Regional Report: British Columbia


BC Ferries is upgrading its two Spirit class vessels and converting them to dual fuel. Photo courtesy of BC Ferries.

Overall economic growth looks positive for the BC marine industry, as various infrastructure projects take shape, particularly port expansions that are necessary to meet changing trade patterns and accommodate larger ships. However, while some marine businesses and trades may see the trickle-down effect of new business coming as a result of some of these projects, the smaller marine yards still have to fight for their piece of the financial pie.

Shaun Stevenson, VP, Trade Development and Public Affairs for the Port of Prince Rupert, reports, "We're seeing strong and weak points in our overall lines of business at the port. We've obviously got some decline happening in coal, as we've seen a slowdown in demand for metallurgical coal in Asia for steel making. Those volumes were down in 2015, but other lines of business such as our container business and grain continue to be very strong."

The Port has experienced an uptick of 26 percent in container business on its year-to-date report through May 2016. "This year, we're continuing very strong. Our overall volumes are down just modestly at five percent, but if you look at our loaded containers, we're actually up two percent," adds Stevenson.

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Meantime, the Port is in the midst of an expansion of the Fairview Container Terminal through its operator, DP World. The upgrade is expected to be complete, with operations set to begin during the third quarter of 2017. The expansion will increase terminal capacity by 40 percent, up to about 1.4 million TEUs, which is good news since new alliances between Maersk and MSC and Evergreen and CMA have already started bringing increased activity to the Port. "This also gives us a second berth, which is being designed to accommodate 18,000-TEU ships," says Stevenson. "With this expansion, we foresee there could be up to 200 additional longshore jobs as we grow into that capacity."

Last May, the Port announced the completion of the Port of Prince Rupert's $90-million Road, Rail & Utility Corridor (RRUC), unlocking new terminal developments and market access for Canadian exporters. The Government of Canada and the Government of British Columbia each contributed $15 million, CN provided $30 million, Canpotex provided $15 million, and the Port of Prince Rupert provided the remaining amount.

The project included the construction of five parallel rail tracks, a two-lane roadway, and a port-owned power distribution system along an eight-kilometer corridor. This shared-use infrastructure defines a long-term port development plan for Canadian export terminals that will provide the capacity to ship potash, liquefied natural gas (LNG) and other Canadian products to international markets. The RRUC will ensure that growth can be accommodated by a sustainable, efficient, coordinated platform. The RRUC construction created 100 jobs for people in the surrounding communities.

Over time, the Port of Prince Rupert has evolved from being a solely export gateway to an import/export one. "Now we're seeing a greater focus on the export side, both in building capabilities for Canadian exports on the intermodal side but also new terminals for cargoes that are focused on the Asia/Pacific area, and a lot of that is energy," explains Stevenson.

While several LNG developments continue to be investigated within the Port's jurisdiction, there is the promise of a proposed LPG facility being advanced by AltaGas, with the aim of creating a Canadian export solution for propane. At least 1.2 million tons of propane per year produced by BC and Alberta natural gas producers could be transported to the facility using existing CN rail lines and Ridley Terminals Inc.'s existing deep-water marine jetty. "That's part of Ridley Terminals' diversification efforts," says Stevenson. "It's all focusing on shifts in trade. Ultimately, that's the role we play in all this. If you look at where trade patterns are shifting, it's really creating opportunity for the Port of Prince Rupert."

BC Ferries (BCF) plans to spend approximately $3 billion over the next 12 years on a number of projects. About 70 percent is earmarked for vessel spending, which includes construction in Poland of three new Salish class dual-fuel vessels that will run primarily on LNG. The two Spirit class vessels are getting mid-life upgrades, converting to dual fuel. As the average age of the fleet is nearly 33 years, most vessels will have to be replaced, however, so not all will be converted to dual fuel.

"Low fuel consumption technology saves us money and in the long run, it's significantly more environmentally friendly than the technology we would have had in the old vessels," says Chief Financial Officer, Dennis Dodo.

