By Keith Norbury
The average total transit for goods shipped by ocean and overland from Shanghai to Toronto via B.C. ports increased by a day and a half from 2010 to 2012, according to a presentation at the Association of Canadian Port Authorities annual convention this past summer.
“I’m happy to say to this audience that most of the delay has been made on the marine side,” said Andrew Carter, an economic analyst with Transport Canada, during a business session on intermodal partnerships at the conference, which took place in Nanaimo, B.C. “That is of course because of the practice of slow steaming that’s taken place in the last couple of years to deal with higher fuel costs.” A slide with his presentation revealed that the marine leg of the journey increased nearly two days, from 13.17 days in 2010 to 15.04 days two years later. Inland travel time also increased, but less dramatically, from 5.76 days to 5.98 days. Days in port, meanwhile, dropped from 3.06 days to 2.51 days during the two years. In aggregate, the total time travel rose from 21.99 days to 23.54 days. The inland travel time was the average for Canadian Pacific and Canadian National railways from both Vancouver and Prince Rupert, said Mr. Carter who followed a presentation by Elaine Holmes, Director of Intermodal and International for CP.
Railway shaves time
Ms. Holmes pointed out that under its new management structure, headed by former CN President Hunter Harrison, CP has shaved 24 hours off the average trip on its corridor from Vancouver to Toronto/Montreal as well as from Vancouver to Chicago. “It had happened in the past that our efforts to be reliable, though not fast, resulted in adjusting the schedule to match the service that we were actually providing,” Ms. Holmes said. “The problem with that was that typically on-time performance would start to slip.” Efforts to address supply chain wrinkles are hardly new. Since 2005, CP has had in place a Dynamic Export Management program, or DEM, which was developed in response to such situations as extreme weather knocking the entire supply chain out of whack by making it impossible for a vessel to keep to its schedule. “In an extreme situation, the port would fill up with exports waiting for the vessel to come in,” Ms. Holmes said. “Not only was the port full, but we started to park export trains waiting to get into the port. And then we started having our terminals back in Chicago and Detroit fill up with exports that couldn’t get on a rail car because the pipeline was full all the way back to the terminal.”
System tweaked to deal with success
To address those stormy delays at sea, CP originally implemented DEM in the winter only. However, it worked so well that CP made it a year-round program. This year, CP evolved DEM even further, she said. That was because those faster rail times were resulting in penalties for shipments arriving early and clogging up dock space until the vessels arrived. Fortunately, ocean lines now have better technology for updating their schedules and can share those updates with the railway, Ms. Holmes said. “So we ended up getting in synch with our ocean lines and communications with their customers about when a ship would arrive,” Ms. Holmes said.
The original DEM allowed for a five-day window to be shifted if vessel arrival changed by three or more days. Under the latest evolution, the five-day window has been removed. However, DEM retains the last cut-off day and still enables movement for vessel arrival changes of less than three days, according to a slide in Ms. Holmes’s presentation.
Reliability index in the works
In a similar vein, Transport Canada has developed a “reliability index,” which Mr. Carter promised will be implemented soon to take into account seasonal effects on supply chain performance. “But we have to wait for having two years of information before we can really do that. We need to have enough data points to be able to tease out that seasonality,” Mr. Carter said. Transport Canada is also purchasing third-party data that tracks transit times through key U.S. routes, such as Los Angeles-Long Beach, Seattle, and New York. “We’re doing that so we can compare how we are performing against our biggest competitors,” Mr. Carter said.
Transport Canada is already comparing its figures with Journal of Commerce port productivity data. “There was a slight difference,” Carter said, attributing that primarily to the Journal looking at all moves per hour, including handling and positioning, whereas Transport Canada looks only at loading and unloading.
“There’s a lot of positive information that comes from the collaboration of the partners that you don’t necessarily see in the metrics but it’s actually very useful to all the parties and to us as well,” Mr. Carter said. “I’ve learned a tremendous amount from the conversations we have with our partners.”
Ms. Holmes said that CP’s approach goes beyond a simple shipper/supplier relationship. “We’re looking at the services we provide in the context of the entire chain from Asia or Europe into Canada or the U.S. and then back out. It’s a whole loop that you have to look at to understand where to find efficiencies because it’s not enough to just maximize our own piece. We have to maximize how the pieces all fit together,” Ms. Holmes said.
Another place where CP collaborates on is the shared forecasts and capital plans, she said. “Because if one person spent a lot of money to expand capacity and that capacity does not align with the partner they’re connecting to or from, then it’s money not well spent,” she said.
Extensive on-dock rail access
Michael McLellan, Vice-President of strategic initiatives for TSI Terminals Inc., which operates the Deltaport and Vanterm operations in Greater Vancouver, noted in his presentation that “we have very strong infrastructure, not only at the two terminals we operate but throughout the supply chain in Vancouver.”
TSI is a subsidiary of Global Container Terminals Canada, which is owned by the Ontario Teachers Pension Plan. TSI’s growth in Canada has exploded in the last 15 years, from 268,000 container lifts in 1997 to 1.2 million in 2012, Mr. McLellan said. Today TSI’s two Vancouver terminals account for 77 per cent of the port’s container traffic, with Deltaport alone handling 55 per cent.
