September 23, 2014
Dear National Board of Directors,
On Thursday September 11, I was present for an executive conference held by the Chamber of Shipping of British Columbia. Fifty executives and stakeholders were invited for a six-hour conference in Vancouver to review port operations, service, communication and the level of user satisfaction. The topic of discussion was 'The Canadian Port Model - Does it Work For You'. I would like to commend Stephen Edwards, President & CEO of Global Container Terminals and all stakeholders who participated in this productive session. It was one of the few where we saw true stakeholders deliberating real issues and challenges faced by industry.
Key stakeholders and panelists promoted Deltaport and Vanterm as being one of the most efficient modern ports in North America. They went on to state that we have the best labour contract for the next eight years that will create stability, a consistent work force and bring credibility and reliability to West Coast operations. From the inside looking out, they are of the opinion things are working well overall. Industry has a slightly different opinion; predominantly due to congestion, the reservation system, lack of accurate information and long delays and dwell times we faced over the past nine months by all verticals and users. Containerized cargo, coal, peat moss, grain, import and export, operations have been severely hindered at extreme costs due to congestion, weather, trucker strikes, lack of schedule integrity by carriers, rail car supply and lack of manpower at the terminals.
Shaun Stevenson, Prince Rupert VP Trade Development and Public Affairs went on to elaborate on Prince Rupert’s growth and expansion from start and inception of 4 million tons to a record 24 million tons today. Major projects and efforts are on the drawing board to expand the port and capacity to deal with exponential growth and demand. It is a complex model where federal, provincial and First Nations are involved. This makes for lengthy, complicated negotiations. Updates will be forthcoming as progress is made. There were many comments made on public approval also impacting negotiations and reviews for any expansion. Social licensing is a major challenge and a force to deal with in today’s day and time. There is a tremendous amount of resistance to release land and permission for port expansion. Competition for this land by real estate developers is also fierce.
Ocean carriers on the panel commented on the tremendous losses suffered by industry over the past five years. They stated Canadian ports’ steady cost increases, work stoppage and poor port-labour relations are making it extremely difficult for carriers to run profitable operations. The trucker strike that crippled West Coast operations for 28 days this year is a prime example of these challenges. Comments by carriers forewarned that should Canadian West Coast ports steadily raise costs while services continue to deteriorate, clients and carriers will find alternative options and ports to move their cargo. Tacoma and Seattle are aggressively looking at ways to be more competitive and gain back their market share. The one unique factor Vancouver has over the US ports is rail capacity to eastern Canada. The alternative option is via a switch in Chicago through US ports which is equally challenged by weather, delays and higher costs.
The general consensus from port stakeholders is that the ports function efficiently until they reach capacity, after which service levels deteriorate. 2014 is going down in history as the perfect storm. Record cold weather and snowfall, a tremendous increase in volume for US cargo transiting through Canada's West Coast ports due to the threat of an ILWU strike south of the border, in addition to an estimated increase of 4 percent (YOY) for Canadian trade, crippled our West Coast gateways. This was compounded by lack of schedule integrity from carriers, insufficient workforce on the docks, the trucker strike, insufficient railcar supply, lack of land and staging areas on Delta port and the inner harbor, Prince Rupert inclusive, creating long delays to Canadian importers and exporters.
The question was posed by conference participants, whether carriers, industry and stakeholders learned from the experiences of the past year. There was no real answer or concrete action plan. The reality is that port terminals must choose between running a fluid operation or capitalizing on the opportunity to increase profits and their market share of US cargo. Honestly and respectfully, ports and terminal operators alone are not solely to blame. All stakeholders share in the dysfunctions and challenges faced on the West Coast. Schedule integrity is a major factor. The on-time performance by some of the major alliances was extremely poor in 2014. You can imagine the impact and domino effect this has on labour at the port, rail and terminals.
