BCAdvantage 2008; Business and investment across British Columbia

Now touting one of the most diverse port facilities in North America, the amalgamation of British Columbia’s three Lower Mainland port authorities has thrown open the doors for increased trade and investment opportunities.

The Vancouver Port Authority, the Fraser River Port Authority and North Fraser Port Authority amalgamated January 1 to form the Vancouver Fraser Port Authority, which will now handle more than $53 billion worth of goods annually, generating an estimated $6.3 billion in GDP.

“We did this to build this gateway for the next 25 to 35 years,” said Gordon Houston, president and CEO of the Vancouver Fraser Port Authority (VFPA). “If this business from Asia is going to be sustained – and we all believe it will be at least until 2020 and beyond – we need to prepare the marine gateway very similar to the way that the province and the federal government have been preparing behind us with changes to roads and bridges, and policy and regulations. This is being done to make this the most attractive gateway to North America for the Asia Pacific region.”

A combined land use plan will help the port better plan for future expansion and better integrate itself with local and regional transportation systems.

“There has always been a realization that the land use plan for the port affects the transportation routes behind us, which in turn affects development, which affects industrial uses,” said Houston. “With three ports planning independently, it just wasn’t a good situation.”

Amalgamation costs will be paid back within three years, according to Houston, and will generate further administrative savings – but that was not the intention. “The ports should not be competing … we should be co-operating with each other, and the best way to do that is to amalgamate,” he said. The VFPA will have revenue in the order of $125 million to $135 million annually, with net income in excess of $30 million a year, Houston confirmed.

Co-ordinated land use planning will open new avenues of development that were not possible before, thanks to a new combination of land and capital. Short seas shipping in the Fraser River is seen as one key future development.

“There is an opportunity to take a lot of trucks off the road and use tugs and barges to move some of those goods that traditionally move around the Lower Mainland,” said Houston. “Our goal is to develop more business on the river. In our view, it is under utilized. … There is a lot of capital now to invest in the Fraser River that just wasn’t available before.”

David Emerson, the Federal Minister of International Trade and Minister for the Pacific Gateway and Vancouver-Whistler Olympics, called the amalgamation a “key building block of the Asia-Pacific Gateway.” He claims it “will allow us to better leverage this important asset and make it a preferred port of call for shippers from Asia.”

The amalgamation helps Vancouver-area ports compete internationally, according to David Gillen, director of the Centre for Transportation Studies at the University of British Columbia’s Sauder School of Business.

“The three ports were too small to be effective competition to the other ports on the east and west coasts which they compete against, and they were also not effective competitors with one another,” said Gillen.

Amalgamation may also increase cargo specialization, which, in turn, could increase aggregate capacity and allow the single authority to generate greater throughput than the previous three ports operating individually, he added. However, “arcane” Canadian port policy still does not provide authorities enough opportunity for entrepreneurship and/or access to capital.

“U.S. ports have some significant advantages due to their access to capital through various means,” said Gillen. Despite that, Washington state ports are now casting a wary eye northwards, with one American legislator proposing the amalgamation of the ports of Seattle, Tacoma and Everett into the Puget Sound Port Authority. That would be in response to the Vancouver amalgamation and intra-port competition within Washington state.

Stalling container volumes at Puget Sound ports have been blamed on, among other things, the opening up of “alternative” shipping routes, including the newest North American West Coast container terminal at the Port of Prince Rupert on B.C.’s northern coast.

Cargo volumes at the Port of Prince Rupert are at their highest in a decade, with 10.7 million tonnes in 2007 – a 36.8% increase over 2006 and a 237% jump over 2005. At the time of writing, the new 500,000 TEU-capacity Fairview container terminal had processed 16,703 containers since commencing operations on October 31 last year.

Don Krusel, CEO and president of the Prince Rupert Port Authority (PRPA), hopes the terminal will hit capacity this year. He’s optimistic about announcements in the “very near future” welcoming new shipping line services to the terminal. The general slowdown in container traffic at west coast ports, due to weak Christmas sales caused by a soft U.S. economy and its troubled housing market, will determine when the terminal reaches capacity, he added.

Environmental assessment documentation has already been filed for the second phase of the container terminal expansion, and the PRPA is looking to have necessary permits in place by the end of the year to start construction in early 2009. Albertan business interests are also increasingly calling at the port.

“There is a natural geographic connection that Prince Rupert has to Alberta,” said Krusel, who anticipates there will be Alberta-related announcements at the port this year. “We are continually being approached by Alberta interests about moving goods through here.”

For Krusel, the merger of Vancouver-area ports was a “natural evolution.”

“I think it is a good move for the international shipping community. There is a great role to be played by both trade corridors and both gateways. The opportunities are so great that I don’t think either organization feels that it is in competition with each other. Rather, that we must work co-operatively in order for British Columbia to take advantage of both gateways.” •

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