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FREIGHT DEMAND
OUTLOOK
SPECIAL REPORT
CONFERENCE
Stories by ALAN DANIELS
Resource sector producers paint
GLOOMY SHORT-TERM PICTURE
Morley Strachan, executive sulphur – reported grim statistics gical coal – used in steel-making,
vice-president of TSI Terminal and offered gloomy short-term pre- and the main product of western
Systems, operator of Vancou- dictions. Canada’s coal mines – had slumped
ver’s two largest container termi- There was no good news except to $75 a tonne from the $140 range
nals, said it best as he stepped up the consensus that the global econ- a few months ago, Mr. Wright
to the microphone. “Good after- omy is expected to recover – even- added, “The key for us in Canada is
noon ladies and gentlemen,” he tually – although it may take years. what’s going to happen with our
said. “Is anybody not depressed “Things have never been worse carry-over tonnage and what’s
yet?” in the forest industry,” said Daryl going to happen to some of the con-
There was laughter, but few dis- Swetlishoff, paper and forest prod- tracts. Will they be met or not? Do
senters, among the almost 200 del- ucts analyst and senior director at the buyers want to stick it to us, or
egates from all sectors of Canada’s Raymond Jones Ltd. “I have said it do they want good relations
transportation industry attending a for years and I have been right every because when things turn around
conference in Vancouver on the out- time.” they will want that coal?”
look of freight demand. Titled Insight For coal, the leading commodity All speakers had more questions
Versus Risk, it was jointly spon- shipped through Port Metro Vancou- than answers.
sored by Transport Canada and ver, the export numbers are equally Barry Clarke, principal of Penta-
WESTAC, the Vancouver-based bleak. Sul Inc., got a chuckle from dele-
Western Transportation Advisory “What has happened in the last gates when he noted that the price
Council. couple of months is a worldwide col- of sulphur, a byproduct of natural
During the Dec. 3 opening ses- lapse in the demand for steel,” said gas production, reached a peak of
sion, representatives of Canada’s Allen Wright, president and CEO of $820 a tonne last summer. “This is
four major resource sector produc- the Coal Association of Canada. the sulphur price, not the gold price,”
ers – coal, grain, forest products and Noting that the price of metallur- he quipped. It was a bonanza for
Photos: WESTAC
Daryl Swetlishoff Allen Wright Barry Clarke
Things never worse Worldwide collapse Haven’t found the bottom
16 • Canadian Sailings • January 19, 2009
He said that it will also result in
more north-south trade and more
SPECIAL REPORT
trucking of short-haul exports.
Another brighter forecast was
made regarding fertilizer exports.
Analyst Tom Maville, president of TL
Maville & Associates, said the
demand for fertilizer is driven by the
world demand for food, and the cur-
rent world population of 5.6 billion is
projected to increase to 9 billion by
2050.
In the shorter term, increased
standards of living in Asia, Africa and
Latin America has caused a shift in
demand from starch to grain, which
Tom Maville Kristine Burr also benefits fertilizer producers.
Brighter forecast for Build a system The co-sponsors of the confer-
fertilizer exports for the future ence, which was subtitled “Is west-
ern Canada’s transportation system
up to it?” said registrations exceed-
producers that he said was increase of 1 to 1.5 per cent a year. ed expectations. “Clearly western
“unprecedented and unsustainable.” Mr. Penner said this is partly due Canadians are as passionate about
“It collapsed more quickly than to crop diversification as farms take transportation as ever,” said Kristine
anyone would have expected,” he acreage out of wheat and durum Burr, assistant deputy minister, poli-
added. “By July 1, there was no and replace it with oilseeds, canola cy group, Transport Canada. Noting
demand and product couldn’t be and specialty crops. “There are that it was one of four such confer-
moved at any price, and today we some fairly significant shifts that are ences to be held across Canada,
haven’t found the bottom; we are happening and will continue,” he she said there were 193 registered
still dredging. By year-end, potash said, noting that the U.S. market is delegates in Vancouver.
shipments to Asia were one million growing in significance. “Yes, we are facing economic
tonnes lower than expected.” “Overall, we expect crop produc- challenges over the next couple of
On the grain side, the news is tion to be higher in 2015, about 12.5 years that are daunting,” she added,
brighter. Chuck Penner, senior con- million tonnes of increased produc- “but we are looking ahead 20 to 30
sultant with Informa Economics, told tivity. More specialty crops results in years, talking about building a sys-
delegates that despite stagnant crop an increased need for containers tem for the future.”
production and a dismal decline in and that’s good news for the ship-
western Canada, the outlook going pers of empty containers out of Van-
forward to 2015 is a production couver.”
