By Keith Norbury
The new federal Liberal government, in fulfilling an election promise, has pledged to spend an extra $60 billion on Canada’s infrastructure over the next decade, doubling what the previous Conservative government had designated. How much of that money will go toward revitalizing the country’s ports, highways, and railways isn’t yet known. And even more of a question mark is what impacts the boost in infrastructure spending will have on project cargo and breakbulk facilities and the movements of those cargoes in Canada.
Brook Simpson, press secretary to federal Minister of Infrastructure Amarjeet Sohi, told Canadian Sailings that the new $60 billion is being distributed in phases. The first phase — covering such projects as public transit, affordable housing, and clean waste water — totals $11.85 billion, according to the Infrastructure Canada website. “But the bulk of the $60 billion is going to be in phase 2,” Mr. Simpson said. The government expects to announce details of the second phase within the next year, he added. “I can’t really speak to the specifics of it because anything I can say now would be premature,” Mr. Simpson said.
Most of earlier allocation still available
This $60 billion is on top of money pledged by the previous Conservative government for such initiatives as the New Building Canada Fund, which still has money up for grabs under its $10 billion provincial-territorial infrastructure component. An interactive map on the Infrastructure Canada website reveals how much money is left in the pot for each province and territory. For example, as of Aug. 19, New Brunswick still had $283.3 million remaining in its allocations — $273.5 million under the fund’s national and regional projects component, and $9.8 million under the small communities component. New Brunswick’s total allocation under the New Building Canada Fund was $364.1 billion. The lion’s share New Brunswick has received from the fund to date is the $68.3 million federal contribution announced in July for a $205 million expansion at Port Saint John. (See related story).
“What we think is that the infrastructure spend should very much be focused on the next round on trade-enabling infrastructure within the framework of a national transportation strategy,” said Wendy Zatylny, President of Association of Canadian Port Authorities, in a mid-August interview the day after port CEOs held a roundtable discussion in Ottawa. Items for discussion included infrastructure spending.
“So that certainly includes ports,” Ms. Zatylny added. “If you look at Canada’s ports, and the port authorities in particular, they handle nearly two-thirds of Canada’s cargo.”
Port infrastructure needs $5.8 billion
About five years ago, ACPA and Transport Canada conducted a study that pegged Canada’s port infrastructure needs at $5.8 billion, Ms. Zatylny said. About two-thirds was for new projects but one-third, or some $1.7 billion, was needed just to rehabilitate existing infrastructure. That estimate was made before Canada and the European Union reached a tentative trade agreement in 2014. Ms. Zatalyny noted that the evolution of larger ships, such as container vessels capable of carrying 18,000 or more standard units, is placing increasing demands on ports all over the world.
ACPA doesn’t have any recommendations, however, for specific spending on port infrastructure to handle breakbulk or project cargo. “From our perspective, the ports compete in a very dynamic environment,” Ms. Zatylny said. “They develop very strong business cases for the kind of development projects that they want. They forecast their growth needs, whether it’s in container, bulk, breakbulk, or project cargo.” The goal, she said, should be to support the continued growth of ports and their ability to handle cargo regardless of cargo type.
Skeptical professor supports port spending
Dr. Murtaza Haider, associate professor in the Ted Rogers School of Management at Ryerson University, wrote an essay recently for the Huffington Post that raised an alarm about “the risk of throwing good money on bad infrastructure.” However, he directed his concerns mainly at spending on public transit infrastructure, “where inferior projects are likely to be built instead of those that will attract significant transit ridership.”
In an interview with Canadian Sailings, Dr. Haider said that seaports are one area where the federal government should invest in infrastructure. Leading up to the world economic collapse of 2008, Canada was facing “a crisis in port capacity,” he said. The drop in demand for trade during the recession made capacity less of an immediate concern. However, he said that spending on port infrastructure “deserves to be part of a larger debate because at the end of the day, these trends will reverse and the trade will pick up and then we will have the same capacity constraints as were facing in the early parts of 2000s.” Because seaports and trade are of national concern, they don’t have local champions in the way that transit projects do, he said. An official in Montreal isn’t going to advocate for more capacity in Vancouver, for example. “I think the role of the federal government is not only to realize and invest in seaport capacity but at the same time make the nationally relevant and important infrastructure a matter of concern at local levels as well,” Dr. Haider said.
