By Keith Norbury
Despite the COVID-19 pandemic, which has upended the world economy this year, the Port of Prince Rupert is on track for another record year in 2020.
As of the end September, total foreign cargo volumes were up 1.8 per cent, to 22.75 million tonnes year to date. Should that pace continue, Prince Rupert will exceed its record of 29.9 million tonnes set in 2019.
“I think we’ll certainly surpass 30 million tonnes this year if things continue to hold,” said Shaun Stevenson, the Prince Rupert Port Authority’s president and chief executive officer.
Earlier in the pandemic, cargo volumes had actually raced ahead of the previous year’s figures. By the end of May 2020, they were up 8.5 per cent over May 2019. While those gains have fallen off slightly in recent months, Mr. Stevenson expects cargo volumes to keep on growing in 2020 and beyond.
Decade of growth anticipated
“We see a path to almost doubling over the next decade,” Mr. Stevenson said.
That would continue the growth trajectory of the previous decade. Back in 2010, the port handled 16.1 millions tonnes — just over half what it is projected to handle in 2020. That would put Prince Rupert on a path toward becoming Canada’s second busiest port after Vancouver. (Montreal is currently in second spot.)
“We had a challenging second quarter as it relates to our intermodal traffic, but all other lines of business have remained strong,” said Mr. Stevenson, who joined the port authority 23 years ago, and was vice-president of trade and development and public affairs for over a decade before he succeeded longtime President and CEO Don Krusel in June 2018. “And then we’ve also realized some recovery and strong quarter in Q3 on intermodal that has us overall on track for a record year.”
Aiding in that anticipated growth will be several expansion projects either in the works or slated for completion over the next few years. (See related story.)
As noted in a 2019 economic impact report that Vancouver-based InterVistas Consulting prepared for the Prince Rupert Port Authority, direct employment at the port also doubled to 3,600 full-time-equivalent employees in 2018 from 1,460 FTEs in 2009. With indirect jobs added in, the 2018 tally was 6,200 jobs — 1,000 more than just a year earlier. That InterVistas report found that the Port of Prince Rupert’s contribution to the B.C. economy is even greater — 8,000 FTE jobs, which earned $566 million in wages and salaries, generated $1.3 billion in gross domestic product, and boasted total economic output of $2.4 billion. The report calculated an average annual wage of $87,200 and estimated that 94 per cent of jobs were full-time and only six per cent seasonal.
“We’ve grown since then but those are good numbers,” said Brian Friesen, the port authority’s vice-president of trade development and communications, while noting that the port commissions an economic impact study every two years.
“Lots of work to go around”
Despite the economic uncertainty earlier in the pandemic, the port proved resilient enough that the impact on jobs was minimal. “The port is so much at the heart of the community here and really serves as the economic engine,” Mr. Friesen said. “There’s still a lot of work to go around.” Mr. Stevenson said Prince Rupert remains on track to add another 2,000 to 3,000 port-related jobs by 2030.
The port has grown even as the population of the City of Prince Rupert has shrunk from around 16,500 in the 1990s to 12,500 in 2020. That reflected the decline of historic mainstay industries like forestry and fishing. What hasn’t changed is Prince Rupert’s distinct advantage of being Canada’s closest port to ever-important Asian markets. Indeed, the Grand Truck Railway chose Prince Rupert as strategic gateway for Asian trade over 100 years ago.
“Those are the same attributes that are fundamental to our future growth and expansion,” Mr. Stevenson said.
The $50 billion in cargo the port handles each year and the economic activity it generates also help critical Canadian industries like forestry, mining, agriculture and natural gas to navigate the challenges of the pandemic, the port authority said in an update this June. The port’s efforts, though, reach far beyond B.C. and Canada. They have also ensured “the ongoing delivery of essential services that are critical to North America’s response to COVID-19.”
All things considered, 2020 has been a good year, Mr. Stevenson said. “It feels like we’ve lived a number of years in one year, frankly,” he noted.
He credited strong coordination among all the terminals that make up the Prince Rupert gateway — such as Ridley Terminal for coal, Fairview Terminal for containers, Prince Rupert Grain Terminal, Westview Wood Pellet Terminal, and the new Ridley Island Propane Export Terminal — as well as Canadian National Railway and other service providers. They responded with “consistent and robust protocols” that kept the workforce safe, he said.
Protocols keep port safe
In mid March, the port authority’s own 80 employees were forced to work from home. By June, though, they could return to the office as protocols such as frequent cleaning of common areas were put in place.
“I don’t know that we’ve had a positive case confirmed here,” Mr. Stevenson said. “The protocols put in place are a reason why we’ve been safe up here.”
That was despite a “tremendous number of tourists coming through the summer” and the sizeable workforce at the port.
British Columbia has fared better during the pandemic that most other North American jurisdictions. And northern B.C. has had relatively few cases compared with the rest of the province.
