B.C. must win the race with other West Coast ports to increase container traffic, or it will lose out on lucrative trade opportunities with China, say business and government leaders.
A forum on ports policy held recently in Vancouver heard a call for more public and private investment in the Port of Vancouver, the Port of Prince Rupert - which is creating a new container terminal expected to begin operations next year - and other coastal communities.
"When you look at the business that's flowing towards the Port of Vancouver just now, we're just ahead of the volume of capacity," said Capt. Gordon Houston, president and CEO of the Vancouver Port Authority, in an interview with Business Edge following the policy forum.
"We need to put $1.4 billion into infrastructure over the next 15 years. We don't have that amount of money."
Houston called for increased federal investment and changes in laws designed to boost trade. The port boss contends Vancouver could soon be in a crisis as traffic is expected to increase 300 per cent - mostly as a result of more demand from China.
With its rapidly expanding economy, China's demand for metals, minerals, grain and wood products is growing rapidly and Canada-China trade is increasing at the same torrid pace.
The provincial government aims to increase B.C.'s market share in Asia-Pacific trade to 17 per cent from nine per cent by 2020.
The Port of Vancouver, which now handles one per cent of China's imports, is looking to double its business with China by 2020.
"They're becoming the manufacturing centre of the world," said Houston. "What's going to happen when that business goes to two per cent, which, of course, is double? Unless we get this infrastructure and, basically, port strategy put together, we're not going to handle it - and they'll find another market to go to."
Many business leaders have complained about container backlogs at Vancouver's docks in recent months.
B.C. aims to boost its current capacity of 1.8 million twenty-foot equivalent units (TEU) to 8.9 million TEU.
Because of the high cost of land in Vancouver, said Houston, the Port of Vancouver is also looking at building an inland terminal outside Vancouver.
"The concept of a dry port is not unusual nowadays," he added.
Meanwhile, federal Industry Minister David Emerson noted a lot of Vancouver's congestion stems from upstream bottlenecks through the Rocky Mountains. But both Canadian National Railway (CN) and Canadian Pacific Railway (CPR) are working on the improving capacity, he said.
CPR has already announced it will spend $160 million to expand its track network between the Prairies and the Port of Vancouver, wagering that China's booming demand for Canadian resources will continue.
But the company is hedging its bets, dividing a potential $500-million total expansion into three phases.
"We believe that over the course of time, our program could be as much as $500 million and we've chosen to do it in three blocks," chief operating officer Fred Green told The Canadian Press.
"What that does is allow us to put sufficient capacity in for the foreseeable future without getting stuck with a half-billion-dollar investment in the ground and then seeing the market tank."
Canada's second-biggest freight carrier said the Phase 1 expansion, to be completed this fall, will increase the Calgary-based railway's capacity in Western Canada by 12 per cent, or more than 400 freight cars a day.
Emerson, B.C.'s senior federal cabinet minister, suggested the congestion is actually a good thing - for now - and predicted the private and public sectors will conquer the problem together.
"Today's bottleneck is tomorrow's surplus," said Emerson. "I think you're going to see significant investment to de-bottleneck the whole corridor through Vancouver. While there's always irritants in the short run, I think (problems) will be worked out quite effectively."
Peter Marshall, CN Rail's senior vice-president for Western Canada, praised the province's integrated approach to reducing congestion and increasing container traffic to Asia.
"Whoever gets there first is going to be in better position, and (being first) is just absolutely critical," Marshall told reporters after the forum, which was staged by the Vancouver Board of Trade.
CN has been criticized for not shipping goods out of Vancouver fast enough. At one point in January, TSI Terminal Systems Inc. (TSI), the largest container terminal operator at the port, limited berthing at Vancouver's Deltaport terminal until the congestion was reduced.
If done correctly, Marshall told the forum, B.C.'s forthcoming trade explosion will mark a milestone in Canada's trade history.
Under its Gateway program, the province wants to increase container traffic at the Port of Vancouver, which includes downtown docks on Burrard Inlet and the Deltaport site in the suburb of Tsawassen next to the ferry terminal.
"At the end of the day, it's about moving shipments to and from the West Coast," Marshall said. "It obviously needs an integrated strategy, because the opportunity is not going to last forever. Other groups, such as the folks in the Pacific Northwest (Seattle and Portland) have big traffic opportunities in the flow."
The province is also aiming to market B.C. as one big port rather than several small ports.
"We've got to get the message out as a Pacific port rather than individual ports," said Andrew Wilkinson, B.C.'s deputy minister of small business and economic development.
He said B.C. is aiming to be the leading gateway to the Asia-Pacific region and the most competitive port on the West Coast - but it will never be the biggest.
"It sounds simple when you say it, but it actually is an enormous amount of container traffic," added provincial Transportation Minister Kevin Falcon in an interview.
Falcon said the province has tried to bring together 60 disparate stakeholder groups to plot out a vision that has clearly definable goals.
He views the twinning of the Port Mann bridge as critical to alleviating port congestion. That plan has sparked heavy criticism from environmental groups and municipal politicians, who contend that the bridge and related Highway 1 expansion will increase automobile traffic and pollution.
"When people think about that (Port Mann) issue, they're generally just thinking about commuters," said Falcon. "We're thinking about trade. That is the most important corridor for goods movement in the Lower Mainland."
Meanwhile, business leaders and provincial and federal politicians are banking that Prince Rupert's new container terminal will also increase the flow.
"Eventually, it's going to help us because the Port of Prince Rupert will grow," said Vancouver port boss Houston, a former Port of Prince Rupert harbourmaster. "It will make B.C. a far more attractive gateway to Asia-Pacific."
Under the terms of the $90-million private-public partnership, the province, Ottawa and CN Rail (subject to board approval) have each agreed to invest $30 million to build the terminal at Prince Rupert, which is Canada's closest port to Asia.
CN's Marshall said the company will invest an additional $125 million over the next two years in new locomotives, rail- cars, rail sidings and tunnel upgrades between Prince Rupert and Edmonton. The province boosted its initial investment in Prince Rupert to $30 million from $17.2 million, while CN has doubled its original $15 million outlay.
The rest of the total $170 million will come in the form of $60 million from New Jersey-based Maher Terminals Inc., which will be the port operator, and another $20 million raised by the Prince Rupert Port Authority.
Don Krusel, president and CEO of the Prince Rupert Port Authority, said federal Industry Minister Emerson and Premier Gordon Campbell, who jointly announced the project, have put their money where their mouths are - and invested in vital infrastructure in the province. Rupert can now shed its long-standing label of the "port of the future" and become the "port of the present," Krusel told the forum.
- with files from The Canadian Press
(Monte Stewart can be reached at monte@businessedge.ca)
