By Tom Peters
The European economic crunch, the state of freight rates and surcharges, the impact of the Panama Canal expansion and business expectations for 2013 were all part of a potpourri of subjects discussed during an open forum at Halifax Port Days. Panel members included Volker Kluge, President, ZIM Integrated Services (Canada) Ltd., Nick Nanos, Director, Traffic, Customs & Toronto Logistics Operations, Liquor Control Board of Ontario (LCBO), Jim Ramsay, Vice-President Air and Ocean Freight Canada, UPS, and Keith Reardon, Vice-President Intermodal Services, CN. In discussing today’s competitive pressures, Kluge stressed the problem of overcapacity. He said in the first six months of this year an additional 840,000 TEU-capacity came on stream and that further substantial additions to capacity are anticipated for 2013 as new ships ordered a few years ago are being completed and delivered. He also pointed to pressures caused by the condition of the global economy and volatile energy costs.
Jim Ramsay said that it was difficult to find a clear pattern in determining pressures but he reported hearing companies expressing concerns about the strong Canadian dollar, the struggling U.S. economy, issues with the European supply chain and a slowdown in growth of emerging markets.
In terms of expected growth in freight volumes in 2013, Kluge said that ZIM anticipates 3-per-cent to 5-per-cent growth. “We see some turnaround in the second quarter, but we don’t see a banner year in 2014,” he said. He said one company priority in 2013 will be to drive efficiencies and “get back into the black.” But he said rates are market-driven and presently carriers are losing money. “The business model in place is not sustainable. The industry as a whole needs to start making money,” he said.
Halifax Port Authority (HPA) Vice-President George Malec was a bit more upbeat about ZIM’s performance, particularly as it pertains to Halifax. “I think you have to look at the fact that ZIM reintroduced a second service [to Halifax] this year so I think you have to separate the context of the overall global economic situation from specific trade routes and opportunities,” he said in an interview. “The fact that ZIM has reintroduced that service is actually very good and that’s what I heard loud and clear from Volker.”
Improved efficiencies was a theme echoed by panelists as a priority for 2013 and all panelists agreed that Port of Halifax plays an important role in their businesses. ZIM has been calling Halifax for over 40 years and this year it reintroduced its second service calling the port from the Mediterranean. “We feel Halifax will continue to grow for us,” said Kluge.
Reardon said CN plans for growth not only in cargo, but also at its autoport on the Dartmouth side of the harbour. He said CN works with HPA in Halifax and overseas on several initiatives to create growth.
Ramsay said, “UPS in general is quite bullish on the Maritimes. The port is doing a lot of good things and we do see opportunities for Halifax in project cargo.”
LCBO imports from about 80 countries and approximately 10 per cent of its imported products move through Halifax, said Nanos. “Halifax has the infrastructure to get the stuff into Canada,” he said.
In their expectations for 2013, panelists were divided. While Reardon is “expecting great things with customers and employees,” Nanos expressed a bleak outlook. “As a retailer, we are concerned,” he said.