By Brian Dunn
Canada is well positioned to profit from the growth in international trade, but it must spend the necessary funds on port infrastructure if the country hopes to remain competitive, according to Wendy Zatylny, President of the Association of Canadian Port Authorities (ACPA).
“In 2011, ACPA performed a study with Transport Canada and … the study revealed a $5.8 billion dollar gap in the funds required for current and future infrastructure needs, over the next 15 years,” she said at the SODES Rendez-Vous seminar on the St. Lawrence – Great Lakes Trade Corridor on November 14 in Montreal. By comparison, American port authorities and their private sector partners are spending $9 billion a year, she pointed out as one reason Canada needs to step up to the plate to remain competitive. Another reason infrastructure spending should be increased is because of the economic and social benefits ports bring to their communities and surrounding regions. Citing a recent Organization for Economic Co-operation and Development (OECD) study, Ms. Zatylny noted that one tonne of port throughput is on average associated with $100 of economic value added, while an increase of one million tonnes of port throughput is associated with an increase in employment in the port region of 300 jobs in the short term. “Richard Florida (a leading U.S. spokesperson on economic competitiveness) said that of the 10 richest cities in world, eight were port cities, including London, New York and Hong Kong.”
Despite the growth of Chinese ports which now count eight among the ten largest container ports in the world, the St. Lawrence/Great Lakes corridor has at least one major advantage over other navigable waterways such as the Yangtze, Rhine and Mississippi rivers, according to Claude Comtois, a transportation and logistics professor at Université de Montréal. While the depth of the other three rivers diminishes as vessels travel further inland, thereby limiting the size of vessels and tonnage that can travel their whole length, the Seaway offers a minimum of 8.23 metres from the Gulf to Duluth, MN, a distance of 1,600 kilometres. Even a Chinamax ship was able to dock at Sept-Îles recently.
But the largest container ships in the world are primarily steaming between Europe, Singapore and Shanghai with stops en route, rendering North American cities like Montreal as a spoke port in an increasingly hub and spoke world, explained Mr. Comtois.
“In terms of European exports to North America, the two largest growth areas are industrial machinery and vehicles which can be very profitable for the St. Lawrence corridor. And more pharmaceutical products are transferring from air to ships. The Seaway should also be prepared to handle more meat from western Canada bound for Europe,” he added. Transshipment of oil by rail bound for Europe could also be an opportunity for St. Lawrence ports, as European demand is not diminishing.
But while other major ports are spending on infrastructure improvements, including Rotterdam, Antwerp, Sydney, Copenhagen and Vancouver’s Deltaport, similar investments on the St. Lawrence corridor “are vastly inferior and need to be brought up to world standards to remain competitive,” said Mr. Comtois. “If dwell times are too long, shippers will look for alternative ports.”
In another presentation called The transformation of ports into instruments of economic development, Mr. Comtois noted that economic impact of the marine transport industry in Quebec in 2010, including transport, port activities and support services, amounted to $2.97 billion. The highest value-added commodity at an average of $220 per tonne was automobiles, with none handled by the Seaway, he noted. Montreal represents 38 per cent of tonnage handled among St. Lawrence ports based on value added cargo.
Citing another OECD study, Mr. Comtois noted that a doubling of a port’s efficiency leads to a 32 per cent increase in cargo volume, while moving up the rankings in terms of size from 75th spot to number 25 results in a 25 per cent hike in cargo volume. “We have to improve the competitiveness of our ports and why not make our ports more energy efficient?” Mr. Comtois asked.
Illustrating a strategic maritime and port network map, he said Sept-Îles-Port Cartier should strive to become a world primary materials transformation centre, Quebec should become an intercontinental transshipment centre, the Trois-Rivières-Bécancour-Sorel-Tracy area should become an international industrial and port centre, while Montreal-Valleyfield-Côte-Sainte-Catherine should position itself as a global container exchange centre.
In terms of challenges, Port of Quebec needs to increase its capacity and increase international trade, according to Patrick Robitaille, Vice-President, Business Development, Port of Quebec. But finding funds is always a chore, although the $20 million wood pellet terminal at the port is being built entirely through private investment, he noted. “The Port demonstrates the strategic role shipping plays in our economy and is a major economic asset…but to remain competitive, we have to respond to the needs of shippers and exporters.” The port has transitioned from a port in the city to a city port, Mr. Robitaille concluded.
The coexistence of the city and port is a constant preoccupation as the port area in Old Montreal continues to be redeveloped, noted Sylvie Vachon, President and CEO of Port of Montreal. Despite the creation of green spaces in and around the port, it’s not enough for some people who want the port to give up more of its land, she added. Montreal is the only container port on the St. Lawrence and 87th largest container port in the world, Ms. Vachon pointed out. And yet people don’t value its importance to the local economy.
“If we want a strong Montreal port, we have to protect its territory and transportation corridors. All of that forms a chain and we can’t take away any of its links.”
The port was again caught up in a political debate during the recent municipal election, the target of erroneous perceptions related to intermodal access. Ms. Vachon wonders why it’s so difficult to get the message across that port access for both CN and CP is critical for them to move traffic through Ontario and the U.S. Midwest. “The performance of these links, once again, has a direct impact on the competitiveness of the port to reach these markets in a timely manner. Again, we’re obliged to ask why this large port city is not being recognized for its value?” In response, the port has undergone a cultural change recently by opening its doors to the community through different channels, including information bulletins on certain projects, port visits by political and business leaders and noise reduction efforts for trucks in and out of the port.
Among initiatives to improve Montreal’s competitiveness was the creation last year of CargoM, the city’s transportation and logistics cluster, Ms. Vachon noted, along with the extension of l’Assomption Boulevard and improved access to Autoroute 25 from the port.
For Canada as a whole to maintain its competitive advantage, the Seaway and the entire Ontario-Quebec corridor must respond to the evolving needs of shippers and trade in the 21st century, federal Minister of Transport Lisa Raitt said during her luncheon address to the SODES day-long seminar. “To help meet these evolving needs, the government of Canada has pledged over $4 billion to transportation projects in Ontario and Quebec that support Canada’s international trade agenda. In Quebec, the federal government has made investments to improve or modernize ports in Sept-Îles, Saguenay, Montreal, Trois-Rivières and Quebec.” Those investments have helped increase traffic on the corridor by over 27 per cent between 2009 and last year, almost back to pre-recession levels, she added. In addition, the Comprehensive Economic and Trade Agreement (CETA) with Europe is a great opportunity for Canadian businesses, with 500 million new customers and competitive access for all ship operators which should benefit St. Lawrence ports, not to mention 80,000 new jobs the deal is expected to create, Ms. Raitt noted. There are already close ties between Port of Montreal and Europe, which accounted for 40 per cent of the port’s total traffic and almost 65 per cent of its container traffic in 2012, the Minister pointed out.
“The increase in trade with Europe will generate not only activity at ports but investment in and around ports. For many port and marine services in this region, CETA could prompt significant investment in local businesses.” Along with this anticipated growth, the government is taking steps to protect the marine environment with a number of new measures, including the establishment of a world-class tanker safety system for vessels transiting Canadian waters. “We are reviewing our liability and compensation regime for oil spills, in order to better protect people and the environment. And to help us with this and other questions, we formed an expert panel on tanker safety. We are also promoting sustainability through our Clean Transportation Initiatives project.” Through its Shore Power Technology for Ports Program, Ottawa is also enabling ships to turn off their diesel engines while docked and connect to an electric power supply in port. Installations are already running in Vancouver and Halifax and plans to develop similar projects in other Canadian ports are in the works.