By R. Bruce Striegler

Vancouver is the third-largest container port in North America and the 47th-largest in the world. It accounted for 42 per cent of the cargo handled by all Canadian ports in 2017, generating revenues of $250 million and handling $100 billion worth of container cargo each year which is expected to triple by 2030. However, there is rising concern within real estate circles and the marine shipping industry: the region does not have enough industrial land with access to both rail and water. Existing terminals have been keeping up with the capacity demands, but if growth continues at the existing pace, and without additional container terminal capacity, the fear is that B.C. ports will lose their competitive edge with more global shipping lines diverting imports and exports through competing American West Coast, Gulf Coast and Eastern Seaboard ports. Port of Vancouver estimates that the additional cost to Canadian importers and exporters to move goods through the U.S. would be $80 million annually, starting in 2030. In the first half of 2018, the Port hit record container volumes of 1.64 million TEUs (20-foot equivalent units) – a five per cent increase in volume over 2017, with export traffic up by 6.6 per cent, and imports up by 3.7 per cent.

Whether containers or bulk commodities such as coal and grains, space for expansion at Canada’s largest port is shrinking. Planning for future capacity is pushing the port to carefully consider what infrastructure projects will be needed to support additional growth, as well as what mitigation may be required to reduce the impact cargo movement may have on surrounding communities. This report is a first-of-the-year look at significant Vancouver terminal expansion projects, just completed or approved and under construction or engaged in some stage of environmental review.

Increasing the container capacity on Canada’s Westcoast

First on the list; GCT Deltaport – the world’s largest ship-to-rail intermodal container terminal, near the U.S. border, thirty kilometres south of Vancouver. The largest container terminal in Canada completed its $300 million Deltaport Intermodal Yard Reconfiguration project in 2018. The 85-hectare (210-acre) facility handles the largest container vessels on the Trans Pacific tradelane, and employs state-of-the-art systems at the terminal. GCT Canada says the upgrade increases the facility’s rail capacity by 50 per cent to 2.4 million TEUs.

Near the GCT site, the Port is working on plans for the Roberts Bank Terminal 2 Project. Proposed as a new marine container terminal at Roberts Bank in Delta, B.C., the Port says the project is necessary to ensure Canada can deliver on its trade commitments and ambitions. The proposal calls for the creation of 108 hectares of new industrial land in deep, subtidal waters to minimize environmental effects. The terminal would have up to three berths for container ships, and would provide 1,500 on-terminal jobs. The Roberts Bank Terminal 2 Project would deliver a total of 2.4 million TEUs capacity. In order to protect the stability of the market for all terminal operators, the project would open with a capacity of 1.6 million TEUs, holding back the remaining potential.

Roberts Bank Terminal 2 has encountered a potential obstacle after a federal agency presented concerns with the project’s impact on migratory shorebirds, particularly the western sandpiper species. While 2030 may seem to be a long way out, the environmental approval process for the Terminal 2 project is already half a decade in, and moving with glacial speed. Given the length of the Environment and Climate Change Canada (ECCC) agency review process, the earliest the new terminal can be built and in operation is somewhere between 2028 and 2030. The project’s capital cost are estimated between $2 billion and $3 billion, although every two-year delay adds about $500 million to the cost. The project contains supporting infrastructure such as a container storage yards, intermodal rail yards, and improved road access.

Also underway is a $320-million expansion of the Centerm container terminal on the harbour in downtown Vancouver. The on-terminal improvements at the DP World terminal would increase the maximum container handling capacity at Centerm by two-thirds, from 900,000 TEUs to 1.5 million TEUs. The project includes an increase to the terminal footprint of approximately 15 per cent and reconfiguration of the terminal to increase the terminal’s container capacity. In October 2018, Environment and Climate Change Canada issued a disposal at sea permit for dredging works associated with construction of this project. This was followed in November 2018, as Fisheries and Oceans Canada issued a Fisheries Act authorization for the Centerm Expansion Project, allowing the project to proceed with in-water marine construction. Construction is anticipated to start in the summer of 2019, dependent on meeting permit conditions. Some preparatory and investigative works, such as surveying and geotechnical investigations, will likely take place in advance of construction

Significant expansion plans from grain and potash producers started

Under construction in North Vancouver is the port’s first new grain elevator in 50 years. G3 Terminal Vancouver is a joint venture partnership between G3 Global Holdings and Western Stevedoring Company Limited (Western). The Joint Venture is building a state-of-the-art export terminal at Lynnterm West Gate in North Vancouver, the first new grain terminal constructed at the port since the 1960s. Canadian grain and oilseed crops generate $23 billion in exports each year – nearly half of Canada’s total food and agriculture exports. However, recent transportation challenges have highlighted the fact that the industry’s current grain movement infrastructure is not sufficient to meet the need created by the increasing supply and demand for Canadian grain. G3 will create 175 local construction jobs, and 50-60 permanent jobs.

