Amidst an uncertain global environment, Canadian ports on the East Coast are pursuing a capacity expansion strategy to increase business and to potentially offer alternatives, in some cases, to lingering congestion issues at US ports on the eastern seaboard as well as on the West Coast.
Ports relying most on general cargo, notably Montreal and Halifax, are enjoying favourable trends in container activity. On the other hand, the recent plunge in commodity prices and fears of a deeper slowdown in China, the world’s primary driver of commodity demand, have hammered such bulk ports as Quebec and Sept-Iles on the St. Lawrence River.
In related developments, federal support for several large port projects was announced in recent weeks by a Conservative government seeking a return to power in a national election being held on October 19.
Although the Canadian economy showed virtually no growth in the first half of this year, partly due to the domino effect of depressed oil prices, the outlook was improving as fall approached and exports were showing a marked rebound thanks to robust demand from the United States and thanks to a weak Canadian dollar (hovering around 76 US cents) spurring sales abroad.
Montreal has Wind in its Sails
Among the leading Canadian ports on the East Coast, Montreal clearly has the wind in its sails. Ranked the second largest Canadian port after Port Metro Vancouver, Montreal’s strong performance in 2014 has carried over into 2015. Moreover, major projects and developments are in progress at a strategic gateway that has no congestion issues and is preparing in a big way to capitalize on anticipated increased North Atlantic trade upon the ratification (hopefully by 2016) of the Canada-European Union free trade agreement.
In 2014, the Port of Montreal handled a record 30.4 million metric tons of cargo, an increase of 8% from the previous year. Container traffic was up 4.2% at 1.4 million TEUs.
Sylvie Vachon, president and CEO of the Montreal Port Authority (MPA) described these results as “very satisfying” within the context of a still fragile global economic climate.
As part of value-added services occurring at the port in 2014, one should note the inauguration of the CanEst Transit facility that cleans and containerizes agricultural products.
The harsh winter conditions had no significant impact on the cargo numbers in the early months of 2015. “All our markets are up,” indicated Tony Boemi, MPA vice-president of growth and development. The low Canadian dollar has notably boosted export shipments to Europe, the Mediterranean and Asia, he added. Meanwhile, in addition to deepening berths and improving truck traffic flow in and around the port, construction was launched earlier this summer to further boost container capacity in the Viau sector. Terminal operator Termont Montreal is investing C$42 million in the first phase and will invest an additional C$30 million in a second phase.
The Viau project will expand Montreal’s total container capacity to 2.1 million TEUs. The subsequent phase of container expansion will be on land the MPA owns at Contrecoeur, 25 miles east of Montreal, where preparatory work has begun for an eventual more than one million TEU facility when market demand arises.
Regarding the Viau expansion, Madeleine Paquin, chair of Termont Terminal and president and CEO of Logistec Corporation, commented: “The development of this new capacity is not only good for Termont, MSC and the Port, but also for Montreal, Quebec and Canada. With its intermodal networks, Montreal is a key facilitator for international trade.”
In another recent major development, Logistec completed the modernization of its Contrecoeur terminal with new equipment.
“Our investment of nearly C$12 million will allow us to move larger volumes and work with a more diversified cargo base in Contrecoeur,” stated Paquin. “In addition to the bulk cargo that the terminal is known for, we have enhanced our ability to handle breakbulk, project cargo and heavy lift.”
Located between Montreal and Québec City on the St. Lawrence River, the Port of Trois-Rivières also has the wind in its sails, with new expansion plans well advanced on the heels of a record cargo performance in 2014. A Transport Canada fund is contributing nearly one third of the cost of building C$50 million multi-purpose terminal aimed at increasing port throughput – mainly liquid and solid bulk - from 4 million tons to 7 million tons.
At the Port of Québec, while the cruise business remains strong as the historic port-city builds on its growth as a primary destination, tough times continue to hit the dry bulk business, as already mentioned.The port handled a total of 24 million tons in 2014 following 27 million tons in 2013 and 32.5 million tons in 2012. The trendline in 2015 points to a further drop of several million more tons.