January 19, 2009 • Canadian Sailings • 17
FREIGHT DEMAND
OUTLOOK
SPECIAL REPORT
CONFERENCE
Delegation to Asia
returns with
optimistic message
A two-week Port Metro Vancouver delegation to Asia berth at Deltaport, which is scheduled to come online in
– Canada’s biggest offshore market – has returned with 2009, an entirely new terminal to be built during the next
an optimistic message despite the current worldwide eight years or so, plus capacity expansions at Vanterm
financial crisis. and Centerm in Burrard Inlet.
Delegates to a major transportation conference in “It’s not just containers,” he said. “This is a shared
Vancouver heard from port executives and West Coast supply chain in this gateway and we are going to see
terminal operators that infrastructure expansions will pro- expansion for bulk and breakbulk commodities, too. We
ceed as planned, and, coupled with productivity increas- are expanding the whole supply chain.”
es across the board, there will be sufficient capacity to He cautioned, however, that the port will require an
meet demand well into the future. additional of 2,500 acres of developable land by 2020,
“Clearly we came back from Asia with a message that adding, “We have to make sure we have policies in place
things will get worse before they get better,” Chris Bad- to make sure that land is available when we need it over
ger, chief operating officer for Port Metro Vancouver, told the next 15 years to ensure the continued reliability of the
delegates from across Canada who attended the confer- gateway. We are expanding right on time, working on key
ence on freight demand outlook. “Our economy is performance indicators throughout the supply chain and
stronger than many others out there and we believe the making them visible. Every year we are going to get bet-
future looks very positive.” ter.”
Capt. Badger said there will be seven million TEUs of Capt. Badger said productivity improvements “have
additional capacity in the port by 2025, including a third been a staggering 40 per cent” during the last 12 months
18 • Canadian Sailings • January 19, 2009
SPECIAL REPORT
Photos:
CHRIS BADGER MORLEY STRACHAN PAUL WAITE
Expanding whole Looking for reliability in Capacity in right place
supply chain troubled times at right time
due to faster railcar turnarounds, road capacity. We have capacity at to perceptions of labour disruptions
improved labour productivity, the terminals and the railroads, and and inconsistent performance – but
reduced truck times at terminals and expansion projects are ongoing to not this time.
shorter dwell times for containers. deliver the consistency and reliabili- “There is a general level of satis-
Morley Strachan, executive vice- ty that our customers are looking for faction with the performance of the
president of TSI Terminal Systems, in these troubled times. TSI remains gateway,” he said. “We have capac-
operator of Deltaport and Vanterm, committed to investing in the future.” ity in the right place at the right time
who was part of the Asia delegation, Paul Waite, vice-president for today and more is planned for the
said the message that was rein- IMX (intermodal excellence) at CN, future.”
forced to Canada’s customers was, said previous delegations to Asia
‘We are open for business. We have have returned with a black eye, due
January 19, 2009 • Canadian Sailings • 19
FREIGHT DEMAND
OUTLOOK
SPECIAL REPORT
CONFERENCE
They said it...
“We are in the midst of a global
recession and conditions will probably
get worse before they get better. When
the rebound comes, likely it will be a
strong one. In the meantime, we are in
for a rollercoaster ride, so fasten your
seatbelts.
“A number of countries think they
may seem to be immune because their
domestic economies seem to be fine,
but there is no global de-coupling from
the recessions that are hitting the U.S.,
Western Europe and Japan. There’s a
plethora of bubbles bursting.”
Ruth Sol, WESTAC president,
pointing out that three years ago
Sara Johnson,
the conference theme was Plan-
Managing Director,
ning for Success: “Frankly, if we
Global Macroeconomics,
had to do it all over again, I would
IHS Global Insight (USA)
call it, What do we do now?”
Allen Wright, president and “Things have never been “By July, sulphur peaked at
CEO, the Coal Association of worse in the forest industry. I $820 a tonne, which was
Canada, referring to skilled have been saying that for several unprecedented and unsustain-
people leaving the job mar- years now and I have been right able. This is the sulphur price, not
ket: “From what’s happened every year.” the gold price. From July 1, there
in the stock market, I’m on the was no demand at any price and
Freedom 85 plan.” Daryl Swetlishoff, today we haven’t found the bot-
Senior Managing Director, tom. We are still there dredging.”
Paper and Forest
Products Analyst, Barry Clarke, Principal,
Raymond James Ltd. PentaSul Inc.
“There will be an economic recov- Western Canada is in a continued
ery and furthermore the response good position but has to understand
from trade comes quite quickly. It’s and plan around this gradual long-
usually one of the first things to turn term deceleration in demand and
around and you can see fairly dra- widening of alternative suppliers.”
matic responses in demand for trans-
portation. Chris Holling,
“The long-term trade numbers are Executive Managing Director,
still there and are still strong, but the Global Trade and
next 20 years will not look like the last Transportation Advisory Services,
20 years in terms of levels of growth. IHS Global Insight (Canada) Ltd.
