Canola and other commodities are expected to drive most of Vancouver's port traffic this year as Asia increases its demand for alternative and conventional fuels.
Vancouver Port Authority (VPA) officials and industry insiders predict a trend of increasing commodity shipments will continue after total trade through area docks grew 3.7 per cent in 2006 - spurred by a 48.2-per-cent rise in canola exports. The rise in canola exports is attributed to strong harvests and high global oilseed demand for producing biofuels.
VPA statistics show canola shipments jumped to 4.3 million metric tonnes in 2006 from 2.9 million a year earlier, while total shipments rose to 79.3 million metric tonnes from 76.5 million.
By comparison, wheat shipments, which experienced the second-largest increase, climbed by a more modest 14.4 per cent to 5.6 million metric tonnes last year from 4.9 million in 2005.
"We're going to have a pretty solid year this year," says Tony Nardi, vice-president of marketing for Vancouver-based Neptune Bulk Terminals Ltd., which handles canola, potash, coal and fertilizer.
Neptune expects canola shipments to drop slightly from 130,000 tonnes last year.
"(Producers) are using canola in biodiesel and that's been driven primarily by the European demand for bio-diesel," says Nardi. "We had a pretty good year last year. This year, it's hard to say how that market's going to go. It could easily change during the year. Really, that market is quite dependent on other factors, such as the price of fossil fuel and all that type of thing."
Nardi expects canola shipments to increase once demand heats up for the grain - for use both as food and an energy source - in North America.
"(Canola) producers in Canada and the United States will tend to favour their domestic markets for transportation considerations," says Nardi. "If you're crushing the oil in Canada in the Prairies, you're typically going to deliver to the closest (market) source and the closest consumers would be in the Canadian domestic market and the U.S. domestic market - for both food and biodiesel.
"Certainly, there's a lot of talk about converting from straight fossil fuel to a combination of a sustainable-fuel base or an agri-fuel base. We'll see how that goes, but that would probably (boost) our opportunities to handle (canola) oil offshore."
Neptune anticipates that its potash shipments will return to the near-record volume of six million tonnes, sustained in both 2005 and 2004. Last year, the company's potash shipments dipped slightly to 4.7 million tonnes.
Neptune's coal shipments are expected to total around five million tonnes, compared to 4.7 million tonnes in 2006, when shipments fell slightly because of slightly lower demand from China, Brazil and other countries.
Neptune's fertilizer shipments are expected to stay relatively flat, dipping to 150,000 tonnes this year from 160,000 tonnes. Nardi says Canada has many opportunities to serve China - but there's still room, literally, for improvement on the Vancouver docks.
"Canada was pretty well positioned to get into areas we've traditionally been strong at, in terms of the export of grain and the export of fertilizer and coal," says Nardi.
"That's going to continue. It's a question of us taking advantage of the opportunities that are presented.
"The facilities right now, we certainly aren't at our capacity, and there certainly is capacity available (elsewhere at the port.) It's a question of making sure that all the parts of the supply chain are aligned. If you have port capacity, you have to make sure that the rail side is able to meet that capacity or optimize that as much as the vessel side."
Conventional petroleum products are also expected to drive much of Vancouver's activity this year.
However, the real impact of conventional fuels will not be felt until 2010-2015, when many new Alberta oilsands projects come onstream.
Last year, Vancouver's petroleum shipments rose 9.9 per cent. Petrochemical exports to China, the port's largest trading partner, soared 61 per cent and will likely increase again this year.
That demand will continue early this year as Asian countries manufacture more coolants and solvents, largely for the oil and gas industry, along with polyester resins, films and fibres.
"I think the commodity shippers are very optimistic, and there's a good reason for that," says Ruth Sol, president of the Vancouver-based Western Transportation Advisory Council (WESTAC). "The demand for many of the commodity products is very high."
Vancouver's total crude petroleum shipments recovered from a 13-per-cent decline in the first quarter and are now back on target - after shipments to the U.S. skyrocketed 142 per cent in November. Near-record oil and gas prices and, as a result, continued strong demand from American refineries, are keeping petroleum inventories high.
Breakbulk iron, steel and alloy shipments are also moving upward as major construction projects in B.C. and Alberta create higher demand for steel imports. But overall, breakbulk traffic fell 6.5 per cent to 3.2 million metric tonnes last year from 3.9 million in 2005.
Breakbulk refers to steel, lumber and other products that are baled, bundled or wrapped and cannot fit in containers or the hulls of ships.
"Breakbulk has been declining as more and more products are put into containers,"says Sol.
Asian demand for forest products is also expected to remain high over the balance of this year. In 2006, forest-product shipments to China climbed 25 per cent to 2.2 million tonnes, while Vancouver's forest-product exports to Korea went up nine per cent and wood shipments to Japan grew three per cent.
The lumber-export increases come as unions claim hikes in B.C. raw-log exports have led to mill closures.
Lumber shipments to countries other than Japan grew 25 per cent last year.
However, breakbulk woodpulp exports declined by an unspecified amount in 2006. Port authority officials attribute the dropoff to excess global supply and strong international competition, which have reduced domestic pulp production.
Meanwhile, Vancouver's container traffic is expected to increase again this year. Most of the traffic will be incoming, rather than outgoing, as Canada looks to acquire more manufactured goods from overseas markets.
"Basically, on the import side, we're seeing the China dragon continue to grow," says Doug Stewart, president and CEO of Transpacific Container Terminal Ltd., better known as TCT, which handles mostly inbound containers. "We're probably going to see high-single, low-double digit increases in import container activity."
In 2006, the Port of Vancouver's container shipments increased 24.9 per cent to 2.2 million twenty-foot-equivalent units from 1.8 million TEUs a year earlier.
Inbound container shipments ballooned 30.7 per cent to 1.1 million TEUs from 857,225 million TEUs in 2005, while outbound traffic went up 14 per cent to 762,388 TEUs from 668,665.
"If you're looking for how big (import container traffic) is going to grow, the constraint is going to be rail before it's going to be anything else," says Stewart. "For the (Asia-Pacific) Gateway to be successful, the rail is an extremely important part ... If the rails are fluid, the ports will be fluid."
When asked to assess the VPA's performance when it comes to improving traffic flow, WESTAC's Sol says the VPA "doesn't really do that."
Sol, whose diverse 34-year-old group includes port authorities, terminal operators, carriers, shippers, labour unions, governments and TransLink, says it's up to the port's users to determine how smoothly goods flow. The VPA's role is to provide leadership, ensure the right policies are in place and work with the community, she adds.
But, she contends, the VPA can do a better job of communicating the port's value to local citizens.
"It's difficult for people to realize how important ... the ships you see in the harbour are," says Sol.
Meanwhile, port authority officials and travel company operators are hoping cruise-ship traffic rebounds this year from a 7.9-per-cent decline in 2006, when the number of paying passengers fell to 837,823 from 910,172.
Unforeseen cancelled sailings are being blamed for the decrease, but local port authority officials contend Vancouver holds "cruise homeport market leadership" over nearest rival Seattle.
But Cruise British Columbia, an association comprised of port authorities and tourism groups, is predicting Vancouver's paid-passenger traffic will again rise above one million paying passengers per year between now and 2010.
(Monte Stewart can be reached at monte@businessedge.ca)
