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CHAPTER 5 - SURFACE TRANSPORTATION
In this section we describe the rail and trucking aspects of container terminal competitiveness. Overall container shipping competitiveness depends as much on rail capacity and reliability and trucking delivery service than it does on ocean shipping and the marine terminals. We provide maps of the competing railway systems and the truck routes in Vancouver. We also review the trucking labour issues that continue to be important for all the Pacific Coast container ports.
5.1 - Rail capacity and reliability
The rail routes from the Pacific coast ports and market shares of the five railroads are shown in Exhibit 18. The widths of the rail lines shown on the map are proportional to the number of trains, rail cars and containers moved along each route. The main distribution centres in Canada are near Toronto. CP has the shortest rail corridor to Toronto and, based on the number of trains leaving the terminals, has about 70 percent of the container business. CP hauls 12 intermodal trains per day from Vanterm, Centerm and Deltaport and CN has four intermodal trains per day from Deltaport. CN uses the longest trains and has the longest most northerly route.
The main distribution centres in the US are in Chicago for the US. CP and CN both have tracks to Chicago but CP’s route is shorter. CN’s network extends from Chicago to Memphis and New Orleans. However, only 5 percent of the containers arriving in Vancouver are destined for the US. Container shipments through Canada to the US may increase if the Fairview Terminal in Prince Rupert is successful in attracting US customers. Of the 1,100 TEUs unloaded from the first Cosco ship, two thirds of the containers were loaded directly onto a CN unit train destined for Chicago.1
BNSF and Union Pacific Rail both serve Seattle, Tacoma, Oakland, Los Angeles and Long Beach. BNSF has several routes across the northern and central US. In Los Angeles and Long Beach BNSF has 65 percent of the container business directly from the dock and UP Rail 35 percent. However, UP moves more of its containers by truck to nearby intermodal yards. Including on-dock and off-dock rail volumes, BNSF has 60 percent of the rail business.2 Union Pacific has the shortest route from Oakland to Chicago and has a larger market share across the southern US. Kansas City Rail connects Manzanillo and Lazaro Cardenas with Mexico City and other parts of Mexico but does not have much cross border business. Long Beach, Tacoma, and Deltaport all have locally owned short line railways.
Exhibit 18 - Rail Routes and Container Market Shares in 20073
About 90 percent of CP’s cars are designed to carry 53-ft. long domestic containers while only 10 percent have 40-ft. container wells to exactly fit the international standard length container. Almost half of CN’s cars are designed for 40-ft. containers. The new CN cars serving Prince Rupert are similar to the typical BNSF cars and come in units of five that carry a total of ten 40-ft. long containers double stacked.4 About 45 percent of BNSF container cars are made for 40-ft. long containers and this proportion is increasing. In the US, some of these cars are labeled “econostack” because they carry a larger load per metre of train length. Only one heavily loaded 20-ft. container can be loaded in an older rail car, while two may be loaded in the newer cars. About 40 percent of CN cars can carry 73 tonnes but 60 percent can carry only 50 tonne loads and are limited in their ability to handle 20-ft. export containers.
The train load capacities and densities are compared in Exhibit 19. The 40-ft. cars being used for Prince Rupert increase a typical freight train’s capacity by one third. In Canada only 40-ft. containers were observed in use at the marine terminals. In LA/LB some terminals use 10 to 20 percent 45-ft. containers. In October 2007, APL began using stronger 53-ft. containers on its Asia to Los Angeles route and this could be the start of a new trend to reduce transloading and increase train density. BNSF representatives expect that the use of 53-ft. containers to increase, thus eliminating some transloading operations near the ports and increasing specialized container packing services in China.
