Canada faces container terminal crunch

Trade agreements aren’t worth the paper they’re written on if import and export goods can’t move efficiently through ports

B.C. needs more container terminal capacity, but the environmental review process for the Roberts Bank expansion is moving at a glacial pace. | Rob Kruyt

Last year, when the federal government announced $2 billion worth of investments to address trade corridor congestion, federal Transport Minister Marc Garneau said:

“We must remember that we can have the best-quality products and the most ambitious trade agreements in the world, but none of that will matter if we don’t move our goods efficiently and reliably to markets.”

But it appears another federal ministry – Environment and Climate Change Canada – didn’t get that memo. Or if it did, it has other priorities – like protecting the western sandpiper from a container terminal expansion at Roberts Bank.

The Canadian Environmental Assessment Agency (CEAA) also hasn’t learned any lessons from the Trans Mountain pipeline expansion project, according to environmental groups, which claim the CEAA is making the same mistake that the National Energy Board (NEB) made when it failed to consider marine impacts from increased shipping traffic.

All of which begs the question: what happens if the proposed $2 billion Roberts Bank Terminal 2 project suffers the same fate as Trans Mountain?

Vancouver is Canada’s largest and most important port, and it faces the prospect of running out of container terminal handling capacity sometime between 2025 and 2030 if the Roberts Bank Terminal 2 project isn’t approved, according to the Vancouver Fraser Port Authority.

While 2030 sounds like a long way out, the environmental approval process for the Roberts Bank Terminal 2 project is already half a decade in, and still grinding on at a glacial pace.

The project is now in its fifth year of a CEAA review process. Given the pace of that process, the earliest the new terminal can be built and in operation is somewhere between 2028 and 2030, said Cliff Stewart, the port’s vice-president of infrastructure.

The project’s capital cost is somewhere between $2 billion and $3 billion, Stewart said, although every two-year delay adds about $500 million to the cost.

“You tell me what year I can start building, and I’ll tell you how much it will cost,” Stewart said.

Without additional container terminal capacity, the fear is that B.C. ports will lose their competitive edge and more global shipping lines will divert imports and exports through competing American West Coast, Gulf Coast and Eastern Seaboard ports. The Port of Vancouver estimates that the additional cost to Canadian importers and exporters to move goods through the U.S. would be $80 million annually, starting in 2030.

Vancouver is the third-largest container port in North America and the 47th-largest in the world. It accounted for 42% of the cargo handled by all Canadian ports in 2017. It handles $100 billion worth of container cargo each year. West Coast container traffic is expected to triple by 2030.

While Prime Minister Justin Trudeau has made much of the fact that Canada is now the only G7 country to have trade agreements with every other G7 country, those trade agreements don’t mean much if the increased flow of goods that is supposed to result from them can’t be physically accommodated.

And the only way to accommodate increased imports and exports is to build a new terminal at Roberts Bank, says the Port of Vancouver, because the region does not have enough industrial land with access to both rail and water.

The province’s shipping sector also wants the new terminal project to move ahead.

“We’ve been discussing it since 2011,” said Bonnie Gee, vice-president of the Chamber of Shipping of BC. “We need to get that project approved.

“The existing terminals are doing what they can to keep up with [the] growing demand of container traffic. But if we continue to grow at the pace we’re growing, we certainly will need perhaps another facility.”

Container terminal expansions have already been done or are in the works for other terminals in Vancouver and Prince Rupert (see “B.C. Container Terminal Investments Buck Global Trend” – Business in Vancouver issue 1513; October 3–November 5). DP World Ltd., which operates Vancouver’s Centerm, plans to invest $350 million in the terminal to expand its capacity to 1.5 million 20-foot-equivalent units (TEUs) from its current 900,000. Global Container Terminals also plans to invest $160 million to expand capacity at its Vanterm container terminal and hopes to secure approval to expand GCT Deltaport at Roberts Bank.

Terminal 2 would add 2.4 million TEUs to the port’s annual container cargo handling capacity.

“Between the growth that we expect to see in Vancouver and the growth they expect to see in Prince Rupert, we’re covered till about 2025,” Stewart said.

Greater Vancouver Board of Trade CEO Iain Black raised concerns about container terminal capacity with federal Finance Minister Bill Morneau when the minister was in Vancouver last week. While Morneau has earmarked billions for improving Canada’s trade corridor infrastructure, he’s not in charge of the environmental review process.

And the problem for the Terminal 2 project is that it calls for new land to be created in a subtidal zone. That idea is going over with environmentalists about as well as one might expect.

Among the 702 Terminal 2 responses the CEAA has received from First Nations, individuals, environmental groups and various agencies – both Canadian and American – is one from Ecojustice.

It says the current CEAA scoping has the same flaw that resulted in the Trans Mountain expansion project being quashed by the Federal Court of Appeal: it doesn’t include marine impacts from increased vessel traffic.

The CEAA’s communications department insists that’s not the case. In an email to Business in Vancouver, it said the environment minister has directed that the review panel “must take into account the environmental effects of marine shipping associated with the project beyond the care and control of the proponent and within the 12 nautical mile limit of Canada’s territorial sea.”

In addition to a terminal capacity squeeze, ports face rail constraints. Canada’s two railways already struggle at times to move grain, lumber, oil and other Canadian commodities when faced with spikes in volume, especially during harsh Canadian weather.

“Other commodities are also increasing in volume, so we’re really getting to a point where rail capacity is becoming an issue,” Gee said. “Without a pipeline, we’re seeing more demand for tank cars to move, so they’re increasing their demands on the railway as well. Canada’s agenda right now is greater trade diversification, so we need to ensure that we have the infrastructure in place to make it happen.”

nbennett@biv.com

@nbennett_biv