Port Metro Vancouver's (PMV) third-largest cargo container terminal operator is taking a trial run at servicing Vancouver Island.
Centerm operator DP World (Canada) Inc., a subsidiary of Dubai-based DP World, celebrated the arrival of its Duke Point terminal's first container ship last Tuesday as part of its plan to test the waters of a containerized cargo shipping service directly linking the Island with Asia.
Nanaimo Port Authority (NPA) president and CEO Bernie Dumas said the opening of the Duke Point container terminal was “an exciting time for Vancouver Island importers and exporters and will prove that the NPA can offer competitive deep-sea connections to global markets.”
The NPA recently received $4.5 million from the federal government as part of its Asia-Pacific Gateway and Corridor Initiative.
DP World Vancouver general manager Maksim Mihic said the company chose Duke Point for its trial Vancouver Island-Asia container service because it's geographically central and is the Island's only port facility with a container crane. He added that it will be Vancouver Island's first container terminal.
Mihic said the Duke Point operation, with an estimated annual container throughput of around 100,000 20-foot equivalent units (TEUs), would initially be small compared with DP World's Centerm operation.
“But this is how we started in Vancouver, with the very same crane.”
PMV's Deltaport, Canada's largest container terminal, can handle 1.8 million TEUs per year. Infrastructure and other upgrades will expand that capacity to 2.4 million by year's end.
Mihic said his company's trial container service would initially connect Vancouver Island with Japan and Korea. Main cargo shipped to Asia from the Island will be lumber, pulp, bottled water and recycling.
Mihic said container volume will determine whether the trial service becomes permanent and pointed out that before DP World started its Duke Point operation, Vancouver Island was the biggest island in the Americas without container cargo shipping operations.
Container traffic between North America's West Coast and Asia continues to accelerate along with the US$4 trillion global trade in containerized cargo. According to analysis from Alphaliner, which collects global liner shipping and container ship data, container throughput in the world's 30 largest ports grew 4.7% in 2014's first quarter.
As of May, Port Metro Vancouver's year-to-date container cargo was up 2.2% compared with the same period in 2013. Laden inbound container cargo was up 5.8% in May 2014 compared with May 2013, and PMV spokesman John Parker-Jervis said July container numbers, which had not been released as of press time, will set a new record for the port.
Container traffic has also surged at Centerm and other PMV terminals recently because of ongoing uncertainty over contract negotiations with longshoremen at U.S. West Coast ports.
Shippers concerned about a possible U.S. longshore strike or other service disruptions at major terminals in Seattle, L.A.-Long Beach and other U.S. ports consequently placed orders early and have diverted some U.S.-bound containers through Port Metro Vancouver and Prince Rupert.
That spike in business, coupled with a shortage of railcars available to service U.S.-bound containers, resulted in DP World notifying customers earlier this month that, as of August 8, it would no longer accept containers arriving in Vancouver for shipment to the U.S. by rail.
Mihic said the temporary halt to that U.S. service was regrettable but unavoidable because of the dramatic increase in containers arriving at Centerm. The resulting terminal congestion, he said, was hampering the terminal's ability to service the flow of its containers to its main customer base in B.C. and Eastern Canada.
Mihic estimated that the number of containers shipped south from his terminal had jumped 300%.
Centerm's percentage of U.S.-bound cargo, normally less than 5% of its business, ballooned to around 40%.
“That is a massive increase for us,” Mihic said.
He estimated that it would take between five and six weeks to clear the backlog at Centerm, which handles approximately 20% of PMV's container volume.
Canadian National (CNR:TSX) and Canadian Pacific (CP:TSX) declined to provide reasons for the shortage of railcars available to carry containers to the United States from PMV terminals.
CN spokesman Patrick Waldon said in an email that the rail company couldn't release details about railcar allocation to individual customers because “such commercial discussions are confidential.” But he added that the railway is discussing “the application of the allocation process to curtail further discharge of U.S. temporary cargo at West Coast Canadian ports it serves … to ensure that its Canadian customers' needs are protected while the U.S. ILWU [International Longshore and Warehouse Union] labour discussions are ongoing.”
CP did not respond to requests for information.
