Port Metro Vancouver plans to introduce user fees this January to recoup its investment in the Asia Pacific Gateway.
The gateway infrastructure fee (GIF) will be implemented to recover the cost of infrastructure projects developed under the port’s gateway infrastructure program (GIP) in the Roberts Bank rail corridor and the north and south shore trade areas. The fees will affect cargo and container traffic differently in each area.
Of the $717 million budgeted for GIP projects, industry was required to provide $167 million. The port pre-funded the industry portion in part through a $100 million bond, the first for a Canadian port authority according to Port Metro Vancouver CFO Allan Baydala.
“We saw this in many cases as a generational investment,” he said, “and we just couldn’t afford as an industry to let it pass us by.”
At Roberts Bank, containers will initially pay a $0.30 per TEU (standard 20-foot containers) fee in 2011-12. That will increase to $0.60 in 2013-14 and $1 in 2015. A $0.03 per tonne charge will be applied to cargo in 2011-12. That’s scheduled to rise to $0.06 in 2013-14 and $0.10 in 2015.
The south shore trade area will be hit with the highest rates.
Containers will be charged $0.50 per TEU in 2011-12, $1 in 2013-14 and $2.13 in 2015. Cargo fees will start at $0.05 per tonne in 2011-12 and increase to $0.10 per tonne in 2013-14 and $0.22 per tonne in 2015.
The north shore cargo will be charged $0.05 per tonne in 2011-12, $0.10 in 2013-14 and $0.15 in 2015.
The fees are scheduled to be in place until 2040. The port hopes to recoup 90% of its investment.
Baydala said port competitiveness concerns were raised about the fees early in the industry consultation process, but port analysis determined the projects the fees are paying for would improve that competitiveness.
He pointed out that less congestion will improve port efficiency and the additional costs from the fees “paled” in comparison to those implemented in jurisdictions such as California.
Baydala also confirmed that the port decided to delay the GIF’s implementation and phase it in over a number of years because of the economic downturn. It was originally going to be introduced in early to mid-2010.
The GIF rate for 2015 to 2040 will be calculated after GIP capital spending is completed by 2014, a stipulation required to receive government funding.
Baydala confirmed that there will be a proposed $300 annual fee to cover the costs of the port’s truck licensing system. It will be applied to the approximately 2,200 trucks serving the port, about half of which are owner-operated.
Higher costs associated with a more robust licensing system introduced after the 2005 labour dispute at the behest of the federal government have been borne by the port, he said.
“We have to recover those costs from somewhere in our fee schedule.”
While some key stakeholders such as the BC Trucking Association are aware of the proposal, Baydala anticipates the public comment and consultation period will last at least until the end of the year.
David Gillen, director of the centre for transportation studies at UBC’s Sauder School of Business, said the GIF could affect the port’s global competitiveness.
“Margins on container movements are fairly thin, so even a small fee increase per unit adds up to lots of money,” he said. “For bulk, [it’s] not clear.”
But he still supports the introduction of fees and believes users should expect to partially foot Gateway costs in exchange for the improved productivity.
“Prices should reflect the value of the product, not market power,” said Gillen. “If not, there’s no incentive to either invest or consume properly. Prices are signals, and we have ample evidence that sending the wrong signal led to many long-term problems.
“The last thing one wants is to have longer-term investment decisions based on false prices that may – and should – increase in the future. A fundamental problem with our infrastructure now is it’s based on under-pricing.”
For Eric Waltz, president of Global Container Terminals Canada, operator of the Deltaport and Vanterm container terminals, his company is committed to strengthening the Gateway for the benefit of its customers and the Canadian economy.
“We understand that the need for continued investment in infrastructure is a means to strengthen the Gateway and ensure that we are competitive,” he said. “Our company will continue to focus on operational excellence at our terminals and on opportunities for our customers in order to be more competitive.”
Denis Horgan, vice-president and general manager of major coal exporter Westshore Terminals LP at Roberts Bank, said the cargo fees would not affect his business’ competitiveness at this time. But he said he didn’t support the fees because the company was not part of the pre-consultation process.
“We are hard-pressed to see what great advantages it has for us.”
While he supports the port leveraging as much government spending as it could, the money that Westshore Terminals has been investing to improve its throughput provides increased revenue for the port authority under its lease agreement.
“We feel we are already paying our own improvement fee.”