East Coast Canada

NO CHANGING OF THE GUARD

In eastern Canada there are new container terminal plans gaining approval and others now unlikely to occur. AJ Keyes looks at what is expected to change in the region and what it means

8 A green light

for Contrecoeur will further strengthen Montreal’s key role in the East Canada region

East Canada is an established and mature port region, serving local markets and competing for the large discretionary US Midwest hinterlands. The competitive landscape is becoming much clearer as a combination of winners and losers starts to emerge.

The North Atlantic, eastern region of Canada offers two existing ports for US Midwest and discretionary cargo – Montreal and Halifax.

Montreal is positioned on the St Lawrence River and has water depth limitations as well as a longer sailing time from/ to the open sea but is closer to major Canadian consuming hinterlands and key US markets. Shipping lines continue to call on a dedicated basis, almost exclusively on a full discharge/load basis.

Halifax, by comparison, offers very deep water and good terminal infrastructure. Access to Ceres Cove is limited due to bridge airdraft constraints, but the Halterm facility, now part of PSA International, can receive ships of 16,000TEU.

DP World has also entered the region through its operation at Saint John (NB), plus there are long-standing projects, such as Novaport and Melford that have known plans to target container volumes, and the more recent Laurentia project in Quebec.

With the exception of Montreal, immediate cargo volumes are limited and this has focused attention on accessing the central Canada and US Midwest markets to produce the volumes required to justify terminal investment. Some successes have been noted, but the concept of regional transshipment hubs has proved financially more problematic.

DOMINANT MONTREAL

In terms of container volumes handled in eastern Canada, Montreal is the dominant facility. As Figure 1 shows, the port’s 2020 volume surpassed 1.6 million TEU, with Halifax handling just over 500,000TEU. The other ports, which include Saint John (NF), St. John’s (NL), Sept Iles (QA) and Quebec City (QC), collectively generate around 250,000TEU per annum.

There was a negative impact on total regional port volumes in 2020 due to the COVID-19 pandemic, thus if the 2019 activity is considered as more typical, then the eastern Canada container port market totals around 2.5 million TEU per annum.

To put recent market growth into context, the same ports collectively generated just under 2.0 million TEU in 2011, reflecting growth of 3.2 per cent per annum since.

Despite the recent uncertainty caused by the COVID-19 pandemic and the impact of seeing cargo diverted away from Montreal during recent strike actions, the region’s largest volume container port is holding up well in 2021. That said, one executive at the port authority felt that Montreal is currently “a step behind its USEC rivals in growth and recovery”.

For H1 2021, the port handled just under 839,500TEU, which although down on the H1 2019 total of 859,400TEU, is an improvement on the H1 2020, COVID-19-impacted figure of 821,700TEU.

CONTRECOEUR DEVELOPMENT

The Montreal Port Authority (MPA) also has a clear aim to meet future local and transit demand through development of the new C$750 million Contrecoeur terminal.

The site is approximately 40km downstream from the existing terminals in the city and the project gained the necessary Impact Assessment Agency of Canada (IAAC) approvals in March 2021.

Current schedules indicate the first phase of the project, delivering 1.15 million TEU of additional capacity, will come on-stream during 2023-2024. Further expansion could ultimately see the facility expanding to 3.5 million TEU over the longer-term.

Contrecœur…a national and international procurement process to identify an operator ‘‘

At the start of July, MPA confirmed it will be launching a Design-Build-Finance-Operate-Maintain (DBFOM) procurement process that will be open to national and international industry players.

“Factoring in our timeline, we are proceeding with the development and implementation of the Contrecœur container terminal through this national and international procurement process, which will make it possible for us to identify which consortium offers the best terms and conditions to operate our important project,” explains Martin Imbleau, President and CEO, MPA.

One of the issues facing Montreal is the limited water depth available on the St Lawrence. With larger vessels calling at New York/New Jersey (NY/NJ) and other USEC ports in recent years, increased interest has focused on the deepening of access to Montreal. An improvement of just 1.0-1.5m will restore the relative position of the port from a shipping cost perspective and allow continued capitalisation on the major inland cost advantages enjoyed by the port.

CONSISTENT HALIFAX

PSA International completed the acquisition of Halterm Container Terminal in the Port of Halifax, Canada, from Macquarie Infrastructure Partners in Summer 2019. The terminal has been undergoing berth expansion, including the delivery of a fifth super post-Panamax quay crane, which means that it can handle two mega container vessels simultaneously.

The port also has highway connections for Atlantic Canada’s high-value exports. Together with CN, it offers double-stack and reefer service coast to coast as well as a continuous line from Halifax to Chicago, Detroit and Indianapolis connecting the US Midwest.

Yet despite it currently being the only container terminal in Eastern Canada that can serve mega container vessels, the facility still faces the same challenges, irrespective of the terminal operator.

In May 2021 the terminal endorsed its credentials to handle the largest ships on the eastern seaboard when the 16,000TEU mv CMA CGM Marco Polo kicked off its tour of the east coast of North America. This is larger than existing ships in regular service on All-Water via Suez Canal services and Halterm will hope that existing schedules are further upgraded moving forward.

