Canadian East Coast ports fighting downturn

By: | at 07:00 PM | Channel(s): Ports & Terminals  

By Leo Ryan, AJOTThe global recession has naturally had a negative impact on overall cargo and shipping activity in eastern Canada, including the St. Lawrence River, Great Lakes, and Atlantic Coast regions. But quite optimistic forecasts for the Canadian economy point to a turnaround in 2010 that should benefit the maritime industry. There are also some bright spots in the current environment, including the expanding emphasis on project cargo.
Following an estimated drop in Canadian GDP of 2.4% in 2009, the Bank of Canada expects a recovery to gain traction and spark growth of three percent next year and 3.3% in 2011.
As far as eastern Canada is concerned, much hinges on economic trends in the United States and Europe, where France and Germany appear to be leading the upward momentum and business confidence in the United Kingdom (Canada’s biggest European trading partner) recently improved to its highest level in 18 months. However, a virtual collapse of steel imports has thrown a dark cloud on the short and medium-term outlook for Great Lakes shipping and ports.
According to the Bank of Canada, 2010 should show solid growth in consumer spending and housing investment in a country that has earned praise for a well-functioning financial system. “Business investment should recover in early 2010 following five quarters of contraction.”
The Canadian central bank considers that an improvement in economic activity and higher commodity prices will boost business spending.
“In these economic times, east coast Canadian ports are generally well positioned for the future even if they have witnessed a downturn in their volumes,” said Gary LeRoux, executive director of the Association of Canadian Port Authorities.
“While most have been caught in the downturn, you have to put this in the perspective of several previous years of record growth,” he said, adding: “All the ports have been well managed collectively over the past 10 years since the creation of Canada Port Authorities (CPAs) under the Canada Marine Act. The 17 CPAs have grown their business by 38%, representing C$152 billion annually. So the ports continue to be strong engines of economic growth. The challenge remains to ensure that infrastructure will be adequate to meet future demand.”
PORT OF MONTREAL PLAYS KEY TRADE ROLE
In this regard, despite a decline in traffic, the Port of Montreal remains on course to triple its container-handling capacity at a cost of C$2.5 billion, although there could be a moderate delay beyond the original target of 2020.
Earlier this year, chairman Michel Lessard stated that “the port is now set to meet every possible scenario” after the Montreal Port Authority (MPA) board reviewed present circumstances.
Last year, Montreal reported the highest growth of any container port on the East Coast of North America, with its box cargo climbing by 7.2% to 1.5 million TEUs.
In the first six months of this year, however, Montreal fell closely in line with other ports by recording a 14.6% decrease from the first half of 2008, with throughput of 619,721 TEUs. An exception was container traffic with the Mediterranean that rose by over 22%. Total traffic dropped by 15.4% to 10.9 million metric tons.
Sylvie Vachon, president and CEO, attributed the downturns in container and dry bulk to the recession-induced difficulties in the manufacturing sectors of Ontario and the US Midwest – key markets for the Port of Montreal.
“Like the whole port, we have experienced a drop in volume of about 23%,” Kevin Doherty, chief executive of Montreal Gateway Terminals Partnership, told AJOT. “But since the decline began in November of last year, it may have bottomed out as of this past June.”
In an interview, Doherty indicated that a decrease in Atlantic container business with Europe has been offset to a certain degree by maritime trade with Latin America and Asia.
He reported that the existing ships in the rationalized St. Lawrence Coordinated Service fleet of OOCL, Hapag-Lloyd and MSC “

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American Journal of Transportation