeg

Canadian Sailings has recently completed a study comparing financial and other performance data related to federally-operated Canadian ports from 2013 to 2014 (Data for 2015 will not be available until July or August). Port of Toronto was not included in the study because its financial statements include the operations of Billy Bishop Toronto City Airport, and are therefore not comparable to those of other ACPA ports.

Total federal Port industry

In calendar year 2014, ACPA Ports produced aggregate revenues of $ 528.4 million, up 6.5 per cent from $495.9 million in 2013. Operating income of $159.6 million represented a strong increase of 10.3 per cent over 2013 aggregate operating income of $144.7 million.

By way of comparison, Statistics Canada reported that for the calendar year ended December 31, 2013, Canadian-controlled and foreign-controlled corporations doing business in Canada reported revenues of $3.49 trillion (up 3.6 per cent from $3.37 trillion in 2012) and operating profits of $311.5 billion (up 8.5 per cent from $287.1 in 2012).

What is the profile of a “typical” ACPA Port?

There is no “typical” ACPA Port because each port is significantly different from the next, resulting from geographic location, size and economic opportunity. Moreover, with Vancouver handing some 48 per cent of all Canadian federal Ports, and responsible for almost two thirds of the comprehensive income generated by all ACPA ports, Vancouver’s stats swamp everyone else’s. Recognizing those limitations, an “average” ACPA port handled 18.2 million tonnes of cargo in 2014, down 0.8 per cent from 2013, producing revenues of $31.0 million, up 6.5 per cent from 2013, and an operating profit of $9.4 million, up 10.3 per cent from 2013. At $9.0 million, 2014 “comprehensive” income was well below 2013’s comprehensive income of $10.7 million. At $310,785, CEO pay was up 4.5 per cent from the 2013 average of $297,342. “Comprehensive” return on assets stood at 4.7 per cent in 2014, down from 5.9 per cent in 2013. “Comprehensive” return on equity was 6.5 per cent in 2013, down from 8.2 per cent in 2013.

If we were to exclude Vancouver’s numbers from the calculations, average tonnage handled by the remaining 17 Ports declined from 10.4 million tonnes in 2013 to 10.0 million tonnes in 2014.

Smallest and largest

Saguenay, the smallest in terms of tonnage, produced $390,046 of “comprehensive” net profits on revenues of $2.5 million in 2014. At $8.77, its revenues per tonne of cargo was the highest, and enabled it to afford the highest employee cost per tonne of cargo, $2.97. By contrast, Vancouver, the largest in terms of tonnage, produced “comprehensive” net profits of $98.2 million on revenues of $222.5 million. Its revenues per tonne of $1.59 were 7 per cent below the national average and at 25 cents per tonne, its employee cost per tonne of cargo was 33 per cent below the nationwide average of 37.6 cents per tonne.

Highest returns on assets and equity

In this category, top marks for the highest comprehensive return on equity went to Prince Rupert (23.0 per cent), and Sept-Îles and Vancouver (8.1 per cent each), Top marks for the highest return on assets went to Prince Rupert (13.1 per cent), and Vancouver (6.8 per cent).

Highest and lowest revenue growth rates

With a revenue growth rate of 32.1 per cent, Prince Rupert underwent the most robust growth of any Canadian federal Port in 2014, well above the national average of 6.5 per cent. Trois Rivieres (19.2 per cent), Saguenay (17.4 per cent) also showed strong growth. Six Port Authorities reported declining revenues.

Employee cost to move one tonne of cargo, and “all-in” costs

In 2014, employee cost to move one tonne of cargo ranged from $0.07 (Sept-Îles) to $2.97(Saguenay), with the average being $0.38, up $0.01 from 2013. The “all-in” cost of moving a tonne of cargo ranged from $0.18 (Thunder Bay) to $7.38 (Saguenay). The average “all-in” cost in 2014 was $1.21, up from $1.01in 2013.

Net income

There were very significant differences between Ports in terms of income performance. Three Ports (Nanaimo, Port Alberni and Oshawa) produced negative operating income in 2014, up from two in 2013. Those Ports also produced negative comprehensive net income. However, in addition to those three, Port of Quebec’s operating profit of $1.9 million turned into a comprehensive net loss of $380,000 after adjustments. Combined comprehensive income produced by all the Ports declined significantly from $182.4 million in 2013 to $153.8 million in 2014. Vancouver produced by far the highest comprehensive income ($98.2 million), followed by Prince Rupert ($24.4 million), and Montreal ($12.4 million). “Comprehensive” losses result mostly as a result of a re-evaluation of the value of the employer’s pension assets in relation to its pension obligations.

Revenue per tonne and operating income per tonne

At $1.71 average revenue per tonne of cargo handled was up from $1.59 in 2013.

Average operating income per tonne of cargo increased between 2013 and 2014 from $0.46 to $0.52/tonne. However, results for individual Port Authorities varied widely.

Investment income

Whereas most Ports formally carry an “investments” account on their books, not all do. However, most Ports do carry substantial cash balances on their balance sheets which, to the extent that they represent cash not generally regarded as needed to conduct their operations, represent an investment. For each Port, we have made a subjective assessment of such “excess” cash, and classified it as “investment capital”. Generally, this amount was the greater of the amount labelled “investments” by the Port’s auditor, and the amount by which the cash on hand exceeded the cash needed to maintain a working capital ratio of 1.0. On that basis, aggregate investments of $145.7 million at the end of 2014 were down from $174.3 million at the end of 2013. Combined year-end 2014 investments represented 4.4 per cent of Ports’ total assets.

Comparing 2014 to 2013, aggregate investment income fell from $7.5 million to $5.0 million. With investment income of $1.7 million, Port of Montreal generated by far the highest investment income, followed by Port of Thunder Bay ($637,000).

Capital expenditures

In 2014, aggregate net capital expenditures of all federal ports declined to $319.5 million from $410.3 million in 2013. It should be noted that the reported capital expenditures are only those that, from an accounting point of view, were paid for or were the obligation of individual Port Authorities, and do not include capital expenditures paid for by way of grants or contributions from federal or provincial governments. The largest year-over-year increases in capital expenditures were made by Vancouver ($95.1 million), Prince Rupert ($64.3 million), and Sept-Îles ($55.7 million).

Salaries, wages and benefits

During 2014, salaries, wages and benefits decreased marginally, after a big jump of 8.6 per cent in 2013. On a per tonne basis, compensation remained unchanged from 2013.

CEO pay and Board compensation

Average CEO pay rose from $297,342 in 2013 to $310,785 in 2014. Aggregate CEO compensation for all of the federal Ports in the study in 2014 was $5,283,344. Lowest CEO compensation was $144,955, while the highest paid CEO earned $864,000. CEO pay per tonne of cargo ranged from $0.0063 per cent (Vancouver) to $0.45 (Oshawa). The average was $0.016.

Ports, like all other business organizations, are governed by a Board of Directors. At Canadian Port Authorities, the smallest Board consisted of five members, while the largest consisted of twelve. The average was eight. At 3,056,623, aggregate Board compensation in 2014 amounted to 57.8 per cent of CEO compensation. Saguenay reported the lowest Board compensation in 2014 ($60,300), while Vancouver’s Board was by far the most generously compensated ($534,000) in 2014. In addition to Vancouver, Ports whose Board compensation exceeded $200,000 in 2014 included Sept-Îles, Montreal, Prince Rupert, Quebec, and Halifax.