The Canadian government has announced funding of $150 million for the Port of Montreal’s massive Contrecoeur terminal project whose cost has reportedly ballooned from C$950 million to over C$1.4 billion.
However, Canada’s second largest port simultaneously indicated that it will be completed under a new delivery model after the procurement process has been cancelled with three shortlisted bidding groups. The process had included the total package of terminal construction work and its operation 40 miles east of Montreal on the St. Lawrence River.
The federal contribution adds to the C$300 million already pledged by the Canada Infrastructure Bank and C$130 million from the Quebec government.
Under what has been described as a hybrid approach, the Montreal Port Authority (MPA) will now act as prime contractor for all dock construction and dredging work. Search is to begin in 2024 for a new operator who will be responsible for land site works – notably the container yard, rail connection, buildings, and other assets.
“Discussions with the bidders did not lead to a result deemed satisfactory by the MPA after factoring in market trends, including interest rates and inflation, between the time the Request for Qualifications began in 2021 to today,” the Montreal Port Authority stated Tuesday.
The original target was for the winning bidder to be unveiled in the third quarter of this year. The initial completion date of late 2026 for a terminal with capacity of 1.15 million TEUs to go on stream is expected to be adjusted to possibly beyond 2027 sometime next year when more details emerge on an eventual operator. The new terminal would boost Montreal’s capacity by 55% to serve main markets in Quebec, Ontario, and the US Midwest.
Whittling Down the Bids
The three qualifying bid respondents for the Contrecoeur project unveiled in May 2022 were Axium Infrastructure Canada and Pomerleau Capital, Terminal Investment Limited owned by the Aponte family, and Ports America Holdings. Industry sources suggest that the latter two operators became increasingly reluctant to assume the overall risk in the current market conditions.
Whether Axium Infrastructure Canada, an independent portfolio management enterprise dedicated to generating long-term investment returns from core infrastructure assets, could be involved in the future remains to be seen. It has more than C$1.2 billion in assets under management, including Montreal Gateway Terminals, biggest container operator at the Port of Montreal acquired in 2015 from Morgan Stanley Infrastructure Partners. Pomerleau Capital, subsidiary of a leading Canadian construction firm, invests, develops, and manages infrastructure assets in Canada and the United States.
Cargo-wise, the Port of Montreal held its own in 2022 with a 5.4% increase in total cargo to 34 million tons and a slight drop of container throughput at 1.7 million TEUs. But amidst present weak global economic trends, container traffic in 2023 is down in the double-digits.
At the announcement ceremony in Montreal, Pablo Rodriguez, Minister of Transport declared: “By supporting the Port in its expansion project in Contrecœur, we continue our efforts to strengthen Canada's supply chain. This is important so that we never again have to go through product shortages like we experienced during the pandemic, or the significant price increases that came along with them."
"This financial backing from the federal government sends a strong message about our large Contrecœur expansion project and the future of the logistics ecosystem in the St. Lawrence corridor,” commented Geneviève Deschamps, Interim President and Chief Executive Officer of the MPA. “It lets us embark on the next steps with confidence, so that we can continue to play our vital role as a sustainable economic driver at the heart of the Quebec and Canadian economies.”