“When Deltaport was built in 1997, collaboratively between us and the port, we wanted to make sure we had extensive on-dock rail access,” Mr. McLellan said. In showing a slide of the 10,000 TEU Arthur Maersk docked recently at Deltaport’s new berth 3, he hinted that the terminal is expected to become even busier. “We’ve already had indications from our existing carriers about bringing 13,000 TEU ships to Vancouver next year,” Mr. McLellan said.
Deltaport’s intermodal yard handled 593,427 rail lifts last year, or about about 1,700 rail moves daily. That accounted for about 57 per cent of Deltaport’s 1,041,061 landside lifts, he said. The rail gate handles so much volume because it is basically open 24 hours a day, 362 days a year, whereas the truck gate is typically open only Monday to Friday, he said.
Transparent goals and predetermined objectives
The intermodal yard handled about 20 million feet of rail cars last year, both inbound and outbound, Mr. McLellan said. That’s about 27,500 rail cars serviced daily, according to the slide in his presentation. He gave much of the credit for those volumes to TSI’s partnerships with the federal, provincial, and even municipal governments. “The investment in particular that both our provincial and federal governments have put into ports has been tremendous over the last number of years,” Mr. McLellan said. What makes a good partner? One thing is having “transparent goals and predetermined objectives,” Mr. McLellan said. “We all know in our relationships with our significant others, with our families, with our children, at work, that that bond of trust is really the foundation for having an effective relationship and managing your partnership,” Mr. McLellan said.
It also helps that everyone involved can understand each other’s business models, such as the challenges of winter rail transportation in Canada, he said. Mr. McLellan praised Port Metro Vancouver President and CEO Robin Sylvester and his team for helping bring the stakeholders together. For example, the port “led and influenced new operating practices around the truck licensing system” in Vancouver, Mr. McLellan said. PMV also brought to the table recently “the gateway intermodal integrated winter plan,” which involves discussion of such issues as recovery plans for dealing with winter snow slides. Another key was the partnership on Pacific Gateway infrastructure, such as the Roberts Bank Rail Corridor, which separates road and rail infrastructure along the 50-kilometre area leading to Delatport, and to a lesser degree the $1 billion South Fraser perimeter road.
Scorecards track performance
Mr. McLellan also gave credit to TSI’s strategic alliance with Coast 2000, a third party logistics provider in Richmond, B.C. Their service level agreement “ensures collaboration and optimization” of moving containers from Deltaport and Vanterm to Coast 2000’s facility. To measure that performance, TSI uses a weekly scorecard that tracks such metrics as the number of export and import appointments, including shipments in and out, and how often they are cancelled. “It’s just a way of us measuring how we do our business together,” McLellan said.
Similarly, a scorecard goes out daily to measure railway performance, such as dwell times, on dock dwell times, ship transit times, the key destinations, car supply, on-time train performance, and train and slot utilization. As an example, he showed a slide of a CN scorecard from July 26 that showed outbound train utilization was 129 per cent, compare with a target of 95 per cent. Inbound utilization was at 75 per cent on that date, which also had an inbound target of 95 per cent.
“There are daily conference calls with both railways to talk about the scorecards, and then at the executive level there’s a quarterly meeting instituted to discuss our targets and how we can improve them,” McLellan said.
More metrics coming
Meanwhile, to improve its metrics, in 2008 Transport Canada embarked on a voluntary project with certain Canadian ports to monitor port utilization and performance. “What we wanted to do with these measures was be able to respond to some of the anecdotal claims that some of our folks at Transport Canada and others would get about unreliability. There were a lot of anecdotal things out there about Canada’s supply chain being unreliable,” Mr. Carter said.
The project’s first phase looks at intermodal indicators, such as average truck turnaround time, berth utilization (TEUs per metre of workable berth), average vessel turnaround time, average container dwell time, gross port productivity, vessel calls per month, average TEU per vessel call, and monthly container throughput. There were slight differences between ports in the technologies they used and what they measured, depending on what they thought to be more relevant, Mr. Carter said.
At the beginning of 2013, the program added three new indicators: the dwell target (the percentage under 72 hours), vessel on-time performance (the percentage within a window), and crane productivity (the number of lifts per hour). Participating ports are Prince Rupert, Vancouver, Montreal, Halifax, and Saint John. The idea was to allow ports to choose the metrics they each deemed “most relevant,” Mr. Carter said. He also stressed the importance of partnerships between the ports and their terminal operators “who have to get together and agree to provide that information to us.” Transport Canada can then aggregate the data and “produce a metric that’s available to the various partners or even the public.” In that regard, Transport Canada serves as a “mutual third party or custodian of the data,” he said.
“In most cases, the ports have access to their own numbers as well as an aggregate number either by coast, in the case of intermodal on the B.C. west coast, or here in the bulk it’s by commodity,” Mr. Carter said, noting that the program also gathers data on bulk cargoes. The main way the metrics are applied is to look at the fluidity of the various supply chains of which he outlined eight different models. On the west coast, the fastest and most efficient of those supply chains is direct rail, from railway to ship. Dubbed supply chain 1, it has been the primary focus of Transport Canada’s analysis. Supply chain 5, which is direct to truck, has also received some attention, he said. “We are hoping to maybe look at some other ones but we haven’t gotten there yet,” Mr. Carter said.