Both container and bulk terminals have a large number of projects planned.
Last week’s tentative contract agreement between longshoremen in British Columbia and employers after more than a year of negotiations was good news not only for Canadian businesses but those in the U.S. that rely on the province’s ports.
A study by the consulting firm Mercator for Global Container Terminals found 34.4% of all imported container cargo moving through British Columbia ports was U.S. destined and 19.6% originated in the U.S.
The Port of Vancouver, which handled 3.4 million TEUs in 2018, is Canada’s largest container port. It says 24% of its 1.7 million import containers are bound for the U.S. and 8% of export containers originate in the U.S. (Nearly 31% of the containers leaving Vancouver are empty, and Mercator included them in its study, bringing the U.S. origin percentage up to 10.7%.)
A spokeswoman for the Port of Prince Rupert, which handled 1 million TEUs in 2018, said Chicago and Memphis are key destinations for cargo in addition to Toronto and Montreal, but added figures on the split between the U.S. and Canada were not available. However, Mercator’s estimate was that U.S. traffic accounted for 68.3% of container imports and 50.5% of container exports, again including empties.
Larry Gross, president of Gross Transportation Consulting, and a leading export on intermodal rail, noted that the rail corridor between Western Canada and the U.S. Midwest is the ninth busiest of the 55 rail corridors tracked by the Intermodal Association of North America. He said IANA stats show 772,000 ISOs, or international containers of all sizes, moved in the 12 months ending in April on that corridor. He believed nearly all the containers moving east in that corridor originate in Vancouver or Prince Rupert.
Major expansions of container terminals in both Vancouver and Prince Rupert are planned.
The Vancouver Fraser Port Authority said last October that despite significant improvements to container terminals in Vancouver and Prince Rupert to increase their efficiency and capacity, “historical trade figures and third-party forecasts have long signaled that the ability of West Coast ports to serve this growth is becoming constrained and that, as early as the mid-2020s, we won’t have the capacity to handle the anticipated future growth of trade in containers at the Port of Vancouver or anywhere else on the West Coast.”
DP World is expanding capacity for its terminal in Prince Rupert from 1.35 million to 1.8 million TEUs. The Prince Rupert Port Authority has identified a second site on South Kaien Island where a 2.5 million-TEU terminal could be build, and in May the authority said a master plan has identified the long-term potential to develop 6 million to 7 million TEUs of capacity through the development of multiple container terminals.
Prince Rupert said it has an advantage moving to the U.S. Midwest, not only because it is closer to north Asia ports but because of good rail connection via the Canadian National Railway, which has trains with a gentler grade to climb when crossing the Rockies.
“Railroads are very sensitive to gradient,” said Gross, and trains hauling freight on the CN can do so with less fuel.
In Vancouver, construction is expected to begin next month on reconfiguration and expansion of DP World’s Centerm facility, which will boost capacity from 600,000 TEUs to 1.5 million TEUs.
Global Container Terminals announced in May it would spend $160 million to densify and modernize its GCT Vanterm facility, which will boost capacity by 25%.
Both GCT Vanterm and Centerm are located in downtown Vancouver.
Twenty-one miles to the south at Roberts Bank — an artificial island in the Strait of Georgia connected to the mainland by a causeway — both the Port of Vancouver and Global have proposed separate and conflicting plans to add container capacity.
The Port of Vancouver wants to construct a new container terminal, to be called “Roberts Bank Terminal 2,” with eventual capacity of 2.4 million TEUs, adjacent to Global’s existing GCT Deltaport terminal. In 2016 it drew up a shortlist of five potential operators for the facility, excluding Global, but including Abu Dhabi Terminals, a Grup TCB/Mitsubishi Corp consortium, Ports America, PSA International and a Terminal Link/CMHI consortium.
Global has proposed an alternative, expanding its existing GCT Deltaport terminal by adding a fourth berth. It says that project would also add 2.4 million TEU of capacity, bringing GCT Deltaport’s capacity to a total of 4.4 million TEU.
But the Port of Vancouver has rejected the idea, saying expanding GCT Deltaport is not an option because Fisheries and Oceans Canada has prohibited further reclamation inland from the existing terminal and because Global “would control a significant majority of the market for container services” and it wants to encourage “an appropriate level of competition.”
Global believes its proposal “makes better economic and sense,” according to a document submitted as part of a review of the port authority’s plan being undertaken under the Canadian Environmental Assessment Act.
“I don’t think there’s any question within the transportation sector that the future demand will be necessary and that the current system is working fairly close to capacity already,” said Robert Lewis-Manning, president of the British Columbia Chamber of Shipping.
Members of the International Longshore and Warehouse Union and British Columbia Maritime Employers Association had negotiated for more than a year to replace their agreement that expired in March 2018 when the union announced last week a “work-to-rule” job action, slowing port operations and refusing overtime.
Employers responded with an announcement that it would lock workers out of British Columbia terminals, with the exception of grain and cruise facilities, starting last Thursday. The two sides resumed negotiations last Wednesday and, after an all-night bargaining session, the lockout was ended within hours after it began.
Details of the deal were not announced, but ILWU concerns about automation at container terminals were a major issue. The pact still has to be ratified.
Lewis-Manning noted there are major expansions planned at British Columbia ports for bulk commodities.
