Terminal will transform grain export: G3

A proposed state-of-the-art export terminal planned for Vancouver will transform grain transportation logistics in Canada, says the man leading the project.

“The facility that we envision in Vancouver will be able to unload a 130-car unit train in under six hours, which is a complete step-change to the industry with respect to efficiency,” said Karl Gerrand, chief executive officer of G3.

It will also lead to construction of a fleet of inland terminals in Saskatchewan and Alberta to service the export terminal.

G3, which is a partnership between Bunge Ltd. and Saudi Agricultural and Livestock Investment Co. (SALIC), has secured the rights to a lease on the north shore of Burrard Inlet serviced by CN Rail.

Earlier this year the company acquired a 50.1 percent controlling stake in CWB.

G3 is conducting a feasibility study into building a terminal capable of exporting six to eight million tonnes of grain per year out of Canada’s busiest port. It would have 180,000 tonnes of grain storage.

Port Metro Vancouver shipped 19 million tonnes of bulk grain, oilseeds, pulses and specialty crops in 2014. Gerrand thinks that export volume will blossom to 25 million tonnes in five years with the addition of the G3 facility.

It would be the first new terminal at the port in 50 years and the first one to have a loop track rail, which means unit trains can remain intact during the entire unloading process.

“The rail companies are very interested in this model because it allows them to keep power on,” said Gerrand.

“They can literally keep the power on, run right around the circle, unload and away they go again.”

One train crew can bring the train to the terminal, unload it and move it off site.

The existing five terminals at the port require unit trains be pulled into a staging yard, broken into three or four pieces and shuttled back and forth to the ladder-style rail tracks for unloading. The process takes 12 to 18 hours.

“We’re essentially doubling or tripling the unload efficiency that currently exists on the West Coast,” he said.

Critics have said a new export terminal would do nothing to improve Canada’s grain transportation system because the port is still serviced by two railways and that is the bottleneck.

Gerrand said the real bottlenecks at the port are the train tunnels and bridges that must be travelled to reach the north shore.

Each time a train passes through a tunnel, that tunnel needs to be ventilated, which is a time consuming process. And the Second Narrows Rail Bridge has to be lifted to allow marine traffic through, which can also lead to lengthy delays.

Moving 130 rail cars through the tunnel and over the bridge all at once is far more efficient than running 50 cars through the obstacle course.

“To those skeptics who say that this isn’t going to add capacity to the north shore, with all due respect it’s out of ignorance for the actual bottlenecks that are causing the problem,” said Gerrand.

The lease for the land at Lynnterm West Gate on the north shore was obtained from Western Stevedoring Company Limited, which will be a minority shareholder in the new export terminal.

Western Stevedoring will relocate its break bulk facility at the site to make room for the new terminal.

“We feel that this property is not only the best deep water port site available in that area but we also feel that it’s probably the last deep water port site that’s available,” said Gerrand.

The terminal will be able to load the largest cargo ships on the ocean, cape-size vessels capable of carrying up to 100,000 tonnes of grain. However, most of the grain will move in Panamax or smaller vessels.

Gerrand said G3 will need to bolster its network of inland terminals to supply the new export terminal, which should be built in time to handle the 2019 harvest.

The company has 15 inland terminals, about half of which are smaller, older facilities. Most of the elevators were acquired when G3 purchased CWB for $250 million.

Four of the inland terminals are loop track facilities under construction in Bloom and St. Adolphe, Man., and Colonsay and Pasqua, Sask. They will be capable of handling 350,000 to 400,000 tonnes of grain annually.

Gerrand estimates the entire inland network has 2.5 to three million tonnes of annual capacity. That is not enough to feed the new West Coast port, considering that much of the existing capacity services G3’s export terminals in Quebec City, Trois Rivieres and Thunder Bay.

He said a number of additional loop track terminals will have to be built on the Prairies to get at least six million tonnes of grain to the new Vancouver terminal.

“We’re pretty pleased with our Manitoba footprint with the work that CWB has done already but we will look hard at Saskatchewan and Alberta for sure,” said Gerrand.

Grain from the terminal will be shipped all over the world but there will be two primary customers.

“I would be shocked if both Bunge and SALIC aren’t two of our largest customers,” he said.

SALIC typically buys three to 3.5 million tonnes of top quality wheat and six to seven million tonnes of barley annually.

Canada is expected to become a top supplier of grain to Saudi Arabia in the wake of SALIC’s new investments. Most of that grain will be shipped through G3’s eastern export terminals but some will be shipped from Vancouver.

Gerrand said G3 will consider making improvements to the CWB’s export terminals in Thunder Bay and Trois Rivieres.

“That’s something I plan on looking at in the first 60 to 90 days once we get that deal closed,” he said.

The feasibility study for building a West Coast port is expected to take four to six months, with a final decision on the project expected by fall or winter.

It has been reported that it will be a $500 million investment, or double the amount spent on acquiring the CWB.

“That’s not a number that came from me,” said Gerrand.

“I would say we’re too early in the process to put a number on it.”

He encouraged farmers to deliver grain to G3 and acquire $5 of equity in the company for every tonne they move through the firm’s inland terminals.

“It’s a great opportunity for farmers to participate and enjoy our growth and be part of our company going forward,” said Gerrand.

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