The limited local market means that the port will always be reliant on having to secure discretionary cargo for the US Midwest and that remains a major reason for volumes handled staying at consistent, if unspectacular, levels. Developing transshipment activity could make some sense to help boost volumes, but to date it has not occurred.

SAINT JOHN (NB) EXPANSION

Saint John (NB) has also recently gained a global terminal operator, with DP World now in control of the port’s multipurpose activities. It is already expanding, with confirmed plans involving

8 Figure 1:

Development of Container Volumes, East Canada Ports in ‘000 TEU, 2015-2020

No Prince Rupert of the East

It had heavyweight support, including Hutchison Ports and Canadian National Railway (CN), and an identified strategy to replicate the success of Prince Rupert on the west coast of Canada, but the planned C$775 million ($624 million) Laurentia project now looks dead in the water.

The Impact Assessment Agency of Canada (IAAC) has confirmed that the proposed 700,000TEU per annum development would cause significant damage to fish and their habitat, together with harming both air quality and human health, and erode the resources and land of the local indigenous people.

“NOT MOVING FORWARD”

IAAC did add that the Laurentia developer could resubmit its proposal, but this is not going to happen. Mario Girard, CEO, Port of Quebec confirmed that the project, “will not move forward.”

The Port of Quebec Container Terminal Project development team, most recently led by Don Krusel, former President and CEO of the Prince Rupert Port Authority, said that the need for Laurentia could be tracked back to the Port Authority of New York/New Jersey having to spend billions of dollars on dredging and raising the Bayonne Bridge to accommodate ever-increasing container ship sizes.

The business case for Laurentia was reportedly based on 90 per cent of all containers moving directly from larger ships onto rail for delivery in more distant (and discretionary) markets in Ontario (Canada) and the US Midwest – thereby replicating the success of Prince Rupert on Canada’s west coast.

“UNFORTUNATE”

Unsurprisingly, Quebec Port Authority (QPA) announced its disappointment at the decision from IAAC, stating it was “unfortunate” that its experts in the areas of concern were not able to meet IAAC concerns. Indeed, QPA still maintains that the Laurentia project fundamentally remains “a very good project, both for the economy and the environment”.

The Laurentia project appeared to tick many boxes. Global operator, Hutchison Ports, signed up and essential intermodal rail service connectivity was guaranteed by CN, plus it had the asset of deep water and modern infrastructure available for bigger container ships.

However, the project did not get to the point where its partners got to use their expertise in operations and rail services. The existence of other projects, most notably Contrecoeur in Montreal having gained environmental approval means that there will be not be a “Prince Rupert of the East” – at least not in Quebec City.

The competitive landscape is becoming much clearer as a combination of winners and ‘‘ losers starts to emerge

an extension to the existing wharf, dredging the main channel to accommodate new Panamax vessels (306m LOA) and updating the container and intermodal yard. This will see annual container capacity increased to 330,000TEU per annum.

A distant location and small local population to generate cargo remains the port’s challenge, so it is also considering development of off-site logistics zones to help generate more container traffic.

Yet at least Halifax and Saint John (NB) are operating - there are other, longstanding projects involving new port infrastructure in the region where no traction is occurring.

OTHER OPTIONS?

Sydney Novaporte is a planned new, largescale container terminal on Canada’s Atlantic Coast, located in Nova Scotia. The port’s developers have long claimed that its location enables a first North American port of call on the Great Circle Route from Europe and the Suez Canal. Also, being located close to the mouth of the St. Lawrence River, it offers two days sailing advantage over NY/NJ and a three-day advantage over Norfolk, Virginia.

However, there is no anchor shipping line client and the project is yet to commence. While it has some strengths conceptually, a lack of progress to date must question the validity of the proposal.

Melford Atlantic Gateway Container Terminal and Logistics Park is located within Melford Industrial Reserve also in Nova Scotia, East Canada. The terminal claims to be the closest facility to Europe and the All-Water routing from Asia via the Suez Canal.

While offering a good marine location, the project is another long-standing potential project that offers deep water but has gained little traction. SSA Marine has previously confirmed an interest as the terminal operator, but no shipping line has joined the venture as an anchor client to provide traffic. Until this occurs, it is difficult to see how the port will generate througput to warrant the scale of infrastructure planned.

OLD FAVOURITES REMAIN

Montreal lacks the deep water and ability to serve the larger ships that can call at Halifax, although it recently handled the largest container vessel to use the St. Lawrence River, when the 6730TEU, mv MSC Melissa, called to the Viau Terminal.

The port has an excellent geographic location with a large local market to serve. It also has a green light for new terminal expansion and is over-coming hurdles other projects have fallen at.

Likewise, Halterm and Halifax will continue to serve its small location population and target discretionary cargo from larger ships then sailing down the East Coast.

The failure of the proposed Quebec deepwater terminal (see panel report) further confirms that there will be no changing of the guard occurring in East Canada.

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