BC Regional Report
August 1, 2018
During 2017, west coast issues were high on the agenda for the Shipping Federation of Canada, given the growing and significant volumes of cargo moving through Vancouver and other British Columbia ports. "This has been very true with respect to the need to strike the appropriate balance between improving the fluidity and efficiency of the trade chain overall, and ensuring that the marine transportation system delivers on the safety and environmental protection front," says Bill Mckinstry, Director of west coast Operations.
The Shipping Federation of Canada is involved with various gateway stakeholders across the country, directly with service providers as well as through government channels. This work on behalf of its members ensures that the various programs announced by the Federal Government move forward in a manner that helps achieve the goals that have been set out in these programs.
BC has benefitted from the global economic conditions through increased capacity in grain handling facilities, expanded container terminal facilities, as well as being able to accommodate the resurgence of commodities that struggled in previous years.
"The west coast has seen back-to-back years of growth in many of our base cargoes," says Mckinstry. "Container traffic has seen 24 percent growth in Prince Rupert and an 11 percent increase in Vancouver volumes. Grain continues to grow through the Vancouver terminals with an eight percent increase, and coal saw approximately 13 percent growth off the west coast as world trade continued to grow."
Growing carrier alliances are providing a positive economic benefit to the region. "Such associations are able to react to long-term market demands and better match supply with demand." Mckinstry explains. "Ocean shipping has always been one of the freest markets in the world and these alliances put operators in a better position to sustain the ups and downs of world trade."
While the reliability of vessel arrivals is critical, the land side of any cargo movement is equally important. International shipping requires the coordinated efforts of numerous stakeholders to "deliver the goods". "Railways, trucking companies, terminal operators and cargo handling facilities, along with forwarders, brokers and government agencies, must all work together to ensure the Asia Pacific Gateway, Canada's largest trade corridor, remains reliable and efficient," he adds.
Prince Rupert Sees Growth
The Prince Rupert Port Authority (PRPA) and DP World have agreed on terms of a project development plan that outlines the next phase of expansion for the DP World Prince Rupert Fairview Container Terminal. The expansion is set to increase annual throughput capacity at Canada's second largest container terminal to 1.8 million TEUs when complete in 2022.
The Fairview Phase 2B project follows the 2017 completion of Fairview Phase 2A, which increased the terminal capacity by 500,000 TEUs to its current capacity of 1.35 million TEUs. Construction on Phase 2B will begin in mid-2019.
Phase 2A, which was completed last November, added one continuous long 800-meter berth to accommodate working two vessels at the same time. Earlier in 2017, the Port Authority added to its facilities three Malacca-max dock gantry cranes, among the largest in the world. The massive cranes are approximately 50 feet taller than existing Post-Panamax cranes and have the capacity to reach 25 containers wide.
The Port has significant depth at the berth in excess of 17 meters (55.7 feet), in addition to its modern, state-of-the-art facilities, signaling that it is ready for an expected trend for new calls from some mega vessels now servicing the Asia/Europe route. "The other key component is the significant expansion of container storage area for the yard," says Brian Friesen, Director of Trade Development & Communications. The terminal is currently 32 hectares in size and will increase to 41 hectares when Phase 2B is complete. Also to be added are two new rubber-tired gantry cranes as well as an eighth dock gantry crane.
The last big component of the Phase 2A expansion was the addition of 6,000 feet of working track for a total of 18,000 feet of on-dock rail (the Phase 2B project will further expand on-dock rail capacity, for a total of 24,680 feet). The Phase 2A expansion enabled the Port to run a three-train-a-day program. With the new on-dock rail footprint in place today, it will have the capacity to increase to four trains a day.
Friesen says there were some challenges with terminal throughput earlier in 2018. "We had significant growth in terms of volume in the pre-Chinese New Year surge period, and a difficult winter," he explains. "The last time we had any impact as a result of winter and sustained cold temperatures inland was back in 2014. The winters since then have had relatively no impact, but this year, we did see an impact with sustained cold temperatures in the Canadian and US prairies." To that end, CN is making significant investments – to the tune of C3.4 billion – in infrastructure, equipment and maintenance, to ensure it has the capacity to handle increased growth in its transportation network.
The PRPA bounced back during the second quarter. From March through the end of May, it saw a significant increase in throughput of 24 percent year over year; laden imports grew by 17 percent, and laden exports by 39 percent. Part of the reason why there is such strong growth in its export business is due to a new partner, which came aboard on September 1, 2017. Ray-Mont Logistics has enabled the Port of Prince Rupert to move agricultural products more efficiently. It's the only facility on the west coast of North America that can accommodate bulk unit trains of agricultural products in hopper cars and transfer that product into containers.
Special commodities such as the export of forest products as well as specialty crops have also seen a growth surge. On the import side, demand for auto manufacturing is on the rise as well. "We've seen huge growth in auto parts, and that's largely due to the importance of speed and reliability in those just-in-time supply chains," says Friesen. "Prince Rupert has, for years, offered the fastest route from Asia into the US Midwest, and has been a reliable service that shippers have been able to depend on."
