By Keith Norbury

For decades, dating back to the 1950s, Port of Nanaimo has built its reputation and business on serving Vancouver Island’s forest industry. Situated on the Island’s east coast, about 110 kilometres north of Victoria, Nanaimo is within easy trucking distance of the vast coniferous forests of the Island’s central and northern regions. Lumber, and to a lesser extent logs, was such an important commodity to the Port that it is fair to say that Nanaimo depended on the timber market.

That vulnerability was exposed when the U.S. housing market tanked in 2009 in the wake of the world financial crisis the previous fall. In 2008, the port exported 142 million board feet of lumber. The following year that collapsed to just 10 million board feet.

“Our prime commodity around here has always been dimensional lumber and we have traditionally been a breakbulk facility,” said Bernie Dumas, Nanaimo Port Authority’s President and Chief Executive Officer, who joined the Port in January 2009, just as everything was unravelling. “So when I came on the scene and started working with the guys, it was quite noticeable that the Port had a serious problem. And the problem was the lack of a variety of products that we could handle here.” It was obvious that to survive, the Port could no longer rely on lumber. It needed to diversify.

Move to container shipping to help Port diversify

Mr. Dumas has a background in containerized shipping, having been general manager of China Shipping (Canada) Agency Co. Ltd., and also having worked for firms like Montreal Shipping Company across Canada from Halifax to Vancouver during a 30-year career. So it seemed logical to Mr. Dumas that Nanaimo should look at containers as a way to diversify the Port’s business. This summer that idea took a giant stride forward when the federal government announced it was contributing $4.5 million toward a project to turn Nanaimo’s downtown Assembly Wharf into a short-sea container handling facility. The Port Authority will match that figure. “This project will enhance the Port’s ability to handle increased volume, in a more efficient manner, creating jobs, growth and prosperity in our communities,” Dr. James Lunney, MP for Nanaimo-Alberni, said in a news release announcing the government contribution. “It will also reduce road congestion and travel time for users.”

Nanaimo Mayor John Ruttan said in an interview that the new is “huge” for his city. And he knows a bit about the Port, as a former Chairman of the Port Authority and having served on its predecessor, the Nanaimo Harbour Commission. “We see ourselves as a marshalling yard for traffic into and out of Vancouver and working closely with Port of Vancouver to try to eliminate some of the waits that they’re having because of success and volume,” Mr. Ruttan said.

Nanaimo has already been handling containers since January 2012, at its Duke Point terminal. By converting the assembly wharf, which currently handles mostly logs and little else, into a container terminal, Duke Point will be freed up to expand into other potential cargo areas as well, including more handling of bulk commodities.

Earlier attempts at containerization faltered

Nanaimo’s move toward containerization goes back much further, to the 1980s, Mr. Dumas said. That’s when the Port Authority purchased, for $1, a 40-tonne Can­­adian-made Canron container crane that had been the original crane at Port of Vancouver’s Centerm operation. Nanaimo relocated that crane to Duke Point, with the thought that it might capitalize on a lack of container capacity at Vancouver ports. “But it never materialized because the container terminals got bigger in Vancouver and the situation changed,” Mr. Dumas said. So, for years, the Canron crane did very little work. “The port used it for different things, moving cargo on different ships and whatnot but it was done sparingly,” Mr. Dumas said.

In the wake of the collapse of the lumber business, Mr. Dumas said, he approached officials at Western Stevedoring, which had been looking after Nanaimo’s two cargo terminals for three decades, about diversifying into containers. But Western wasn’t into containers in a big way, Mr. Dumas said, so at the end of 2011 the Port made a switch and hired DP World to take over its terminals management. Based in Dubai, DP World is heavily into containers, which accounts for 80 per cent of its revenue. DP World has 60 terminals on six continents, according to its website. In B.C., DP World has 16 locations, including the Centerm container terminal in Vancouver.

Container barge service began in 2012

In July 2012, DP World began to operate a weekly barge service to transport containers from Centerm to Nanaimo’s Duke Point facility. Because the crane had originally been in service at Centerm, DP World dispatched mechanics from there to refurbish the crane, Mr. Dumas said. “We spent a fair chunk of cash to bring it up to speed,” Mr. Dumas said. “And it’s working quite well.” While the crane can handle about 20 containers an hour, compared with about 25 for the more modern machines at Centerm, Mr. Dumas said it is nearing the end of it useful life. As a multipurpose terminal that also handles project cargo, break bulk lumber, scrap metal and occasional bulk commodities, Duke Point is getting pretty busy. And the success of the barge service, which is now calling twice a week, has created growing pains. “One of the huge challenges that we’re facing is when we have a lumber ship on berth at Duke Point, the barge has to wait,” Mr. Dumas said.