According to the B.C. government’s COVID-19 dashboard, as of Oct. 16, northern B.C has had a total of 350 COVID-19 cases, with three confirmed deaths. Meanwhile, 332 had recovered with only one person still in hospital at that date and 14 other active cases. The Northern Health region covers 592,116 square kilometres, more than half the province’s total area. The region had 285,131 residents in 2017, according to the Northern Health website.
“We’re hopeful we can keep mobilized and don’t have to go back to work from home,” Mr. Stevenson said.
That B.C. has done a relatively good job during the pandemic might have some bearing on how well Prince Rupert has weathered the pandemic, Mr. Stevenson said. However, first and foremost has been the port’s position as a key link in trans-Pacific trade. Despite the impacts of COVID-19 lockdowns on consumer demand, that demand has proven to be resilient.
Demand roars back
“You’re seeing strong demand for household goods and home renovations and consumer goods. While there was some question in Q3 about auto sales, that demand that has come roaring back,” Mr. Stevenson said. “So if you look at the supply chains that Prince Rupert anchors, those lines of business and trade have been quite robust, notwithstanding a couple soft months in Q2.”
Mr. Friesen said it might seem counterintuitive that the port has done well during the pandemic. However, one large factor is that Prince Rupert’s major export cargoes — coal, grain wood pellets, propane — “haven’t been affected by the economic upheaval that has happened,” Mr. Friesen said.
“You talk about grains — people need to eat,” Mr. Friesen added. “Talk about propane and metallurgical coal, they’ve been really steady for us this year.”
While Prince Rupert Grain Terminal volumes were down 4.6 per cent from January to September, they increased 5.3 per cent in September. For the first eight months of 2020, volumes through the Westview Wood Pellet Terminal rose 26.6 per cent.
Ship’s crews relieved
The port was even able to provide relief for ship’s crews arriving during the pandemic, allowing them to go ashore for barbecues and social gatherings — with social distancing, masks, and other protocols in place. (See related story.)
The two biggest movers of cargo in the port are Ridley Terminal and Fairview Terminal, which together account for about three-quarters of the port’s volume.
In 2020, during the pandemic, the Ridley coal terminal has been the biggest player. From January to September, Ridley Terminal moved 10.2 million tonnes compared with 8.2 million in 2019. That’s a 24.2 per cent increase.
Meanwhile, in the first eights months of 2020, the Fairview container terminal handled 7.4 million tonnes, a 17.5 per cent decline from the 8.97 million tonnes in 2019.
“If you look specifically at the container business, our import cargo is down approximately seven per cent,” Mr. Friesen said. “And the primary driver of that is really the second quarter of this year, when the effects of COVID-19 were most pronounced in North America with containment and curtailment measures.”
While imports dropped, laden export cargo actually increased one per cent, Mr. Friesen said. “So pretty, pretty close to where we were at last year. That’s good.” The port is also moving fewer empty containers in 2020, he added.
The Fairview Terminal has seven gantry cranes, including three Malacca-Max models capable of servicing 20,000 TEU ships, although the largest container ship to call at the port to date had a capacity of 14,000 TEUs. An eighth crane is proposed for the next expansion phase of the terminal, which will increase its annual capacity to nearly 2 million TEUs. (see related story)
Uptick in imports
Driving a recent uptick in container imports is changing consumer behaviour in North America, Mr. Friesen said. “Consumers are spending less on services, but more on physical goods — so furniture, patio equipment, and household goods and that kind of thing. That’s really given rise to some strong numbers here,” he said.
In February 2020, just as the pandemic was manifesting as a potential global concern, Prince Rupert handled 2.54 million total tonnes of cargo compared with 1.5 million tonnes in February 2019. The figure for March 2020 was about the same, although down slightly from 2.66 million tonnes the previous March. Total cargo volumes for the each of the next five months — April to August — were up from 2019 before dropping slightly in September.
“Early in the year, we were dealing with a lot of gyrations around trade,” Mr. Stevenson said, noting that January 2020 was down 15 to 20 per cent from January 2019. “We had some issues in February, with rail blockades and interruptions, but despite that, we still had strong volumes overall,” he added.
Those protests, in response to the Coastal GasLink Pipeline project, seem like a lifetime ago. The February bump occurred as factories in China were firing up again, which also coincided with the annual rush around Chinese New Year.
“Q2 is when we saw the real impacts of consumer spending happening with lock down and so forth through April, May, June,” Mr. Stevenson said. “And we saw significant declines in our container volumes. But then that was met with a surge following in Q3. So overall, we’re faring quite well. And we’re seeing continued strong volumes across all lines of business.”
On the export side, commodities like coal, grain, and wood pellets “really haven’t been affected by the economic upheaval that has happened,” Mr. Friesen said.
