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CHAPTER 10 - CONCLUSIONS AND OPTIONS
This section summarizes our conclusions with regard to assisting exporters, improving transportation service, stimulating innovation, and strengthening public support. We describe the container terminal competitiveness initiatives currently being considered and therefore indicative of the future.
10.1 - Assisting containerized exporters
Our conclusion is that existing marine terminals are managed primarily in favor of importers and containerized exports are a secondary consideration. Manufacturers and shipping companies from China are winning larger shares of world markets, creating an inequitable balance of container trade. There is an opportunity to balance container trade with investments such as the Fairview Terminal in Prince Rupert that benefit Canadian exporters of specialty wood products from British Columbia and polyethylene, sulfur, malt, barley, beans, lentils, and peas from Alberta and Saskatchewan.
Our finding is that terminal-related tariffs make up about 30 percent of export shipping prices, compared with only 10 percent of import shipping prices. Ocean rates from the US and Canada to Asia are fairly comparable but there are extra costs in Canada for transferring forest and agricultural products from rail cars arriving in Vancouver into containers and then trucking the containers to the shipping terminal. To meet the challenge of US competition the following options are being advocated by Canadian exporters:
Options:
- Government support for source loading of exports
Under the Asia-Pacific Gateway Corridor Initiative, several major investments were announced in 2007 to contribute to Canada’s competitiveness by upgrading local infrastructure close to production centres.1,2
- A second container terminal at Prince Rupert (Exhibit 36)
This terminal would add 1.5 million TEUs per year capacity at a cost of $650 million by 2010.3 To maximize competition, the expansion may introduce a new shipping company competitor within the Port.
Exhibit 36 - Fairview Terminal Expansion Prince Rupert 20104
10.2 - Improving terminal service in Vancouver
Canadian container terminal service for trucks is less accessible and slower than many US terminals. Container terminals in Canada, like pipelines, toll highways, and transit systems, are essential services with little competition. In Vancouver two companies control the three terminals and the rail service is set by company allocations. Unlike the multiple terminals competing in each port in the US, in Canada and Mexico customers have little choice.
Options
- Higher day-time tariffs to reduce congestion
The California terminals have implemented a pricing system that makes their terminals more accessible and provides faster service. Higher fees during the day to shift truck traffic to the afternoon. Stakeholders suggest making reservations freely available would spur export growth and reduce import bottlenecks.
- Performance standards
Some terminal users propose performance standards be incorporated in Canadian transportation practices, which would enhance container terminal competition in Canada. Some of the changes listed in Exhibit 37 are successful in the US.
Exhibit 37 - Possible Performance Standard Legislation 20075
Issue: Service standards
Name of Act: Marine Act
Possible Performance Standards:
- Reports of exports per terminal
- Terminal access for exports
- Truck access & turn time reporting
- Service during breaks
- Posting of Terminal Tariffs
Issue: Rail standards
Name of Act: Transportation Act
Possible Performance Standards:
- Rail access for small exporters
- Rail car density & weight standard
- Demurrage credits for delays
Issue: Security
Name of Act: Marine Transport Security
Possible Performance Standards:
- Mandatory radio tags & tracking
Issue: Terminal Tariffs
Name of Act: Shipping Act
Possible Performance Standards:
- Full financial disclosure
- Update property assessments
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10.3 - Stimulating container trade research and innovation
Los Angeles, Long Beach, other US terminals and Centerm in Canada are using advanced information technologies to improve container availability with real time information about their locations. There is a rapid trend towards the use of electronic commerce tools by the international shipping lines. Transport Canada funds research to apply technologies in areas such as international marketing and education, reducing overall shipping costs between Canada and China, and stimulating transportation investment partnerships.
Options
- Container tracking
Global positioning systems are increasingly used on all trucks and containers to help speed truck service at marine terminals and make container use more secure and efficient.
- Electronic commerce tools
The expanded use of electronic commerce tools by Canadian exporters particularly forest product companies, value-added wood products, and specialty crop producers is being encouraged to help them take advantage of international shipping line and marine terminal technology.
- Crop transportation market research
Transport Canada funds research in transportation and further data gathering and field trips to existing crop loading sites may be useful to accurately describe containerized export marketing and compile shipping price breakdowns. Information about agricultural crop customers, their needs, and their transportation systems would also be useful.
- Crop transportation research
Researchers at the University of Saskatchewan have long advocated open access to existing rail tracks throughout Saskatchewan by independent operators. Increased containerization of crops reduces hopper car use and instead requires truck transport to expanded intermodal yards at Saskatoon and Regina. Research exploring these seemingly contradictory options may be useful.
10.4 - Private sector initiatives in Vancouver
Changes are underway near Vanterm that will benefit container transport and possibly open parts of the waterfront to the public. Similar developments in Oakland, Long Beach and Los Angeles were popular with the public.
Options
- Improvements to CP tracks
The 7-ha Alliance Terminal shown in Exhibit 38 is being renovated to load containers with crops. It has eight railway sidings that could be expanded possibly reducing the need for tracks in the downtown core.
- Public access
The privately owned Rogers Sugar property immediately west of the Alliance terminal may switch from bulk to containerized raw sugar. This change would allow a small portion of the Rogers’ waterfront to be opened to the public.
Exhibit 38 - Alliance Terminal Expansion 20086
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10.5 - Expansion in Delta
Our conclusion is that shipping companies in the US have a competitive advantage by attracting traffic through their own terminals. None of the six large shipping groups operating terminals in the US have their own terminal in Vancouver, although they have terminals in each of the US market areas.
Options
- The Port of Vancouver has proposed a new terminal to expand capacity by 1.9 million TEUs per year with three berths, 10 cranes, additional rail sidings, wider causeway, and 80 ha of infill land at a cost of $900 million.7 The Port has selected APM Terminals, a Maersk Shipping subsidiary, as a potential partner in planning, environmental approval, financing, construction and operation.8
Exhibit 39 - Roberts Bank Terminal 29
1 Transport Canada, Ottawa, News Release, May 24, 2007.
2 Transport Canada, Ottawa, News Release December 7, 2007.
3 D’Arcy Jenish, Business Edge, November 30, 2007.
5 Source: Compiled by Hanam based on California practices and regulations.
7 Port of Vancouver, Container Expansion Project, Brochure, May 2003. http://www.eao.bc.ca/
8 Port of Vancouver, July 2007. http://www.portvancouver.com/the_port/terminal2.html
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