Arctic needs are greatest
Dr. Barry Prentice, a professor in the Department of Supply Chain Management at the University of Manitoba’s I.H. Asper School of Business, said the biggest infrastructure need for ports is in the Arctic, where there are no ports. “Where is the Arctic infrastructure to deal with the north in view of climate change and certainly in terms of project freight for mining and so on?” said Dr. Prentice, former Director of the University’s Transport Institute.
Related to that, he said a paved road should be built to link the port of Churchill, Manitoba, with the highway network. The port’s operator, U.S.-based Omnitrax announced this summer it was closing the port, which it once touted as destination for project cargo. He described the railway serving Churchill as “useless,” adding that “nobody wants to ship grain there any longer.” A road would open up Churchill as a tourist destination and enable the transport of project freight to and from the port, he said. “There are lots of ports in this world that operate without rail lines to them,” Dr. Prentice said, citing Hong Kong and Singapore as examples.
Railways seek level playing field
Railway Association of Canada (RAC), however, is “looking for shortline infrastructure funding to level the playing field with trucking,” Association President and CEO Michael Bourque said in an emailed response to written questions.
“Shortline railways invest roughly 12 per cent of their annual revenues into maintaining their own infrastructure,” Mr. Bourque said. “Compare that to their main competitor, the trucking sector, which operates on publicly funded infrastructure (roads and highways). Canada needs to level the playing field for infrastructure investments. Despite being eligible for the New Building Canada Plan and its predecessor fund, shortlines have received just 0.07 per cent of available public funds to date.”
RAC would also like to see support for Via Rail’s high-frequency passenger service, as well as infrastructure money for improvements to safety crossings, such as “grade separations, technical improvements and closures.” The association also “supports infrastructure investment initiatives that improve the efficiency of Canada’s trade gateways,” such as the Roberts Bank Rail Corridor Program in B.C. And, like other transportation stakeholders, RAC favours federal spending on infrastructure “to improve the overall transportation network in support of Canadian commerce.”
Canada’s roads “out of date”
Another of Dr. Prentice’s pet peeves is the state of the Trans-Canada Highway.
“To encourage Canada east-west trade, we need a proper four-lane highway,” Dr. Prentice said. It’s a particular problem to move project freight in northern Ontario, where the intermittent four-lane sections are like a “breath of fresh air,” he said. “We’ve got some gaps in Canada where we’re still with roads that are 50 years out of date,” Dr. Prentice added.
The mountainous terrain of B.C. has created obstacles for moving ultra-large loads along the province’s highways. In recent years, the B.C. government has been working with industry stakeholders such Port of Vancouver and B.C. Trucking Association to develop designated corridors for 125-tonne loads. “They’re in the process of doing analysis of the routes and once that analysis is complete, we’ll have a better sense of what’s achievable without any additional work and what might need some work,” said Louise Yako, President of B.C. Trucking Association.
The stakeholders’ ad hoc project cargo working group has also actively promoted — at Breakbulk Americas conferences — that the B.C. highway system can handle most project cargo destined for Alberta. However, pinch points remain, such as the snow sheds on the Coquihalla Highway.
Whether any of the federal government’s promised infrastructure spending will go toward to widening B.C.’s highway corridors is an open question. “My understanding is the federal government is in the process now of considering which projects to fund,” Ms. Yako said. “So until some decisions are made as to what is going to be funded, it’s really hard to say what that impact might be for project cargo.” She did, however, pass along a list of the association’s infrastructure priorities, many of which are in the B.C. Ministry of Transportation’s 10-year plan. They include replacement of the Patullo Bridge and the George Massey Tunnel, two major crossings of the Fraser River. The trucking association notes that those two projects — as well as four-laning of certain roads in Surrey, Abbotsford, and Aldergrove — have received commitments to move forward from all three levels of government. However, “planning is in some cases in the early stages and the process of securing all of the required funding is ongoing,” the BCTA noted in an email. Some of the projects fall under municipal, provincial or federal jurisdiction. “And we’ve got all sorts of routes that fall under each of those categories that would benefit project cargo,” Ms. Yako said.