Figures on the port’s website show a slight drop in grain volumes for the year — 3,803,637 tonnes compared with 3,986,408 in 2019, although there was a big spike in August 2020 (477,252 tonnes compared with 152,000 tonnes in 2019) and a slight rise in September (384,690 tonnes versus 365,351 tonnes).
Propane terminal meets targets
One of the newest facilities at the port is the Ridley Island Propane Export Terminal, or RIPET, which went into operation last year. Despite the turmoil of 2020, RIPET is meeting its projections for the year.
“The addition of the Ridley Island Propane Export Terminal has been really important from a diversification perspective for the Port of Prince Rupert,” Mr. Friesen said. “One of our primary goals as a port and as a gateway is to diversify our commodity mix so that we’re more resilient into the future as well as growing volumes overall.”
By the end of August, the $475 million terminal, which occupies a 24-acre brownfield site about 10 kilometres south of the City of Prince Rupert, had exported nearly 800,000 tonnes of propane, putting it on track to meet its 1.2 million tonnes annual target. Most of that propane goes to Japan.
“I think it’s been a great success, considering it’s been operational for just over a year,” Mr. Stevenson said. “We’ve seen increasing volumes and strong trade between Canada and Japan for propane. We’re constantly hearing that there’s a need to create more capacity.”
The first such facility in Canada, RIPET exported its inaugural shipment in May 23. Calgary-based AltaGas owns a 70 per cent interest in the facility with Netherlands-based Royal Vopak owning the rest. Japan-based Astomos Energy Corporation agreed in 2017 to buy at least half of RIPET’s annual propane output. RIPET’s location is just 10 days away from Asia, a 15-day shipping advantage over U.S. competitors on the Gulf of Mexico.
The liquid propane comes from the Montney region, a major shale gas reserve that straddles the Alberta-B.C. border. AltaGas has processing plants in the region to extract natural gas liquids — such as propane, butane, and condensates from the gas stream as well as fractioners to separate them into saleable products, explained Randy Toone, executive vice present and president of midstream for AltaGas, in a video on the company website.
“It’s the cornerstone asset of our midstream infrastructure,” Mr. Toone said of RIPET, adding that it has opened up a new market for western Canadian propane that until now sold only in Canada and the U.S.
RIPET offloads 50 to 60 rail cars daily and then transfers the propane to storage vessels where it is cooled for shipping at atmospheric pressure, according to a posting on the AltaGas website. The chilled propane is then loaded onto ships called Very Large Gas Carries, or VLGCs, 20 to 30 times a year for shipment to global markets.
RIPET created about 250 jobs during construction and 40 permanent jobs for its operation.
“With RIPET now operational, we can offer producers a uniquely complete solution for their propane, providing premium netbacks and market optionality, while also positioning AltaGas to profitably grow our Midstream footprint — a true win-win for AltaGas and our customers,” said Randy Crawford, AltaGas’ President and Chief Executive Officer as the facility celebrated its grand opening in May 2019.
Since Asia is the world’s biggest importer of liquid propane gas, the LPG growth prospects for Prince Rupert are equally large. More than 25 million Japanese homes use propane for cooking. Nearly 25 million vehicles on the planet are powered by propane, which is also an important feedstock for the petrochemical industry.
“This first-of-its-kind project demonstrates to the world what can be achieved through effective partnerships between Canadian and Japanese companies, and will ultimately benefit both countries for decades to come,” said Seiya Araki, President of Astomos Energy Corporation following RIPET’s launch in 2019.
Enhancing the port’s success
The Ray-Mont Logistics facility established at the port three years ago is another “resounding success.” Built on a 12-acre site on Ridley Island, the facility is surrounded by a 100-car rail loop corridor and includes a modern conveyance system and grain dumper pit.
Also contributing to Prince Rupert’s continuing success is Canadian National Railway, which links the port with markets in the North American heartland, such as Chicago. “They have invested heavily in their network, and specifically their network as it gets closer to Prince Rupert with additional siding projects and siding extensions,” Mr. Friesen said. “They’ve been just such a great partner.”
Those projects ensure that the port has the necessary capacity to serve its global customers. That’s important because “trade is discretionary,” Mr. Stevenson pointed out.
While Prince Rupert has advantages such as being one or two sailing days closer to Asian markets, the port still has plenty of competitors.
“I think when we talk about Canadian exports, whether it be bulk like things like coal, grain, or forest products, then obviously we’re competing primarily with terminals in Vancouver,” Mr. Stevenson said. “When we talk about imports, which are truly discretionary, we’re competing with East Coast ports. If we’re talking about trans-Pacific, we’re going to compete with Vancouver, Seattle, Tacoma, L.A./Long Beach. Ultimately the efficiencies we can bring to that system and those supply chains as well is going to dictate how far we can grow and what kind of market share we can hope to achieve.”