By Brian Dunn

The recent announcement of a planned expansion of the Fairview Container Terminal in Prince Rupert, BC, was well received by CN which handles about 95 per cent of the port’s discharged traffic.

The expansion of the terminal, operated by Maher Terminals Holding Corp. and scheduled to be completed by mid-2017, will increase container capacity from 850,000 to 1.3 million TEUs. It is served by the CKYHE Alliance, offering three weekly marine carrier services from Asia.

The expansion will include the creation of an additional 155 metres of wharf at the north end of the terminal, installation of crane rails to support an eight-crane, two-berth operation and upgraded rail capacity from the creation of three additional working tracks, supported by up to rubber tire gantry cranes.

Since its conversion from a breakbulk to a container handling facility in 2007, traffic through Fairview has grown at the fastest pace of any container terminal in North America, with container volume up 15 per cent last year from 2013 to 618,167 TEUs, according to Don Krusel, President and CEO of Prince Rupert Port Authority. It ranks second behind Port of Vancouver in terms of revenue dollars generated for CN, noted Jean-Jacques Ruest, CN’s Executive Vice-President and Chief Marketing Officer. In the fourth quarter of 2014, it represented 30 per cent of CN’s international intermodal business in terms of volume.

While CN has no equity in the port and is not contributing financially to the expansion, the two are very co-dependent. “The terminal and CN work closely together. Without CN, the terminal would not be financially successful and vice versa,” explained Mr. Ruest. “We would not be able to grow our inland terminals such as Chippewa Falls, Arcadia, Detroit or Chicago without having an increased capacity on the west coast. So we very much encouraged them to see that our investment strategy inland was going to support the capital risk they were taking on the waterfront and vice versa.”

Most of the commodities that land at Prince Rupert are destined for the U.S. Midwest as far south as Memphis which includes furniture, footwear, apparel, household goods, electronics, building materials and automotive parts.

For the return trip back to Prince Rupert, CN has created container stuffing facilities in places like Chicago, Saskatoon, Edmonton and Prince George for grain and agricultural products, lumber, pulp and plastics.

The port expansion is an important component of CN’s growth plans, according to Mr. Ruest. “For a number of years, CN was growing through acquisitions. We’ve bought five railroads in the last decade. The last one we bought was a very small railroad around Chicago. But that was five years ago, so for the last five years we’ve had to grow organically. We had to find a way to bring more business on the existing network that we have.”

To do that, CN is looking to bring more products in from Asia through Prince Rupert and Vancouver to serve the U.S. Midwest and eastern Canadian markets. But the U.S. Midwest is where CN sees the most opportunities. “Our share of that market is quite limited and there we compete with U.S. railroads. So the more we grow with a Canadian port, the more we will need to get more than just our regular share of the U.S. Midwest market. And Maher also recognizes that more than half their investment is for the U.S. market.”

While the port expansion will not change what CN currently handles, the company would like to increase its auto parts business in Detroit, Ohio and Ontario. And having increased capacity in a fluid port like Prince Rupert should give CN that opportunity, said Mr. Ruest. “In order to do auto parts very well, we need a port that’s very fluid, which is not the case in the U.S. and sometimes it’s challenging in Vancouver. But we would also welcome a similar expansion in Vancouver.”

While CN has no equity in the Fairview Terminal, it has invested heavily to improve its rail capacity just outside the property by adding a second track at a cost of $17 million that included infrastructure work near the water. The investment allows CN to operate 12,000-foot trains to maximize the fluidity and productivity of the terminal. Before it added a second siding, CN was limited to two trains in and two trains out per day. Now, it can accommodate four trains a day in and out if the port expansion warrants that increase.

In terms of fluidity, the average dwell time at the terminal during January and February was two days, according to Mr. Ruest. “Transit time to Chicago is a little over four days, so you discharge the cargo from the ship and it arrives in Chicago in a week. This was the best dwell time on the west coast this year.”

CN is also planning for the future by purchasing land around some of its existing inland terminals, including Detroit, and has available land in Chicago where it has two terminals and can expand if necessary, and has been holding discussions to acquire more land in Memphis in addition to some cities in Eastern Canada. “We’re always looking at expansion as we look at the business we want to target,” explained Keith Reardon, Vice-President Intermodal. “We also work with our existing customers as they grow their business. We try to keep ahead of it by at least two years, because that’s how long it takes to expand most of our terminals. “It’s not only expanding the Port of Prince Rupert, but also the organic growth each one of our customers represents.”