About 20 percent of capital expenditures is focused on terminal upgrades and other investments. Dodo says 2017 investments will include upgrading berths at the Langdale Terminal on the Sunshine Coast, performing maintenance on the Queen of Cowichan and the Queen of Alberni, and revamping the company's IT infrastructure to improve customer booking and ticketing operations.

BCF reports an increase in passenger traffic this year, returning to numbers not seen since 2009. Last fiscal year, the company transported more than 20 million passengers and more than eight million cars. "If fuel continues to be as low as it is right now and the Canadian dollar continues to stay depressed as compared to the US dollar, we'll continue to see people looking at BC as a destination for vacation and also a place to invest," says Dodo.

The Vancouver Fraser Port Authority (VFPA) which manages the Port of Vancouver, enabled the trade of approximately $200 billion in goods in 2015. The port sustains an estimated 100,000 supply-chain jobs, $6.1 billion in wages, and $9.7 billion in GDP across Canada.

In 2015, overall volume through the port of Vancouver remained steady at 138 million tons of cargo. New records were seen that include total container TEU volumes at 3.1 million TEUs (up 4.9 percent over 2014); bulk specialty crop at 3.5 million metric tons (up 20 percent over 2014); and potash exports at 8.7 million metric tons (up 15.6 percent over 2014). The VFPA is forecasting 2016 volumes to be about the same as 2015.

On October 8, 2015, the VFPA issued a project permit to Global Container Terminals Canada Inc. to reconfigure the Deltaport Container Terminal's intermodal yard, including new container handling equipment, as well as construction of a new rail maintenance facility building and associated infrastructure upgrades at the facility. This project is part of the Deltaport Terminal, Road and Rail Improvement Project, its objective is to enable greater efficiencies in terminal operation allowing the existing marine container terminal to handle an additional 600,000 TEUs annually to achieve an overall maximum throughput of 2.4 million TEUs per year within the existing terminal footprint.

The Centerm Expansion Project includes a series of improvements to increase the container capacity of the existing terminal by approximately two-thirds. These proposed improvements include an expansion of the terminal area, reconfiguration of the terminal, and road and rail access improvements. The project is currently in the preliminary design phase, which includes undertaking technical and environmental studies, analyzing project data and developing the design. Should it be approved, construction of the project is anticipated to start in early 2017 and be completed in late 2019.

The construction of the Roberts Bank Terminal 2 Project is estimated to create 12,700 person-years of employment over a five-and-a-half year period. Its operation would support approximately 12,400 full-time jobs on an ongoing basis: 1,500 would be as a result of on-terminal activities and 10,900 would be as a result of off-terminal activities, including services provided by truck drivers, Harbor pilots, tugboat operators, warehouse operations and railway activity. The Project is currently in the environmental assessment stage. If it goes ahead, it will be funded by the VFPA and private funding.

The VFPA recently issued a project permit to G3 Terminal Vancouver to construct an export grain terminal in North Vancouver on federal lands managed by the port authority. The decision came after a thorough review of the application, which included consultation with the community, municipalities, agencies, stakeholders and Aboriginal groups.

Seaspan's Vancouver Shipyards (VSY) have been seeing a boom in business. Work is underway on several vessels under the Federal Government's National Shipbuilding Procurement Strategy contract. Construction of the Canadian Coast Guard's (CCG) second Offshore Fisheries Science Vessel (OFSV) began earlier this year.

Significant progress continues on the first OFSV with 37 of 37 blocks currently under construction. The two CCG ships are part of VSY's three vessel, incentive-based build contract for the construction of three OFSVs, which will be delivered under a ceiling price contract before the end of 2017. Work on the third OFSV is scheduled to begin later this year.

In March of this year, Seaspan and the Government of Canada announced two new NSS Long Lead Item contracts valued at more than $65.4 million, which will help pave the way for future construction of the CCG's Offshore Oceanographic Science Vessel (OOSV) and the Royal Canadian Navy's Joint Support Ships (JSS) at VSY. "We have about 20 years of identified work in front of us, and we're growing into that quite nicely," says Seaspan President, Brian Carter.