According to port and terminal operators, rail car supply has equally been a challenge further complicating logistics at the terminal, leading to vessel bunching and the creation of super piles (see photo below). Terminal operators have no option but to stack all containers that do not have a rail car at the time of vessel offloading, creating what industry calls ‘super piles’. These super piles are five to six containers high, nine across and fifteen to twenty deep. As a rule, the terminals work the front of the pile for extra rail capacity but there is never sufficient capacity to handle all the containers in the pile. As full ships continue to arrive with insufficient rail car supply, the new containers are stacked on top of the old ones that remain buried for a prolonged period of time. This is one of the reasons industry has experienced two to three week delays for the past several months.
Super piles at TSI
My tour of Delta Port, with Director Colin Parker on September 12, was impressive and very informative. They truly have a will to improve the process and work with industry to the best of their ability. This will require the investment of stakeholder time, energy and a collaborative approach from all. My visit and tour of Centerm, with Director, Maksim Mihic, was equally informative. They are facing similar challenges as Delta Port and Vanterm.
On the trucking challenges, the President of the British Columbia Trucking Association, Louise Yako, stated that there are 23,000 trucking companies in Vancouver with 90 percent of them operating less than five trucks. Deregulation has continued to drive the deterioration of rates. Ms. Yako claimed the independents are creating most of the problems faced at Vancouver ports. She suggested that shippers educate themselves on the trucking industry and select good operators who respect regulations, safety and are properly insured. Ms. Yako further confirmed that many brokers and owner-operators cut corners and operate on minimal resources. In many cases, cash flow becomes the priority for these independents, hence the incentive to cut rates, in turn creating havoc for the industry. Ms. Yako did not foresee government involvement but warned to 'be careful what you wish for'. Legislation or government intervention, can sometimes create more problems than solutions. The key is for all parties and stakeholders to agree to a fair process and operating guidelines.
Keynote lunch speaker Robin Silvester, President and CEO of Port Metro Vancouver was very enlightening, energetic and optimistic on Vancouver's West Coast operations. He emphasized investments being made, projects in the pipeline, and challenges faced by the port. The trucking challenges are in the process of being resolved, as per Mr. Silvester, by tracking turn times at the terminal and other initiatives that will provide visibility to truckers and industry. He mentioned schedule integrity is a major challenge in 2014 where vessel arrival times continue to deteriorate over 2013 levels which had improved by 12 percent YOY. Investments in IT, reservation systems and visibility is ongoing. The new overpass at TSI (see photo below) is scheduled for completion in October 2014 and will alleviate traffic congestion and provide more fluidity to incoming and outgoing rail capacity. Mr. Silvester showed a true willingness to continue working with businesses to improve process and efficiencies on port operations.
Deltaport overpass to keep traffic flowing scheduled for completion in October 2014
The conference and discussion closed with all stakeholders agreeing that business must continue to talk to business and all stakeholders must continue improving process and develop a platform of accurate communication for vessel arrivals, true dwell times, rail car capacity, loaded to rail, ETD and ETA. The present reservation system is also a major issue with stakeholders necessitating an overhaul. These are the major obstacles facing industry. I emphasized and suggested to Mr. Silvester and stakeholders to think outside the box and consider a joint initiative to create a portal where industry and users can access accurate and relevant data. Mr. Silvester replied that port clients have their own service standards and as independent users we would have to contact each carrier for customer service; further proving industry's point. The rude reality is that carriers blame ports, ports blame carriers, ports blame rail, rail blames port and truckers claim unfair treatment. At the end, no one wins. Finger pointing continues to waste valuable time and deteriorates the reputation of Canada's West Coast as boasting first-class ports.
Industry must align to create transparency and stakeholders take responsibility for their role in the supply chain. This is where industry and business should start. Focus and invest in Vancouver and Prince Rupert as best-in-class ports and destinations of choice for carriers, commerce and industry alike.
We await feedback from the BC Shipping Chamber of Commerce and industry to advise the next steps. CIFFA will continue positive dialogue with all stakeholders and assist with membership where possible to improve process and systems.
Respectfully submitted,
Marc Bibeau
Past President
CIFFA
1 | Page