The new construction is a grain storage facility consisting of up to forty-eight concrete storage silos, each 14-storeys tall and capable of handling 180,000 tonnes with an overhead conveyor system for distributing grain commodities as well as a rail loop with capacity for three trains of up to 150 cars each. The existing wharf will be demolished in part, and a berth structure will be added that includes pile driving 25 metres (82 ft.) south of the existing berth face to support up to three ship-loading cranes. The ship loading system will include three articulated booms that can load ships up to a post-Panamax size. The terminal is slated for completion in 2020, and the types of products that will be handled will include wheat, soybeans, canola, peas, corn and specialty agri-products.

In the meantime, in November 2018 the Port issued a project permit, and construction began for Fraser Grain Terminal Ltd. to build a grain export facility in Surrey, British Columbia. Located on federal lands managed by Vancouver Fraser Port Authority, and adjacent to Fraser Surrey Docks, the proposal is to construct a facility to ship up to four million metric tonnes per year of bulk grain products including wheat, barley, oil seeds, pulses and other specialty grains from an existing berth at Fraser Surrey Docks. (FSD) The proposed project would add 3.5 million tonnes per annum of grain capacity, with the balance of 0.5 million tonnes coming from the existing Joint Venture grain facility at FSD. The proposal includes the construction of 25 above-ground steel storage silos, three fixed stationary shiploaders, a semi-loop rail track, container loading facility and storage yard, rail and truck loading facility and other associated terminal infrastructure.

In June 2018, BHP Billiton Canada Inc. submitted a project permit application to develop a potash export facility in Surrey, B.C., on federal lands managed by Vancouver Fraser Port Authority. The 29-ha site is located entirely on Fraser Surrey Docks property, with the facility receiving the potash from BHP Billiton’s proposed Jansen Mine near Saskatoon, via rail. The potash would be offloaded and transferred to the storage building using a covered conveyor system and moved from storage to the shiploaders by covered conveyor. When the facility throughput reaches the projected 8 million tonnes per annum, eight to ten trains per week are expected, and three to four vessels will load weekly at the facility, ranging from Handysize up to Kamsarmax, similar to vessels that call at the existing terminal. The project will require demolition of existing structures and significant site preparation.

A four-year legal battle over Fraser Surrey Docks approval from the Port to implement U.S. thermal coal exports seemed to end in January 2018 with the release of a federal appeals court decision. “I can find no basis for overturning the Port Authority’s decisions — they were made fairly and lawfully, and untainted by a reasonable apprehension of bias,” Justice James O’Reilly said in his judgment. “I must, therefore, dismiss this application for judicial review.” In published reports, Jeff Scott, president and CEO of Fraser Surrey Docks, told a local newspaper that the project is still in play. “We still have our permit for the coal facility. We currently do not have a construction date for that facility but we’re still discussing opportunities with potential customers,” he said.

Finally, B.C. owned and operated Fibreco Export Inc. which has served the western Canadian forest industry moving wood chips and wood pellets to customers around the world for almost 40 years, has decided to upgrade its facility and to diversify into other commodities. The plan includes handling grain and lentils for the international agricultural trade. Accordingly, the company has received a District of North Vancouver development permit and project permit approval from Vancouver Fraser Port Authority. The Fibreco Terminal Enhancement Project will enhance the terminal’s current wood pellet operations, add new grain export operations and remove the woodchip exporting infrastructure. Works to be undertaken within the Port Authority’s jurisdiction include marine enhancements such as berth improvements, a new shiploader, dredging, and demolition, with completion scheduled for late 2019.

B.C. ports spared damage from American trade wars and tariffs

B.C.’s ports have thus far been spared any major collateral damage from the China-U.S. trade and tariff war. Vancouver recently graduated into the list of the world’s top 50 container ports as compiled by the U.S.-based Journal of Commerce. Its 10.9 per cent increase to 3.25 million TEUs handled in 2017 ranked it No. 47. Mid-year 2018 cargo numbers showed container cargo through the port up five per cent to a record 1.64 million TEUs.

Port of Prince Rupert volumes were up by 16 per cent to 591,335 TEUs compared with the first six months of 2017. In December, DP World’s Fairview container terminal at Prince Rupert celebrated a historic milestone. For the first time in a calendar year, the facility handled one million containers. When it opened in 2008, Fairview moved only 182,523 TEUs.

Last year, Metro Vancouver experienced 4.7 million sq. ft. of positive absorption, but this was achieved with only 3.1 million sq. ft. of new industrial space being completed. Businesses that undertake supply chain logistics such as retail and e-commerce require such industrial spaces for warehouses. And this is more important than ever with the growth trajectory of the Port of Vancouver’s cargo volumes. Construction and supply companies are also among the traditional occupiers of such spaces, but in recent years the rapidly growing film industry has been turning to warehouse sites to convert the structures into large production studios.

The shortage in supply continues to drive up rents, with the average net asking rent for Metro Vancouver during the fourth quarter of 2017 at $10.23 per sq. ft. – up 13.6 per cent year-over-year. This is also the first-time industrial space rates have crossed the $10 barrier in the region, and property taxes have increased by 20 per cent or more in some areas. Industry forecasts indicate the region could run out of industrial land within a decade — some even say as early as 2020. If that happens, it could hollow out Vancouver’s economy, relegating the Pacific Coast city into a playground for wealthy retirees and tourists, warns Robin Silvester, Port of Vancouver’s Chief Executive Officer.