Downturn in oil patch reduces demand
However, the economic downturn has diminished the need to upgrade B.C.’s highways to be able to handle larger loads because of the lower demand for project cargo, particularly in the oil sands region. “In the foreseeable future there are not going to be any more big megaprojects like that,” said Ed Scherbinski, President of Mullen Trucking, part of Alberta-based Mullen Group.
Ms. Yako, however, said she and other players regard the downturn as a “temporary lull” and “not a portent of the future.” Instead, it provides a break that affords time for the highway work to be done, she said. Mr. Scherbinski expressed skepticism, though. “I’ll believe that they’re going to spend that kind of money when I see it,” he said. “With the slowdown in the economy, the tax base is eroding quickly. There will not be the money to spend.”
Others who have involvements in the heavy-haul space offered more optimistic takes on the prospects of infrastructure spending. Glen Fleming, Vice-President Operations of Alberta-based Entrec Corporation, said infrastructure spending would absolutely benefit his company, which could potentially haul equipment, including cranes, to those construction sites, and even perform the craning work.
Entrec has already done such work for major ring roads in western Canada, he said. “If that’s ramped up, there’s opportunity there,” Mr. Fleming said. For now, Entrec is “like everybody else,” he said. “We’re waiting to see what is funded and what isn’t, and we’ll certainly do everything we can to participate in what comes down the line.” Whatever form the infrastructure spending takes, he would like to see it spent sooner rather than later because of the excess capacity in the heavy haul industry. “It is something that would be very helpful for contractors that are trying to power their way through this recession,” Mr. Fleming said. “That extra scope of work would make all the difference in the world and there’s a lot of opportunity for heavy haul companies to participate in that.”
Manufacturers expect to benefit
Don Moore, Executive Director of the Canadian Transportation Equipment Association, said the infusion of infrastructure spending would also benefit the association’s membership. The organization consists largely of Canadian manufacturers of such equipment as commercial trailers, truck suspensions, and dump truck bodies. “In general, any time we’ve got infrastructure spending going on, it’s a good thing from our perspective,” Mr. Moore said. “A lot of our members do build vehicles involved in construction of roads, bridges, and any number of those kinds of programs.” Even non-transportation infrastructure projects like water treatments plants would have a spinoff effect for CTEA members because those projects would require vehicles such as mixer trucks and dump trucks, he said. “The more activity there is, the more vehicles they’ll need,” said Mr. Moore, a mechanical engineer by profession who spent 17 years with Western Star when the truck maker was still based in Kelowna, B.C. “And of course vehicles wear out when they’re being used.”
Louise Yako of B.C. Trucking Association, said non-road related infrastructure projects would also benefit her association’s members. “Any time there are large projects, they require the movement of large pieces of cargo and equipment,” she said.
Be careful about overbuilding roads
Dr. Haider, however, cautioned against spending a lot of money to improve highways for the rare occasions that they need to accommodate oversized loads.
“If you were to expand the road system and invest in increased capacity to transport cargoes, people would question why this money was spent when a recession occurs,” Dr. Haider said. A wiser investment would be in maintaining waterways for moving those large cargoes, he said. “We have the St. Lawrence system that connects us to Quebec, and that’s more suited to carry very large pieces of equipment than to try to carry them on the roads because you have hundreds of bridges and physical constraints that would be difficult to deal when moving very large equipment over the road network,” Dr. Haider said.
Building modern paved roads to carry project cargo to Canada’s remote north wouldn’t be practical. An alternative that Dr. Prentice has promoted for the last decade has been to dispatch massive airships capable of carrying loads of up to 250 tonnes or more. He would like to see the federal government put money into building the hangars, or air docks, needed to support such airships. “They’re like dry docks for shipping. Without those we can’t have an airship industry in this country,” Dr. Prentice said. “Would the airplane industry have gone anywhere if the government hadn’t come in and built airports and subsidized a national airline?” he said. Then again, Dr. Prentice said, infrastructure isn’t even the problem in many cases. Sometimes changing regulations can have a greater effect on smoothing the flow of goods. One would be to remove the revenue caps on the railways for grain hauling. “The railways could then invest their own money,” Dr. Prentice said. Another would be to ease the cabotage restrictions on airlines but also on Great Lakes shipping. “Right now the Great Lakes are very much handicapped because you’ve got two separate fleets,” Dr. Prentice said.