Exhibit 19 - Train Capacity and Density Comparison in 20075
Low Density – 40-ft. container on 53-ft. domestic rail car
High density – 40-ft. containers on 40-ft. rail cars
| Rail Line | CP | CN | BNSF | UP |
|---|---|---|---|---|
| Container Cars6 | 9,200 | 6,900 | 16,000 | 14,000 |
| Train length metres | 2,100 | 3,650 | 2,440 | 2,130 |
| Trains per day | 12 | 2 | 100 | 75 |
| Train capacity - FEU/train | 250 | 340 | 240 | 260 |
| Train density - FEU/metre | 0.12 | 0.093 | 0.10 | 0.12 |
Rail reliability can be measured by polls, arrival, departure, and transit time. Canadian railway reliability is adversely affected by more weather-related disruptions than the US railroads. About 17 percent of CP and CN capacity was lost in the first quarter of 2007 due to mud slides, low temperatures, an ice storm, avalanches, and track washouts, whereas BNSF’s main route had no such disruptions.7 Export customers complain about mismatched grain, delays, storage costs, congestion, and vessel demurrage. Railways offer an incentive of $7/t to load 100-car units putting smaller grain companies at a disadvantage.8
CP has transport agreements with Canadian Tire, Consolidated Fastfrate,9 Hudson’s Bay Company, Sears and Daimler and distribution warehouses adjacent to many of its 23 container terminals across Canada. CP’s Coquitlam terminal stores about 1,000 domestic containers 80 percent owned by Canadian Tire. CP provides stores of major retailer chains tracking information for inbound goods via shared software to reduce investment in inventory.10
Container trains operate on a schedule seven days per week at an average speed of 41 km/h for CP, 42 km/h for UP, 48 km/h for CN11 and 54 km/h for BNSF.12 The railcars stay together when containers are loaded and removed. The trend is away from switching cars and delivering by rail car to final delivery by truck. Destination trains increase speed and reliability by eliminating switching and other stops. In Canada, the import container cycle time for a return trip between Shanghai and Toronto averages about 52 days with a best cycle time of 42 days.
The average loaded hopper car rail transit time for crops is 16 days with a standard deviation of eight days.13 This variability makes it difficult for crop exporters to synchronize their rail shipments with bookings on container ships and can cause financial penalties. The Canadian Government owns about 11,000 cars (and the proportion of government-owned cars is declining); Saskatchewan and Alberta own about 1,000 cars each; and the Canadian Wheat Board owns about 4,000 cars.14 The railways also provide about 8,000 of their own or leased cars. During peak periods 25,000 cars are used. About half are managed by CN and half by CP. About 70 percent of the hopper cars are booked in advance.
In 2006, US grain exports were about five times Canada’s. However, more than half of US grain exports travel by barge down the Mississippi River. US bulk crop exports from the Seattle and Tacoma are mainly corn. Louis Dreyfus exported 5.9 million tonnes of corn from its elevator in Seattle and Cargill exported the same amount from its elevator in Tacoma. Containerized crop exports from Seattle and Tacoma were almost equal to bulk exports. Conagra and Cenex Harvest operate elevators in Kalama and Vancouver, WA, for corn, wheat and soy beans. Wheat and barley is handled at several elevators in Portland, OR. Soy meal is exported from a terminal in Grays Harbour, WA.
In the US, use of containers to transport grain has grown from 1 percent of total exports in 2004 to 6 percent in 2007. US soybean and soy meal exports to Asia in containers have grown from almost zero to 83,000 TEUs in 2007.15 BNSF expects containerized crop exports through Seattle and Tacoma to double again in two years because of the trend towards identity preserved and organic crops. None of the BNSF crop containers are from Canada except during system breakdowns. Similarly, Australia container wheat exports grew to 35,000 TEUs in 2007.16 Further analysis is required to explain the seemingly lower rate of containerization of the various crops in Canada.
In conclusion, rail cars built to exactly fit 40-ft. international containers and capable of carrying a full 73 tonne load are replacing lighter duty domestic container cars. More high density trains were observed at the US terminals. Larger international containers, both 45-ft. and 53-ft. are being used at Los Angeles and Long Beach. Importers are more satisfied with the reliability of their rail service than exporters.
5.2 - Truck delivery service
The locations of the marine, import, export, and empty container terminals in Metro Vancouver are shown in Exhibit 20. The inland terminals are in five main industrial areas: Tilbury Island, South Richmond, Mitchell Island in North Richmond, Annacis Island, New Westminster, and near Fraser Port in Surrey. These five areas are convenient to all three terminals. The companies in Delta mainly use Deltaport and the ones on Mitchell Island in Richmond mainly use Vanterm. The exhibit shows the major trucking routes. The inland terminals are within 20 km of the marine terminals.