The PRPA's 2016 economic impact study revealed that the port generated more than $1 billion in annual economic activity through 25 billion worth of exports, and created more than 3,100 direct jobs. With the continued expansion of the Fairview Container Terminal, those numbers will only increase. "We have had a lot of success in Prince Rupert as a gateway, and because the port and the community are so closely linked, there is a shared sense of ownership and pride in the success we've had."
Port Alberni Hub
The Port of Alberni Port Authority (PAPA), located on Vancouver Island, is working with its private sector partner, Canadian Maritime Engineering (CME) (through its parent company, Russell Industries), with support from the City of Port Alberni, to achieve a floating dry dock project in Port Alberni.
This infrastructure project would provide much needed capacity for marine vessel repair, maintenance and ship building on Canada's west coast. "Market demand far exceeds capacity to do the work in a timely, cost-effective manner," says PAPA's president and CEO Zoran Knezevic. "This project would be a great leap forward for the community and for the coastal marine industry, which is now in a significant expansion mode."
PAPA is also pursuing its proposed Port Alberni Transshipment Hub (PATH) to be located in the Alberni Inlet. The project would create a "hub and spoke" model of shipping container distribution on the west coast, with a modern, fully-automated container terminal, able to efficiently handle any size vessel, including new Ultra Large Container Ships up to 22,000 TEUs.
A feasibility study reveals that PATH could reduce CO2 emissions by 22,000 tons per year, and remove over 600 trucks from the roadways. The cost of building the new hub if it goes ahead, would be approximately 1.7 billion. "PATH would maximize the efficiencies of our coastal water ways as marine highways to barge containers from a location within the mouth of Barkley Sound direct to the distribution centers along the banks of the Fraser River and Puget Sound," says Knezevic.
The PAPA directly manages its own shipping terminals as well as three recreational marinas and one commercial fishing marina under a long-term management agreement with Small Craft Harbours. It also manages a campground and two breakwaters. Other marine-related facilities include a privately-operated floating Bed & Breakfast in the historic wooden vessel Swept Away Inn, as well as a commercial fuel dock operated by Port Alberni Marine Fuels Ltd. In addition, PAPA also oversees more than 100 upland and water lot leases. License holders of these leases and licenses pursue a number of varied operations including on-water log storage, a commercial fishing ice plant and processing plant, a marine vessel retailer, and repair and manufacturer; and a frozen-at-sea factory fishing vessel offload facility.
The PAPA's most recent economic impact study completed in 2016 reveals that manufacturing related to forestry remains the largest source of employment and economic activity. Port operations generated 13.5 million in taxes for the federal, provincial, and municipal governments, and port-related activity supported approximately 1,100 jobs.
"Overall, our lumber shipments have declined dramatically as we have not seen a lumber ship since December 23, 2017," says Knezevic. "We are optimistic these will return to regularity soon. Also, through our partnership with ISCC and its Frozen At Sea factory fishing ship, the Raw Spirit, we have seen their cargo offloads through our shipping terminals increase. We continue to attract interest by other commercial fishing companies that will help us expand our marine cluster."
Victoria Cruise Business
The Greater Victoria Harbour Authority (GVHA) is enjoying a marked increase in cruise traffic. This year's numbers are projected to bypass the 2017 cruise season, with estimates of 245 ship calls, which will bring more than 630,000 passengers, 250,000 crew and $130 million in economic value to the region.
The big highlight for the 2018 season has been the arrival of Norwegian Bliss on June 1. The mega-cruise ship, which can accommodate 4,000 passengers, is the largest ever to visit Victoria. Bliss will visit Victoria several times during her Alaska itineraries this year during the April-to-October cruise season.
GHVA's cruise facilities include three berths at Ogden Point. Pier A was recently upgraded with bollard improvements ahead of Bliss' inaugural call. Looking to next year, the installation of a second mooring dolphin at the end of Pier B will be necessary to accommodate Ovation of the Seas<</i>/strong>, one of Royal Caribbean's larger ships, expected to arrive during the 2019 cruise season.
The GHVA's CEO Ian Robertson indicates that Alaskan cruises are more popular than ever due to the current geo-political climate and security concerns. "I've talked to a lot of cruise lines that are not yet deployed in Alaska. They're looking at Alaska very closely because they see it as being safe and secure, and from what I understand, the margins are good for cruise lines travelling to Alaska. We work very closely with the port of seattle to sell the Pacific Northwest and sell the Alaska itinerary, and that's really important to us."
While the GVHA is a relatively small cruise ship facility, it boasts being Canada's busiest cruise ship port of call. That number covers not only direct economic impacts from tourism alone but also from cruise vessels taking advantage of having work done at the region's Esquimalt Graving Dock.