20 • Canadian Sailings • January 19, 2009
They
SPECIAL REPORT
said it...
“A sustainable gateway is not
negotiable and we will have to
work for this … Shareholders will
not invest in companies that have
poor environmental records. “The conversion of Lynnterm
Companies such as Wal-Mart (from forest products) to contain-
and Ikea are asking shipping ers will not proceed. We will
lines what is their environmental remain committed as a breakbulk
footprint on product transporta- hub to our core shippers and car-
tion. Lloyd’s is fixing insurance “We are passionate about the riers and to the sustainability of
premiums based on green certifi- environment. Neptune is an the breakbulk trade. With this
cation … It’s not how much will it industrial terminal in the middle of backdrop and the forecast for
cost, but how much it will cost if an affluent residential area. Being 2009, the breakbulk system can
we don’t do it.” a good community partner is vital easily accommodate extra cargo
and we take that seriously.” volume.”
Claude Comtois,
Professor, Jim Belsheim, Tim Chapman,
Université de Montréal President, President and CEO,
Neptune Bulk Terminals Western Stevedoring Co.
“One of the things we don’t do a
good job of in Canada – to be honest –
is compare. I talk to supply chain man-
agers across Canada and they don’t
know what their total supply chain cost
is compared to the total costs of the
company.”
Bob Armstrong,
President,
Supply Chain & Logistics
Association Canada
“We can’t ride roughshod over
First Nations. We can’t pretend
they are not there. They have got
claims that are backed up by Tom Prendergast,
jurisprudence and constitutional CEO,TransLink,
law to a good chunk of the land. explaining the concept
What we have chosen to do is to of a frequent transit
give them a piece of the action in network: “If you have
some way and make them allies to get into your pocket
as opposed to otherwise.” to find out when the
next bus is, you proba-
Daniel Veniez, bly won’t take the bus.”
Chairman,
Ridley Terminals Inc.
January 19, 2009 • Canadian Sailings • 21
FREIGHT DEMAND
OUTLOOK
SPECIAL REPORT
CONFERENCE
They said it...
Dave Watson, president of
Canadian operations, OOCL,
noting that 80 container ships
were currently laid up, including
5,000- to 8,000-TEU vessels:
“Freight rates are down, asset
values are down, all the indica-
tors are down. At this point, we
are looking at the survival
of the fittest.”
“We have 1,000 casuals in our
“We operate in a free market. workforce and most were working
It’s like trucking. There’s nothing a fair number of hours. But now,
to prevent anyone from going to in (the six weeks prior to Dec. 3),
one of our customer’s docks and many of these 1,000 people
competing with us. We have to be aren’t getting any work at all. One
nimble to stay ahead of the of our challenges … is to make
game.” sure we can retain some of these
people in case things change on
Steve Frasher, a dime.”
CEO,
Washington Marine Group Tom Dufresne,
President,
International Longshore and
Warehouse Union Canada
“(The recession) is going to be
a case of making sure we are “To quote a respected politician –
ready to ramp down smartly so it obviously not one of ours – ‘Yes we
also allows us to preserve our can.’ Yes we have challenges, but
ability to pick back up to ensure we have systems in place. You
we are ready to go when every- can’t sit on your hands, but we can
body else is.” do it.”
Bill Waters,
Mike Franczak, Professor Emeritus,
Vice-President of Operations, Centre for Transportation
Canadian Pacific Studies,
University of British Columbia
Sauder School of Business
22 • Canadian Sailings • January 19, 2009
They said it...
SPECIAL REPORT
“It is true how the perception of Canada as a trading partner has changed,
and we are now viewed in a positive light. That only happens because we are
all working together in making sure our competitive position remains strong.”
Helena Borges, Director General,
Surface Transportation Policy, Transport Canada
WESTAC president Ruth Sol asked several
participants what they wanted for Christmas.
Here are some of the answers.
Tom Dufresne: A change of government to a more labour friendly
government.
Mike Franczak: We need to have a vision for Greater Vancouver.
We cannot be allowed to operate our parts of the chain at the
expense of others. We need a vision to be a world-class transporta- GORDON HOUSTON
tion system, so we have gateway recommendations, agreed to and President and CEO,
signed off by all partners, so when we come out of the slump we are Port Metro Vancouver
ready to roll. “We need government regulators to
Steve Frasher: We have been asking the government for tax work together on development
changes that would allow shipowners to build in Canada, to get struc- approvals to a time frame that is
tured financing and accelerated depreciation in the same package. If acceptable. The approvals time frame
this would happen, you would have more shipbuilding in Canada. cannot continue that exists today.”
January 19, 2009 • Canadian Sailings • 23