Trucking competitiveness can be measured by driver wage rates, truck operating costs, and cycle times. The trucker picks up the container at the terminal, takes it to the receiver such as an import distribution centre, waits for the container to be discharged, and then returns the empty container to the terminal. For export cargoes, the trucker takes an empty container from a terminal and usually returns it loaded to the same terminal.17
Due to space constraints, Vancouver terminals do not store as many containers as the Los Angeles and Long Beach yards. In Vancouver, the empties are stored in separate yards located mainly in Delta and Richmond. Off-dock storage of empty containers generates inefficient truck trips with no loads. When containers are stored on the dock drivers have more opportunities for loaded round trips.
Of about 125 trucking companies licensed to serve the Port of Vancouver, the 25 companies listed in Exhibit 21 were reported to be the main service providers, although the list is not comprehensive.18 Some of the largest stores such as The Bay and Canadian Tire have their own fleet of trucks. The largest trucking companies serve particular import distributors, exporters or export transload terminals as shown in the Exhibit. Several container trucking companies also operate their own warehouses and transload terminals.
Two large trucking companies owned by Maersk employ 1,500 drivers and have offices in Vancouver and throughout the US. Another large company, Bison, based in Winnipeg has 845 tractors and 1,260 employees. Many of the largest US trucking companies such as UPS subsidiary, Fritz Companies, Seattle, with 200 tractors, and Cal Cartage, Los Angles with 1,000 tractors, do not operate in Vancouver. However, some US trucking firms haul lumber from Washington State mills to terminals in Surrey.
Exhibit 20 - Container Truck Routes, Terminals and Volumes in Metro Vancouver, September 200719
| Import or export terminal | Trucker |
|---|---|
| Maersk | Pacific Rim Transport, Bridge terminal Transport |
| HBC Logistics | HBC Logistics, Richmond (212 tractors) |
| Canadian Tire | CDI (Consolidated Fastfrate) |
| Schenker Stinnes, Delta | Blue Moon, Canadian Freight, CN Rail |
| Lawrence, New West | McGill Carriers |
| Van Truck, Richmond | Vancouver Trucking |
| Squamish & Comox Freight | Squamish Freightways |
| Interstate, Delta | Bison Transport (845 tractors) |
| Lyndon, Delta | Lyndon Transport |
| AMJ Campbell | AMJ Campbell Van Lines |
| Bunzl, Delta | CP Intermodal |
| Can Alliance, Richmond | CN Intermodal |
| CHEP | CN Intermodal, Canadian Freight |
| McKenna Logistics, NW | CN Intermodal |
| Interline, Surrey | Interline Motor Freight |
| JR Hall | JR Hall |
| Teck Cominco | Westshore Transport |
| Canfor, P&H, Can Retail | American Cartage, Aheer, Forward |
| Shipping lines | Team Transport, Richmond (104 tractors) |
| Eurasia | KTL Transport |
| Global Agriculture, Surrey | TSB Holdings, Prudential, TMS Transport |
In 2005, Vancouver port operations were disrupted by a truckers’ dispute due to high fuel costs, low rates, terminal delays and the increase in unpaid trips. Since then, the Vancouver Port Authority gives licenses to haul containers only to companies with employee drivers. An agreement between trucking companies and the Canadian Autoworkers’ Union established driver rates at $120 per one way trip between the main transload and warehouses locations and Vanterm, Centerm and Deltaport.21 Half the drivers have joined the union. In August this year federal regulations came into effect to require independent container truck drivers who own their rigs to be paid rates at least as high as the union rates.22
Public interest groups at US Ports are pushing for Port Authorities to copy Canada and issue contracts only to trucking companies that agree to minimum wage, environmental and security standards.23 In mid 2006 there was a trucker’s strike in Los Angeles and Long Beach over wages that average only $12 per hour.24 The average annual income of these truckers is $29,000 but the drivers work an average of 50 hours per week to achieve this income.25 At the Port of Oakland about 100 small companies pay 2,500 truck drivers a median income, after truck expenses, of $25,000.26 In Seattle the average annual earnings for container truck drivers is $31,300. A quarter of the truck drivers earn less than $20,000. Two thirds of drivers do not have health insurance and 81 percent do not have retirement benefits. The majority of US container truck drivers are immigrants and many are undocumented. American-born drivers earn an average of $12,600 more than immigrant drivers.27
The licensing and unionization of truckers in Canada has increased income to almost double that in the US as shown in Exhibit 22. In Vancouver, gross revenues generated per driver (excluding owner operators) averaged $196,000 in 2006.28 Average working hours in Canada is about 40 hours per week, compared with 50 per week at LA and Long Beach. Railway workers’ average income of $70,800 per year is much greater than truck drivers’ average income. US longshore workers average $133,000 per year working 44 hours per week, compared with $123,000 per year working 38 hours per week in Canada.
