By Brian Dunn

There is a much bigger threat facing the Canadian maritime industry than a possible terrorist attack similar to the one perpetrated by a single individual in Ottawa last year and it may not necessarily come from the outside.

“There are over 115 countries in the world practicing cyber espionage. Last year, five Montreal companies were hacked by a Russian activist to make a political statement. But there is also the danger of an inside threat since 85 per cent of criminal activity is facilitated by an (company) insider and sometimes they’re not even aware of it,” according to Michel Juneau-Katsuya, an Ottawa-based threat and risk assessment specialist. “We need to segregate information in a company, as the main breach comes from the executive level,” he said in a presentation on What the Future Holds for Canadian Ports at the Association of Canadian Port Authorities 2015 conference in Montreal, Sept. 29-Oct 1.

Since ports are the “backbone of the economy,” they are an attractive target for outsiders and therefore ports need to embrace authority more to get a heads up on any perceived threat, the specialist said.

“The challenge for Port Authorities in deploying good security is to get access to good threat and risk assessment and good intelligence. Since ports are of various sizes and financial capacities, the burden of security might be greater for some. Unfortunately, federal authorities do not share information easily, leaving the ports to themselves in assessing the threat. If you cannot keep your eyes on what is coming, you are forced to remain reactive. The lack of proactively also prevents the chance to be more strategic in your investments and mitigation factors against the threat.”

“There should be a discussion among port industries to create an organization to produce intelligence which would not necessarily be expensive with economies of scale. If terrorism is not shedding blood (in Canada), corporate espionage should be our number one priority.”

In the same panel discussion, a demonstration of a potentially new cell phone application clearly impressed attendees. The demonstration tracked the status of a truck delivery of perishables in real time. The app monitors what the truck is carrying, the temperature inside the trailer, the fuel status of the truck and when it’s due for its next maintenance. For example, if the temperature inside the trailer should exceed a certain setpoint, threatening a frozen food delivery, the driver is alerted and guided to the nearest depot to rectify the problem. All the information can be monitored from a cell phone and instructions conveyed to the driver in the same manner. “The application is currently not publicly available, but is based on a real project being done with a Microsoft customer in the U.S. who must, for the moment, remain confidential. In order to inspire other companies with a real business scenario, we created this simplified sample application,” explained Charles Verdon, a company technology analyst. Microsoft provides technology components. Our consultants or our network of partner companies could assemble components into a finished solution for an interested customer.”

A third speaker on the same panel looked at under-keel clearance ((UKC) as it pertains to waterways and ports. “When ports/waterways need to make allowances for unknowns in UKC, they generally have to allow bigger tolerances in their UKC rules. This means that most of the time they are operating inefficiently,” explained Laurence Benn, Senior Engineer, OMC International, Melbourne, Australia. “However, on some occasions when conditions are bad, their rules may actually be unsafe. The old UKC rules are a variable risk system. By using more accurate modelling and real-time data in a Dynamic UKC system, they can better manage each individual transit. The allowance under the keel is adjusted depending on the conditions, the ship, its speed, and its location along the waterway, to safely manage each transit. Because the unknowns are reduced and controlled, it is a fixed risk system, reducing uncertainty. “With that in mind, for most transits the UKC allowance can be safely reduced. Ports can then take advantage of the extra draft, and therefore higher tonnage levels can be achieved. Alternatively, sailing at the same draft can increase the tidal window. This is because the required tide for a safe transit will occur earlier at the start of the window, and last longer at the end of the window before the water level drops too low.”

OMC has seen 100,000 vessels use DUKC without incident since 1993 and the safety record of the system is the company’s major focus, said Mr. Benn. Also, financial gains for the ports using the system are significant. Under very favourable conditions, DUKC can allow large vessels to safely sail up to one metre deeper, allowing them to carry more than 15,000 extra tonnes of iron ore or coal, as examples. Port of Montreal is the first Canadian port to implement the system, although there has been some interest from others, he added.

Another panel discussion looked at Strategies to Expand Maritime Trade in Canada. While we have experienced “huge maritime growth with Asia,” our overall share of the Asian import market has shrunk from 1.8 per cent in 1993 to under one per cent in 2013, according to Danielle Goldfarb, director of the Conference Board of Canada’s Global Commerce Centre. In her presentation entitled Seizing the Benefits of the Next Trade Era, Ms. Goldfarb noted Canada will experience uneven growth with some regions, including Japan which is flat, Asia Pacific (excluding Japan) which is growing, while the BRIC countries are slowing down, particularly China. “Emerging markets are fast growing, but they’re also slowing down, with commodity prices coming down and China and India moving from coal to cleaner energy. Ports are service providers and high value services, expertise and knowledge will be key drivers. But disruptive innovation such as driverless trucks is coming.”