However, in July, the federal government announced infrastructure “funding consideration” of up to C$60 million for constructing a multi-purpose terminal as part of an overall five-year project whose total cost will exceed half a billion dollars. Some significant regulatory issues need to be addressed before it’s all systems go, and it remains to be seen whether the private sector will agree to make investments representing half the cost. Depressed commodity prices have also taken their toll on activity at the Port of Sept-Iles on the North Shore of the St. Lawrence River which, in addition, has been affected by the shut down or scaling down of certain iron ore mining projects in the Labrador Trough. Sept-Iles handled 23.8 million tons in 2014 compared with 27.7 million tons in 2013. And in the first quarter of this year, cumulative volume was down from a year-earlier.
Still a vital asset for the port’s long-term future will be the C$220 million multi-user dock nearing completion. Now expected to be formally launched this fall, it is designed to accommodate Chinamax bulk carriers for transporting iron ore to Asian and other world markets – not the greatest prospect at present, at least in the short term.
Bigger Ships Calling Halifax
At the Port of Halifax, a current major focus is to develop a stronger distribution network, says George Malec, vice-president of business development and operations. “This is supported by over $100 million in infrastructure investment since 2011 that is being used to develop trade. We see opportunities on the horizon with CETA (Canada-European Union free trade agreement) and the overall move to larger vessels.”
While container traffic dropped by about 10% last year to 400,000 TEUs, the completed deepening of the berths to 55 ft. at the two container terminals means the port can handle the largest container ships calling on the East Coast.
Indeed, the future of the deepwater Nova Scotia port brightened considerably when an era of bigger post-Panamax containerships was launched in early August through the arrival of the 8750-TEU Budapest Express and of the CMA CGM Vivaldi. France’s CMA CGM already had ships calling at Halterm Container Terminal in Halifax, but has added Halifax to its Columbus Loop service – thereby offering the first direct import/export service between Canada, South China and Malaysia. Halterm CEO Ashley Dinning underlines the facility’s key role as a gateway to and from Canadian and US Midwest markets.
The Budapest Express is part of the Asia Suez Express (AZX) service of the G6 Alliance linking Asia to the East Coast of North America.
“The arrival of larger vessels to the Port of Halifax is a positive development,” Karen Oldfield, president and CEO of the Halifax Port Authority, told AJOT. “This is good news for terminal operators, logistics providers, port users and for the larger community due to the increased potential for economic growth.”
Since 2004, the Port of Halifax has invested over C$250 million in infrastructure, including the deepening to 55 feet the capacity of the two container terminals and the addition of several post-Panamax cranes.
“The investment has been made, the infrastructure is in place, and as a result the Port of Halifax is able to triple existing capacity and take advantage of the overall shift toward larger vessels which is now underway,” Oldfield said.
Saint John Eyes Bigger Box Role
For its part, the Bay of Fundy Port of Saint John in New Brunswick which handled 23.9 million tons of chiefly bulk cargo in 2014, this summer received news of federal government funding support of C$68 million for a C$205 million project modernizing the Rodney and Navy Island terminals to accommodate larger container vessels and increase handling capacity.
“Our container traffic has almost doubled since 2012,” says Jim Quinn, president and CEO of Port Saint John. “To continue competing and growing on the world stage a terminal upgrade is required to accommodate larger vessels and to have the handling capability required to service modern fleets.”
In recent years, the port’s mainly north-south container orientation with Latin America, through notably Tropical Shipping, has broadened to wider global markets thanks to the arrival of Mediterranean Shipping Company (MSC). Several decades ago, Saint John’s container business was hit hard by the departure of various Far East carriers. Last year marked the first full year of MSC calling Saint John, and the carrier increased its presence last spring with additional vessels calling at Rodney Container Terminal.
“We have doubled our container traffic, going from an average of 45,000 TEU’s in the past decade to almost 90,000 TEU’s in 2014, with projections to be over 100,000 TEU’s in 2015,” affirmed Quinn. “We also know that US ports are becoming more and more congested.”