By Brian Dunn
A year ago Madeleine Paquin, President and CEO of Logistec, said her company’s biggest challenge in 2014 was to surpass the excellent results of 2013. Mission accomplished. “The momentum held up in 2014 which was a record year. We experienced growth everywhere, in bulk, general and container in both Canada and the U.S.,” said Ms. Paquin, who was recently named CEO of the Year by business magazine Les Affaires in its medium-sized business category.
Consolidated revenue in 2013 for the publicly-traded company was $298.3 million from both its marine services and environmental services operations, up from $250.9 million in 2012. For the first nine months of 2014, revenue was $235.3 million versus $218.8 million a year earlier. Yearend results will be published at the end of March.
Logistec operates 42 terminals in 30 ports in Canada and the U.S., including three facilities in Montreal and one in Contrecoeur. It provides bulk, breakbulk and container cargo handling services and environmental services through its Sanexen Environmental Services subsidiary. The company also offers marine transportation to some 40 northern communities with four vessels through its Nunavut Eastern Arctic Shipping subsidiary.
In 2014 Logistec committed $61 million in capital expenditures, the bulk of which is being spent at Deception Bay, Nunavik, where it has taken over port operations of Canadian Royalties which began shipments of copper and nickel concentrate last March. Most of the earmarked funds are being spent on loading equipment.
“We also purchased a large crane in Montreal to handle containers on behalf of Termont,” said Ms. Paquin. “In our environmental business, we doubled the capacity of our hose manufacturing business in the Eastern Townships.”
About $7 million of the $61 million cap ex program is earmarked for Logistec’s MtlLINK (formerly Mestco) Terminal subsidiary, a provider of port logistics services in Montreal-East. Most of the money will be spent on building a 40,000 square-foot warehouse next to a CN Rail spur. “We didn’t have indoor storage, so it limited the services we could offer,” Ms. Paquin noted. “This facility is also a strategic fit with CargoM’s vision of developing Montreal as a logistics hub and will help support regional growth in the container sector.”
The warehouse will have four doors with direct access to rail, five docks to accommodate trucks of any size, and two ground-level oversize doors. By early 2015, MtlLINK customers will have access to additional laydown area, suitable for major projects and oversized pieces, she added.
Logistec has partnered with Lamêlée Iron Ore to develop a cargo handling solution for its proposed 15 sq. km. mining project, located at the south end of the Labrador Trough near the Newfoundland-Quebec border. The two companies have signed a memorandum of understanding for a terminal and stevedoring services package, which includes the FlexiPort moveable docking solution, Logistec’s made-to-measure solution, a joint-venture with European engineering partners. It will allow Lamêlée to start shipping its products from Port-Cartier, with first commercial shipments scheduled for 2018. Logistec has worked on similar projects with Baffinland Iron Mines and Consolidated Thomson (now Bloom Lake Division of Cliffs Natural Resources).
Turning her attention to 2015, Ms. Paquin said Canada was fortunate to get through the recent recession better than most countries due to our resource-based economy. Now, there’s downward pressure on commodity prices.
“The excitement of three or four years ago has been tempered somewhat and we have to be prudent in our growth expectations. But we still see growth opportunities in port logistics, biomass and containers. The Montreal shipping community is dedicated to increasing the scope of where containers come from, instead of mostly the North Atlantic and Mediterranean.”
Logistec isn’t the only port terminal that enjoyed a banner year. Empire Stevedoring saw an uptick in the amount of steel it handled at its Montreal facility and doubled the number of automobiles it handled from 5,000 to 10,000 units both inbound and outbound carried by Oceanex, according to Andrew Chodos, President and CEO. “Montreal also had a strong year handling grain for Viterra, with Empire and Logistec handling about one million tonnes each.” The company also doubled the amount of potash exports it handled to two million tonnes out of Saint John from a new mine operated by Potash Corp of Saskatchewan.
“Houston and New Orleans inbound tonnage of steel was also extremely strong mostly due to shale gas exploration and a general upturn in the U.S. economy,” said Mr. Chodos who took over the company from his father Ted in 2012. His grandfather Sam Chodos founded the company in 1931. “We hope business will last through this year, but there will be less exploration due to low oil prices.”
Chodos expects grain and potash exports to remain strong throughout the year. The only wild card is what impact oil prices will have on the steel trade.