Seaspan's Vancouver Drydock facility is also extremely busy with several commercial ship repair projects which will continue through the summer. Victoria Shipyards, however, is currently experiencing a quiet period after the fifth of five Royal Canadian Navy frigates were delivered in May to the Navy after their mid-life refits. Still, work continues on the HMCS Cornerbrook submarine as part of the Navy Submarine Program Victoria in Service Support Contract (VISSC), as well as other commercial projects as they arise.

"We've come down a little in Victoria, and that's part of the cyclical nature of the business," says Carter. "At Vancouver Shipyards where we work on new construction, we've added about 380 tradespeople to the Shipyard, and that's on a continual growth basis where we'll achieve about 1,000 in 2018. We had a good strategy for recruiting tradespeople before the Alberta downturn and the downturn in oil and gas has really bolstered that." On November 6, 2014, Seaspan completed its two-year, $170M Shipyard Modernization Project, which allowed the company to be work-ready for the NSPS projects.

Seaspan elected to pass on the major LNG conversion of some of the BC Ferries fleet as Seaspan hasn't yet worked on an LNG project, but Carter says after the refits have been completed, Seaspan will be working closely with BCF to get familiar with those systems. In addition, Seaspan is building two new LNG-fuelled ferries of its own at Sedef Shipyard in Turkey; the first is expected to be delivered in the summer of this year. "We are preparing for the future LNG-powered vessels that will come into the region so that we're able to provide value to shipowners," says Carter.

Yard activities are certainly in full swing. Carter sees only positive growth and economic impact for BC and Canada. "The National Shipbuilding Strategy is alive and well. The Liberal government has confirmed and reconfirmed its support for the program, and we're focused on delivering the ships that are in our backlog."

A new marine association is now active in BC. Founded late last year, the Association of British Columbia Marine Industries' (ABCMI) mandate is to represent the interests of the industrial marine sector and its supply chain across the province, in Canada, as well as around the globe.

The Association evolved from the west coast Shipbuilding and Repair Forum, which has existed since 2006. Member businesses range from small to large across many sectors that include shipyards, boatyards, marine repair facilities, fleet owners, ocean and marine technology companies, industrial marine service companies, consultants, labor groups, suppliers, manufacturers, and more.

ABCMI offers its members networking, training, partnership and work opportunities through a variety of events and platforms. In addition, the Association is also involved in workforce development strategies. "The economic outlook for the BC marine industry is hinged around the National Shipbuilding Strategy and LNG to an extent," says Mark Dixon, ABCMI President.

While the province's foray into LNG projects hasn't gained as much ground as first thought, some marine trades will be part of that supply chain on the water side, should things go ahead, says Dixon. As far as shipbuilding, he notes that the NSS is a large contract but only on the build side, which affects Seaspan and its subcontractors. "There is the government's promise under the NSS of vessels under 1,000 tons being built outside of the two large shipyards (Seaspan and Irving on the east coast) but there is no current program for that which would help rejuvenate the small to medium marine yards, so we'll be pressing government for this to allow for the small and medium enterprises to start preparing to win the maximum extent of this work for the BC industry."

While shipbuilding dominates a lot of discussion around marine businesses, it's not the only item on the ABCMI agenda. With its diverse membership, new connections and business opportunities are being initiated by many different sectors of the BC marine industry that may not have otherwise happened, which Dixon is happy to see.

"We're here to represent the members," he says. "Each business has different drivers. We aim to help them develop new markets, be ready for potential contract opportunities and bring together a pool of diverse knowledge on everything from workforce skill gaps to lobbying the government for their benefit."

An expansion project at Vancouver's Centerm will increase container capacity of the existing terminal by approximately two-thirds with an expansion of the terminal area, reconfiguration of the terminal, and road and rail access improvements. Photo courtesy of the Port of Vancouver.


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