By Alex Binkley
Modernizing governance of the 17 Canadian Port Authorities has been under review for four years and Transport Minister Omar Alghabra has been instructed by Prime Minister Justin Trudeau to bring it to a conclusion. When that might happen and whether legislative changes will have to be made by Parliament remains to be seen. However, the Association of Canadian Port Authorities (ACPA) has identified three fundamental matters the federal government needs to act on “to enable Ports to fully achieve their potential in enabling Canada’s ambitious international trade agenda.”
They involve the rules for land acquisition and disposal, financial flexibility in their business investments and expediting Board appointments. Further port modernization will be difficult to implement without action on them, ACPA has been telling cabinet ministers and senior government officials for years.
When asked about the timeline for completing the governance review, Transport Canada said it engaged with partners and stakeholders during public consultations in 2018 and 2019. It published its observations on those discussions in a 14-page report in October, 2020 and said the suggestions it received would be considered. It was not clear whether the department will propose changes or conduct further consultations. Its ongoing consultations on the country’s supply chain problems are bound to include discussions on port issues.
Debbie Murray, ACPA’s Director of Policy and Regulatory Affairs, said the port review involved many transport- related and business groups. Among the ideas advanced was making better use of technology to fix problems in marine shipping, which received plenty of support, she said. ACPA had been calling for action on its three fundamental changes since 2012 and has raised them at numerous CEO Roundtables with senior federal officials focusing on Port Authority concerns.
The Port Authorities were created by the federal government almost 25 years ago with the aim of being financially self-sufficient as well as strategically significant to Canada’s trade while providing a link to rail and highway infrastructure and having a diverse cargo base. In a recent discussion paper on port governance modernization, ACPA says the ports have become facilitators of trade and need to be “empowered, as part of their core mandate, to engage in trade-facilitation activities, notwithstanding the primary mode of transportation, which may include logistics facilities, inland ports and supply-chain related uses. Port Authorities need to be able to participate in, invest in, and partner in supply chain activities that go beyond current legislation that confines port Modernizing governance of the 17 Canadian Port Authorities has been under review for four years and Transport Minister Omar Alghabra has been instructed by Prime Minister Justin Trudeau to bring it to a conclusion. When that might happen and whether legislative changes will have to be made by Parliament remains to be seen. However, the Association of Canadian Port Authorities (ACPA) has identified three fundamental matters the federal government needs to act on “to enable Ports to fully achieve their potential in enabling Canada’s ambitious international trade agenda.” They involve the rules for land acquisition and disposal, financial flexibility in their business investments and expediting Board appointments. Further port modernization will be difficult to implement without action on them, ACPA has been telling cabinet ministers and senior government officials for years. When asked about the timeline for completing the governance review, Transport Canada said it engaged with partners and stakeholders during public consultations in 2018 and 2019. It published its observations on those discussions in a 14-page report in October, 2020 and said the suggestions it received would be considered. It was not clear whether the department will propose changes or conduct further consultations. Its ongoing consultations on the country’s supply chain problems are bound to include discussions on port issues. Debbie Murray, ACPA’s Director of Policy and Regulatory Affairs, said the port review involved many transport- related and business groups. Among the ideas advanced was making better use of technology to fix problems in marine shipping, which received plenty of support, she said. ACPA had been calling for action on its three fundamental changes since 2012 and has raised them at numerous CEO Roundtables with senior federal officials focusing on Port Authority concerns. The Port Authorities were created by the federal government almost 25 years ago with the aim activities to the movement of goods at the port or on port lands.” ACPA also urged the government to allow the ports “to create non-wholly owned subsidiaries for operations on non- port properties and, if required, for non-port activities. This approach provides an innovative financing mechanism. For example, a Port Authority could create a subsidiary and sell a portion of the shares to a private sector participant to build a major new infrastructure development. ACPA further suggested that the federal government should provide loan guarantees for infrastructure projects that facilitate increased trade. Port Authorities must be flexible and adaptable to changing circumstances in responding to “trade-related opportunities while reducing time- delaying restrictions imposed by government legislation, regulations and other requirements.”
ACPA noted that the global transportation system is rapidly changing and federal review provides “an opportunity to further transform our port system into one that holistically integrates trade, supply chain partners, new technology, and communities in a predictable, innovative and safe manner.”
The government’s current ponderous and slow Board appointment process has left many Port Authorities with a reduced number of Board members. “Several Boards have dropped to less than half of their complement of Directors, preventing them from developing critical strategic plans for the Port Authority. A further unforeseen consequence of extensive appointment delays is that well qualified candidates have withdrawn prior to their eventual appointment. “There is a clear need for consistent and timely Board appointments that reflect and respect both the work that went into developing the nomination lists, as well as the Board-approved competencies matrices for each CPA.”
The ports have evolved into “operations and activities beyond their important initial role as port land managers. Modern Canadian ports have become multi-modal industrial hubs, including the development of logistics centres, product transformation hubs and trade enabling infrastructure to support continued commodity throughput growth.
“Modern Port legislation has to provide CPAs with the power and authority to be the initiators, the catalysts, the architects to develop an integrated supply chain data management approach. “The model for success should be something akin to what happens when somebody orders a product on-line and then can track on-line and in real time the delivery progress from the manufacturing floor to their doorstep.
“Integrated information technology and advanced data management are the next frontier of port efficiency. Numerous disruptive technologies such as blockchain applications are being tested in various formats, but none have yet gelled.” The federal review should also consider observations from the United Nations Conference on Trade and Development (UNCTAD) on key trends shaping the marine sector including:
- The relationship between Ports and container shipping lines and shipping alliances
- Restructuring and larger vessel deployments
- The impact of market concentration and ship deployment in the selection of ports-of-call,
- Configuration of liner shipping networks, distribution of costs and benefits between container shipping and Ports, and container terminal concessions,
- Protectionism creating uncertainty from broad geopolitical, economic, and trade policy risks,
- Digitalization and e-commerce’s ability to help maritime transport respond to increased demand with enhanced efficiency,
- Excessive new capacity among overly optimistic shipping lines could lead to worsened shipping market conditions,
- The potential for market power abuse by large shipping lines as well as the related impact on smaller players,
- The value of shipping can no longer be determined by scale alone, and the ability to leverage relevant technological advances is increasingly important.