The biggest demand from Asia will include ores, precious metals, oilseeds, edible oils, fertilizers and aerospace products. Canada should seize the benefits of recently signed free trade agreements such as the Pan-Pacific partnership and the Comprehensive Economic and Trade Agreement with the EU, especially for food products and chemicals, said Ms. Goldfarb. In terms of a future strategy, Canada should continue to leverage its relationship with the U.S., but also look to new markets and look beyond natural resources. “Be technology leaders where ports can play a role by developing expertise in data analytics to improve efficiency, timeliness, safety and security. Export port expertise and technology and leverage knowledge.”

There are “waves of changes” in the bulk logistics chain and Canadian Port Authorities are concerned that the Chinese economy, which absorbs about 40 per cent of the world’s raw materials, is slowing down, according to Claude Comtois, a logistics and transportation professor, Université de Montréal. “As the Chinese economy slows down, there is reduced demand for raw materials, including supplies from Canada. China is building several port terminals and the Chinese model is shifting from a manufacturing to a consumer-based economy and cross-border trade connecting China to Central Asia is growing.”

In addition, the routing of the 10 largest vessels involved in the iron ore trade connect Chinese ports with ports in Europe, Africa and South America. China is investing in iron ore projects in the latter two regions.

Inland transportation innovations include tunneling technologies and underground logistics such as conveyor belts are growing to meet high safety standards and reduce road and rail congestion, plus they are lower-cost methods of transport, noted Mr. Comtois. To remain on top of the bulk trade, he said Canadian ports must adopt innovative marketing strategies, noting that all-weather warehouses for sensitive cargo are cropping up in China and Europe. In China, there are 10,000 tonnes/hour automatic bulk loading/unloading systems, while Cosco has 300 vessels with 30 million tonnes of capacity. “In certain ports, a lot of time is wasted if unloading facilities are not up to par and China will impose its standards on dry bulk ports around the world.”

Asked if Canadian ports can compete, Mr. Comtois said they need to invest in dredging and infrastructure, especially in hinterland connections to ports, some of which he called third world quality. “I recently came back from Antwerp where they are investing millions of Euros in two new port terminals. If you look at ports in Canada, investments are miniscule instead of investing massive amounts. Montreal can’t attract megaships, because the St. Lawrence is not deep enough and Vancouver is facing major obstacles, including environmental issues. In both cases, traffic is being diverted away from Montreal and Vancouver.”

An OECD study concluded the maximum size of vessels should have been reached by now and anything bigger would be uneconomical, suggested Frank Gerkens, Port Ambassador, Antwerp Port Authority. “A seaport has an advantage over a hinterland port. But like airlines, where the largest aircraft does not necessarily offer as great a cost advantages as originally thought, vessels may face the same dilemma.”

The opening ceremony and luncheon on Sept. 29 featured Montreal Mayor Denis Coderre and Quebec Premier Philippe Couillard who both praised the maritime industry for their importance to the economy. “You have politicians who are allies and we’re there as facilitators. It’s important to build together with the public and private sectors,” said the mayor.

The Premier noted Quebec was the first province to introduce a “comprehensive maritime strategy” and that free trade with the EU and Trans-Pacific Partnership should increase maritime trade. And while climate change presents opportunities like the opening of the Northwest Passage, Mr. Couillard noted the maritime sector is already very efficient with an improving carbon footprint. He called on federal leaders to invest more in northern infrastructure and maritime infrastructure, and urged Atlantic Canada and British Columbia to push for a Canadian maritime strategy.

The Premier noted the close collaboration between Montreal and Antwerp, pointing out one in five containers at the Port of Montreal arrives from the Belgian city.

“We’re not trying for a one-size-fits-all strategy, because each port has its own specialty. People now see why we went ahead with our own maritime strategy. They see the maritime industry as an important part of our economy. It’s a good career choice for a young engineer or a ship’s captain.”

During the conference, it was announced Mario Girard, CEO of Port of Quebec, was elected as incoming Chair of ACPA’s Board of Directors for the next year. ACPA’s Board also announced that Donna Taylor, President and CEO of Port of Oshawa, had been elected incoming Vice Chair and Sean Hanrahan, President and CEO of Port of St. John’s, as Corporate Secretary/Treasurer.