“Last year, we were more positive or equally positive compared to 2013. Now, we have to see what effect the Canadian dollar and oil prices will have on our traditional steel markets.”
After spending $73 million to expand its Richmond Terminal in Halifax three years ago, Empire has no major projects on the books in 2015.
After a career spanning more than 40 years, Roger Carré retired as General Manager at Termont Montreal in November, 2014. He was succeeded by Julien Dubreuil on July 1 who worked closely with Mr. Carré until his retirement. An MBA graduate from Université du Québec à Montréal, Mr. Dubreuil, 33, joined Termont in 2006 as Vessel Superintendent. He was promoted to the position of Project Manager in 2009 to manage improvement projects at the terminal. Mr. Dubreuil inherited a terminal operating at full capacity from his predecessor, handling about 490,000 TEUs of container traffic a year. With growth possibilities constrained, Mr. Dubreuil said “We’re looking for about eight hectares (20 acres) where we would operate mobile cranes.” However, he suggested that would only be a short-term solution until a new site could be found to build another container terminal that could handle an additional 300,000 TEUs.
Termont currently operates four cranes and is replacing one of its older Panamax cranes with a Post-Panamax crane. While business should remain steady throughout 2015, the company expects to see an uptick in container traffic next year, once the Canada-EU Free Trade Agreement kicks in. It also expects to benefit from any new maritime alliances.
Following a delayed startup, CanEst Transit anticipates doubling its original grain handling throughput in 2015. The former Elavator No. 3 at the port of Montreal reopened October 20, after being closed for over 10 years. The original opening was scheduled for last July, but was delayed due to the late arrival of specialized equipment for product cleaning, sifting, packaging and containerization, according to General Manager Réal Bélanger. “I think we’ll double our original estimate of 100,000 tonnes of grain a year in our first year, because we’re getting requests from a lot of different companies. One of them is the biggest company in Canada in specialty crops which thinks it can do 1,000 tonnes a week through Montreal. Another is Lansing (Trade Group of Kansas City) with 17 facilities in the U.S. that wants to ship 50,000 tonnes a year.” A third new potential client is AGT Food and Ingredients (formerly Saskcan Pulse Trading) of Regina. It is one of the largest suppliers of value-added pulses (a grain legume), staple foods and food ingredients in the world. It buys lentils, peas, beans and chickpeas from farmers around its 34 facilities located in pulse growing regions in Canada, the United States, Turkey, Australia, China and South Africa, and ships products to over a hundred countries around the world.
A new product for CanEst from AGT could be faba beans, said Mr. Bélanger. Grown in Alberta, its primary export markets are the Middle East and Asia. Some of the business is new business and some is shipments being diverted from other ports, he pointed out.
After only two months of operations, CanEst was operating at 40 per cent capacity and expects to reach full capacity in the first half of 2015. It was scheduled to add a second shift by the end of January, doubling full-time employment to 14. While the company has already spent $20 million to get the business off the ground, Mr. Bélanger anticipates additional investments will be required for specialized cleaning equipment for bio wheat. “It’s a nice problem to have,” he said, referring to the growth potential of the grain terminal.
Montreal Gateway Terminals Partnership (MGT) heads into 2015 potentially under new ownership. Morgan Stanley Infrastructure Partners, a unit of Morgan Stanley, has agreed to sell it to a Montreal-based consortium led by Fiera Axium Infrastructure for an estimated US$600 million. MGT operates two container terminals at Sections 62 and 77 at the port of Montreal and handles about 800,000 TEUs annually, or roughly 65 per cent of the port’s business, according to the most recent information from MGT. Fiera is an independent portfolio management company whose equity partners include Desjardins Group and Fonds de Solidarité FTQ. Fiera has over $80 billion in assets under management and is mostly involved in solar and wind power projects in Canada and the U.S. Until the pending purchase of MGT, the only transportation related investments the company is involved in are the Sea-to-Sky highway between Vancouver and Whistler and the 407 toll highway in Ontario.
Morgan Stanley Infrastructure initially acquired an 80 per cent share of MGT in 2007 from TUI AG of Germany. It bought the remaining 20 per cent from Hapag-Lloyd in 2013. Because of the due diligence process, neither MGT nor Fiera Axium could comment on the sale of MGT.