The GVHA is also working hard to use green technologies that ease terminal congestion and environmental pollutants. In 2017, GHVA introduced North America's first purpose-built electric double-decker bus, which operates between Ogden Point and downtown Victoria. Robertson says there are five double-deckers that operate on the shuttle; four are contracted out to BC Transit, and the other is the new bus.
"We're hoping to introduce a second one sometime this year or early next year, and by 2022, our goal is to have all five buses operating the shuttle be fully electric," he says. In addition, it's expected that by 2019, all buses that operate on and off the terminal will be 2010 engine age or newer. GVHA has entered into an agreement with a joint venture called Pacific Northwest Transportation Services (PNWTS), which is a collaborative effort between CVS Tours and The Wilson's Group to bring new, quieter buses and lower emissions to the cruise terminal.
The GVHA also oversees other properties in Victoria, including Fishermen's Wharf, and the inner Harbor marinas, all of which have seen increased economic activity this year. "Operationally we're very busy," says Robertson. "And we're obviously benefactors of a very strong tourism economy in Victoria."
BC Ferries (BCF) is enjoying many historic company milestones. Last year was the all-time highest vehicle traffic ever in the history of the company, and it looks like that record will be broken this year. Additionally, foot passenger numbers were the highest in 20 years in 2017, and it's expected that foot traffic will be even busier in 2018. In fiscal 2018, the company carried 22 million passengers and 8.7 million vehicles.
Also during 2017, BCF introduced three new LNG-fueled Salish class ships, marking one of the most rapid introductions of new tonnage in the company's history. In fact, BCF had to pioneer new technology in order to make a good business case for how the ships would be fueled. In partnership with its shipyards and Fortis BC, the technology allows the Salish class vessels to be fueled directly from a tanker truck onto a semi-enclosed deck.
Additionally, the Spirit of British Columbia underwent a mid-life upgrade, including being converted to run on LNG, and later this year, the Spirit of Vancouver Island will undergo the same upgrade. "The big technical win is the Spirit of British Columbia," says BCF's CEO Mark Collins. "It has a completely enclosed deck. And when you're dealing with a gaseous fuel like LNG, that's very significant. We conservatively estimated that we have forgone about 100 million in infrastructure that would have been necessary, had we accepted to fuel the LNG ships in the conventional way."
In addition, maintenance work was carried out on 12 vessel refits to keep the fleet moving. BCF also has two new M47 ferries under construction. One will service the Texada Island to Powell River route and the other, the Port McNeill/Sointula/Alert Bay route. The M47 ships will be powered by electric-hybrid propulsion.
Investments in the new ferries are part of BCF's overall investment under a $3.1 billion capital plan that will be spent over the next decade. After the M47s are built, BCF will begin replacing the Bowen class of ferries (request for expressions of interest are expected to be disseminated in the later summer or fall to procure the new ships). Following that, a huge project will involve the replacement of the C-class, 320-car vessels which service the major routes. "This is easily a billion-dollar effort," says Collins. "It's going to be a major program, and we'll be talking to industry within 18 months or so," he says, adding that the new C-class ferries are expected to join the fleet between 2023 and 2026.
Collins says engaging the community in the design of new ships ensures that they have direct input on the final vessels. For example, the new M47 class ships have been designed around community requirements for scheduling and speed.
Plans are also underway for major upgrades to the Langdale and Horseshoe Bay ferry terminals. The first phase of the Langdale improvements began last year with the addition of a new, modern, concrete floating berth. The next stage will include adding a passenger walkway estimated to be completed in 2019, with a new terminal building following several years later. BCF is in the early planning stages with the Horseshoe Bay terminal, which it estimates will be rebuilt within a five-year time frame, once construction begins. "We have to rebuild for efficiency and make it more integrated with the community," says Collins.
Recently, the issue of road travel congestion, particularly following vehicle accidents on the Malahat section of the Trans Canada Highway that runs between Victoria and the Cowichan Valley on Vancouver Island, has prompted new calls for an alternative ferry route. BCF is encouraged that BC Premier John Hogan and his government are looking into options which may include changing the Brentwood Bay to Mill Bay run to be serviced between Patricia Bay and Mill Bay.
"We have long believed that there are other routes that can contribute to the transportation efficiency of the South Island," says Collins. "You don't want a complete replacement. What you need is something that's going to work when there's an emergency. And it needs to stand on its own two feet the rest of the time. For us, it makes good sense for the route to go into Swartz Bay. It already has great bus connections, highways and docks, which would cut costs tremendously."
BCF's forward-looking projects also include a complete overhaul to its IT system for reservations based on customer demand. "They want convenience. They want apps. They want certainty of travel and I think that's the single-biggest thing I hear from customers," says Collins, referring to complaints of having to sit in line for hours when reservations are sold out.
For the routes that have reservations, Collins says in the future, BCF envisions that reservations will be free and be part of the ticket. "You'll go online or on your phone and you'll make a reservation, and you will sail at 3:00 pm on Wednesday. You only need to show up before your sailing. No more guesswork."