He said there also is a lot of interest by different commodity traders about how the interaction of increased demand from container projects such as the proposed Roberts Bank Terminal 2 “will affect other commodities looking for that limited operational capacity from the railways.”
Vancouver saw 37 million metric tonnes of coal cross its docks in 2018, with 32% originating in the U.S.
Vancouver has two major coal terminals — Westshore Terminals handled the majority of the coal, 30.5 million tonnes in 2018. Like GCT Deltaport, it is located on Roberts Bank, having been built before the container facility was added. The other major bulk terminal is Neptune Bulk Terminals, an affiliate of the big potash exporter Canpotex, which ships the majority of its potash through the facility.
According to Westshore’s annual report, 57% of its volume last year was metallurgical coal and 42% was thermal coal. Westshore said in its annual report that Teck Resources, the second-largest supplier of steel-making coal in the world, was its largest customer in 2018, but that its current contract with Teck expires on March 31, 2021.
The annual report goes on to explain, “Under this contract, Teck has committed to ship 19 million tonnes per contract year at fixed rates. Westshore expects that the majority of Teck’s coal not shipped through Westshore will be exported via Neptune Bulk Terminals. Teck has announced expenditures of $470 million on a project to expand Neptune’s capacity, which Teck anticipates will be completed in the third quarter of 2020. Teck has advised Westshore that it does not expect to ship the current contracted volume of 19 million tonnes through Westshore after the current contract expires in 2021.”
Vancouver is one of the few options for exporting coal for U.S. producers in the Powder River Basin in Wyoming and Montana.
An article in the Casper Star Tribune in March said a lack of export terminals in the U.S., as well as the low heat content of the coal mined in the Powder River Basin, has hampered U.S. coal exports to Asia.
Wyoming and Montana are among the states that filed a court brief last year supporting the company that wants to build the Millennium Bulk Terminal Coal Export Facility on the Columbia River.
On May 10, Cloud Peak Energy in Gillette, Wyo., a “pure play” Powder River Basin coal producer, filed for protection under Chapter 11 of the U.S. bankruptcy laws. S&P Global reported that Cloud Peak shipped about 4.6 million metric tons of coal through Westshore’s terminal in 2018.
Gas and crude oil exports are expected to grow explosively in coming years at British Columbia ports.
In May, AltaGas made its first shipment from its Ridley Island Propane Export Terminal in Prince Rupert, the first marine export facility for propane or in Canada.
AltaGas expects to ship approximately 1.2 million tonnes of propane annually to customers in Asia. In 2017, AltaGas entered a multiyear agreement with Astomos Energy Corporation, a Japanese propane importer and distributor, to purchase at least 50% of the propane shipped from the terminal each year.
AltaGas said it has a 10-day shipping time to Asian customers, a 15-day advantage over the 25 days it says it takes for ships carrying propane from the U.S. Gulf Coast.
Lewis-Manning said a permit has been issued to LNG Canada, a joint venture of Shell, Petronas, PetroChina Co., Mitsubishi and Korean Gas Corp., that will liquefy and ship natural gas produced in British Columbia to Asia through a port in Kitimat, which is located southeast of Prince Rupert.
Canadian Prime Minister Justin Trudeau said the $40 billion project is “the single-largest private sector investment project in Canadian history.”
LNG Canada said in phase one, an LNG tanker will visit the project’s marine terminal every other day, increasing to one ship per day when the project is completed. The first LNG could be shipped from the terminal by late 2022 or early 2023.
Chevron and Woodside Energy recently said they want to double the size of a different proposed LNG terminal in Kitimat. In a different project, Woodfibre wants to build an LNG terminal in Squamish, about 50 miles north of Vancouver.
Another project that could cause a huge increase in ship traffic, said Lewis-Manning, is the proposed expansion of the TransMountain Pipeline.
TransMountain said the expansion is essentially a twinning of an existing 1,150-kilometer pipeline between Strathcona County near Edmonton, Alberta, and Burnaby, British Columbia, a city adjacent to Vancouver. It would increase the nominal capacity of the system from 300,000 barrels per day to 890,000 barrels per day, and it would carry bitumen from the Alberta tar sands.
The Canadian federal government purchased the pipeline, with expansion opposed by environmentalists, from Kinder Morgan Canada in 2018.
In May, the British Columbia Court of Appeal blocked an effort by British Columbia to stop the pipeline and, according to the website ShaleDaily, “paves the way for federal cabinet approval, scheduled for June 18” of the $9 billion (Canadian dollars) expansion.
Lewis-Manning said today about four or five Aframax tankers (with capacity between 80,000 and 120,000 dwts) call at the Westbridge Marine Terminal in Burnaby each month. TransMountain said after the expansion it “is forecast to serve up to 37 vessels per month — up to 34 Aframax class tankers and three barges. This increased total would represent about 14% of today’s marine traffic in Port of Vancouver.”
The TransMountain expansion has been “hugely controversial in Canada,” Lewis-Manning said, explaining that the project was approved and a court challenge quashed the original approval for two reasons — a lack of consultation with First Nations along the route of the pipeline and shipping corridor as well as a lack of review on the marine shipping aspects of the project.
“So it’s just undergone another year and a half of additional review and we’re expecting the federal government to announce its decision by June 18,” Lewis-Manning said.
“We’re finding a lot of environmental issues along the entire BC Coast, said Lewis-Manning. “It’s almost all about environmental issues at the moment.”