The first seven months of operation at Prince Rupert’s new container terminal have produced a mixed bag of results.
On the negative side, the number of containers moving into the port from Asia carrying consumer goods for distribution across North American has been below expectations.
On the positive side, the backhaul for containers carrying North American products to the port for shipment to Asia has been unexpectedly strong.
The new terminal has an annual capacity of 500,000 20 foot equivalent units (TEUs).
So far it has been operating at about 20 percent of capacity, said Shaun Stevenson, vice-president of marketing and business development for the Prince Rupert Port Authority.
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The port has shipped an average of 1,800 TEUs a week, which works out to a seven-month total of 50,400 TEUs.
“The volumes have not met the expectations we had when we started construction, but we’ve opened up a new terminal in the midst of an economic slowdown in the U.S.,” said Stevenson, adding container shipments to all west coast North American ports are lagging behind last year.
“We anticipate that volume will increase as we enter the peak shipping season over the next few months.”
Container business generally increases through the summer as goods intended for sale at Christmas are shipped to North America from Asia.
It’s a different story for westbound traffic that carries goods to port for export to Asia.
Stevenson said it was expected that 20 to 30 percent of containers would carry a backhaul, but in fact it has been 40 to 50 percent, a reflection of strong U.S. exports because of the weak American dollar and rising demand in Asia.
The backhaul includes agricultural and forest products and aluminum ingots.
One of the major questions surrounding the development of a container port at Prince Rupert was whether its catchment area could generate strong exports. So far, the answer seems to be yes.
“It’s been a pleasant surprise for the carriers serving Prince Rupert,” Stevenson said.
Most agricultural exports have come from the U.S. Midwest through Chicago, but the hope is that Canadian National Railway’s investment in new infrastructure in Edmonton could create traffic in Canadian agricultural products.
A number of communities in Western Canada, including Winnipeg and a joint effort involving Saskatoon, Moose Jaw and Regina, have expressed interest in developing inland port facilities to take advantage of the increased container traffic moving through the Prairies.
Stevenson said any increase in handling capacity is positive but cautioned that proponents need to focus on shippers’ needs.
“Some of these projects seem to have been more economic development in nature, to create local opportunities,” he said, declining to identify any specific proposal.
“There are a lot of aspirations by cities along the corridor to play a role in transportation but the real opportunity may be more looking at the marketing opportunities.”
Prince Rupert’s container facility is Phase 1 of the port’s development plan. Phase 2 will cost $650 million and expand annual capacity to two million TEUs.
Engineering work has been completed and the project is in the environmental review process.
The timetable calls for construction to begin in 2010, assuming all necessary approvals are received.
Stevenson said port officials are undeterred by the slower-than-expected start or the controversy surrounding CN’s plans to improve its rail network around Chicago.
“Fundamentally, the outlook remains strong for growth,” he said, with projections for a 300 percent increase in container movements into the west coast of North America between 2004 and 2020.
The rail controversy involves CN’s planned $300 million purchase of the Elgin, Joliet and Eastern Railway to bypass Chicago. That would cut nearly 30 hours off the time it takes for trains to get to Memphis, a key distribution point for containerized goods, and make Prince Rupert more competitive with the heavily used port of Los Angeles-Long Beach.
Local environmental groups have complained that the purchase and resulting increase in traffic on the EJ&E line will negatively affect those living nearby. They recently received a letter of support from Illinois senator and presidential hopeful Barack Obama.
CN officials have rejected the concerns, saying rail traffic will increase only slightly and cause minimum disruptions to local road traffic.
CN spokesperson Mark Hallman was recently quoted in published reports as saying the outcome of the dispute could affect Prince Rupert.
“We don’t expect so in the short run, but failure to get the expected efficiencies could make the Prince Rupert-CN option less competitive with other ports and railways over time,” he said.
Stevenson said the uncertainty in Chicago won’t affect plans for Phase 2.
“Our intention is absolutely to go ahead,” he said.