So Mr. Dumas approached federal Industry Minister Ed Fast about accessing funds from an Asia Pacific Gateway Corridor initiative for short-sea shipping that hadn’t been tapped. The Port made its application and on July 3, the federal government announced its $4.65 million contribution.

Search underway for newer mobile container crane

About $3 million of the roughly $9 million total cost of the project will be to purchase a mobile container crane, similar to a Liebherr EMH 320 crane that was installed last year at Port of Thunder Bay, although not necessarily from that manufacturer. “We’re looking for a used model that doesn’t have that many hours on it,” Mr. Dumas said. “There are a number of them around the world.” The Port would prefer to buy it from the manufacturer in order to have it under warranty. “The idea is we are trying to be a multi-task terminal. So we are looking at project cargo and stuff like that as well,” Mr. Dumas said. “We’re hoping to be able to find a crane that can do both.”

Most of the remainder of the project money would go toward beefing up the Assembly Wharf itself. It was built from the 1930s to the 1950s on landfill and pilings. The pilings will have to be removed and more fill brought in to beef up the dock face on the wharf’s A berth, which hasn’t been used for two decades. The project will also involve repairing and paving of the wharf’s apron and installing new bollards to bring the facility up to modern standards. In addition, plumbing and electrical will have to be upgraded, including replacement of a 1970s vintage transformer.

Mr. Dumas expected a tender call on the project to be issued in late August or early September. Once a contractor is chosen, construction should take six to eight months.

By May or June 2014, the work should be completed, he said. “This footprint is going to be created by DP and ourselves as a fairly sophisticated container terminal,” Mr. Dumas said. “It’s going to be a mini Centerm.”

At present, the Assembly Wharf covers about 35 acres, a basic footprint that will remain after the renovations. The draught at the dock face is about 11 metres, although it can be increased by dredging. But the Assembly Wharf isn’t meant to be a deep-sea terminal. That is the role of the Duke Point facility, which has a draught of 13.5 metres. “This is going to give DP the flexibility of making sure we keep on schedule because, as you know, making the connection to the mothership and getting the containers on the mothership to Asia without having to wait for another week is essential,” Mr. Dumas said.

Maksim Mihic, General Manager of DP World Vancouver, wasn’t able to comment on the company’s arrangements with Nanaimo Port Authority. However, in a Jan. 4, 2012 news release, Matthew Leech, Senior Vice-President and Managing Director for DP World Americas, said the company is “excited to be given the opportunity to expand our capability in this growing and dynamic market and look forward to working in partnership with Port of Nanaimo into the future.”

Nanaimo hopes to target box-store market

At present, Duke Point is handling about 200 40-foot containers each week. Most of that are exports from Vancouver Island businesses of lumber and logs, but also of bottled water from a Fanny Bay company about 80 miles north of Nanaimo. Most of the containers now arrive empty in Nanaimo. But Dumas is hoping that in the future those inbound containers might carry stock for Island big-box retailers like Canadian Tire and Walmart. Mr. Dumas said he has begun discussions with the retailers about possibly building a small distribution centre to handle that cargo, which is now routed through Calgary and then comes back to the island by ferry on 53-foot tractor trailers. “We are competing with BC Ferries and Seaspan to some extent, but this is international business,” Mr. Dumas said. “We’re not touching the domestic operations. This is purely cargo dominantly going to Asia.”

On the inbound side, Nanaimo wouldn’t be looking at all of that big-box business either, but at seasonal products such as garden furniture and barbecues. “We don’t expect 100 per cent but if we get 25 or 30 per cent of that, it would really help the service develop,” Mr. Dumas said.

Other business opportunities on the horizon

The Port is also looking at expanding its business in other areas. In 2011, it completed a cruise ship terminal and welcome centre at a cost of $24 million adjacent to the Assembly Wharf. This year, the terminal has welcomed seven full-sized cruise ships and two “pocket” cruise ships. The Port is trying to build those numbers up to 20 to 25 ships a year. “We’re really not trying to compete head on with Vancouver or Victoria, but we’re trying to create our own little destination,” Mr. Dumas said.

Meanwhile, lumber exports rebounded to 125 million board feet in 2012, close to levels that prevailed before the U.S. housing crash. Mr. Dumas also expects Duke Point to handle more windmills for a wind farm at Cape Scott on Vancouver Island’s northern tip.

And, “as bizarre as it may sound,” he said, potash companies are also pondering Nanaimo as a bulk terminal site because of a lack of space in Vancouver. “We’re sort of branding ourselves as the solutions Port.”