| Carriers | People | Income $/y | Hours/week | Health Insurance % | Pension | |
|---|---|---|---|---|---|---|
| Oakland | 100 | 2,500 | 25,000 | 55 | 34 | |
| LA & L Beach | 1,000 | 8,000 | 29,000 | 50 | 23 | 13 |
| Seattle | 280 | 31,300 | 33 | 19 | ||
| Vancouver | 125 | 1,200 | 54,000 | 46 | 100 | |
| BNSF & UP | 2 | 2,900 | 72,000 | 38 | 100 | 100 |
| CP & CN Rail | 2 | 35,000 | 70,800 | 40 | 100 | 100 |
| Int’l Longshore Workers Union - Canada | 2,000 | 123,000 | 38 | 100 | 100 | |
| Int’l Longshore Workers Union - US30 | 9,500 | 133,000 | 44 | 100 | 100 |
In conclusion Vancouver’s new truck licensing system and move towards more unionized drivers has helped increase trucker income and prevent costly work stoppages like the one in 2005 that adversely impacted the Canadian economy. Public interest groups at US Pacific Coast ports are advocating some of the same changes that have been made in Vancouver.
1 D’Arcy Jenish, Business Edge, November 30, 2007.
2 Wilbur Smith Associates, Multi-County Goods Movement Action Plan, October 6, 2006. http://www.mta.net/images/Final TM3 100606.pdf
4 Wilbur Smith & Associates, Multi-County Goods Movement Action Plan, for LA County Metro Transportation Authority et al, October 6, 2006. http://www.mta.net/images/Final TM3 100606.pdf
5 Source: Compiled by Hanam Canada, Photos: Hanam Canada
6 National Retail Federation, Port Tracker, June 2007 p. 6. http://www.railroadpm.org/
7 Albert Nashman, CN Rail, Winning Back the Confidence, May 20, 2007. www.portvancouver.com/shipping_trade/docs/
8 Great Northern Grain Terminal News Release, March 8, 2007. http://www.garrybreitkreuz.com/articles/agarticle2007/225.htm
9 Paul Satwinder and Nova Woodbury, Opportunity Assessment for an Inland
Intermodal Container Facility in Kamloops, Thompson Rivers University, September 2006.
http://www.venturekamloops.com/SiteCM/U/D/3EA46D986297C5A3.pdf
10 Supply Chain Solutions, December 2005.
11 CN Rail, 2007 http://www.cn.ca/about/investors/pdf/perf_measures_en.xls
12 American Association of Railroads’ Performance Measures, 2007. http://www.railroadpm.org/
13 Quorum Corp., Edmonton, Container Measures Study for Transport Canada, June 2006. http://www.quorumcorp.net/
14 Farmer Rail Coalition, Regina, 2006. http://www.farmerrailcarcoalition.com/updates.htm#2006-05
15 International Trade Digest, October 2007 http://www.icfb.org/
16 Australian Government Wheat Export Authority, August 20, 2007 Changes in Export Wheat Marketing http://www.wea.gov.au/Publications/
18 http://www.pacificgatewayportal.com/tlsportal/
20 Source: Compiled by Hanam Canada
21 Pacific Gateway Portal, Vancouver. http://www.pacificgatewayportal.com/tlsportal/
22 Vancouver Sun, August 2, 2007.
23 Coalition for Clean & Safe Ports, Los Angeles. http://www.cleanandsafeports.org/
24 Chris Kutalik, Monthly Review Magazine, Los Angeles, June 2006. http://mrzine.monthlyreview.org/kutalik020606.html
25 CGR Management Consultants, Los Angeles, September 2007. http://www.portofla.org/Clean_Truck_Program_Full Report_Sept72007.pdf
26 By Joseph Plaster - San Francisco Bay Guardian, July 17, 2007. http://www.transportworkers.org/node/653/print
27 http://www.portjobs.org/ Seattle, 2006.
28 Transport Canada, Transportation in Canada 2006, Annual Report.
29 Source: Various sources referenced in report.
30 Pacific Maritime Association, Annual Report, 2006. http://www.pmanet.org/AnnualReport/2006
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