As the northern British Columbia port of Prince Rupert starts to build a container handling facility, officials with Canada’s special crops industry are looking for ways to ensure that prairie shippers will be able to take advantage of it.
The issue is the availability of containers, and at the moment the outlook is not good.
Francois Catellier, executive director of the Canadian Special Crops Association, came away from meetings with steamship companies in Montreal last week warning that container supply will continue to be a serious problem.
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“We need to put our house in much better order than we saw this year or we’re going to be in big trouble next year,” he said.
At the root of the problem is the hot Chinese economy and that country’s dominance in world container shipping markets.
In 2003, ports in mainland China handled 48 million 20-foot equivalent units, or TEUs, and are expected to handle 100 million TEUs by 2007. When Hong Kong is added in, China accounted for nearly 25 percent of world container traffic and 33 percent of container commodity volumes.
The upshot is that the priority for container carriers is to get their boxes back to China as quickly as possible to take advantage of the hot freight market, even if means shipping empties from North America.
It’s estimated about half of the containers arriving in China are empty, while virtually all that leave the country are filled with manufactured goods.
“They make a lot more money hauling materials from China to North America than carrying crops to Asia,” said Catellier. “The opportunity to drop them off (in the Prairies) is not great when they know they can have it back in China in less time and filled up again with a very lucrative cargo.”
The key issue for prairie shippers is the time it takes to get containers dropped off at prairie locations, loaded and returned to port. If that turnaround time is too long, then the container companies are further ahead shipping empties back to China.
“We’re hearing that turnaround times are 20 to 30 days,” said Catellier. “That’s unacceptable for some of the steamship lines.”
To minimize turnaround time, most processors and shippers must limit the amount of time containers are held for loading.
“We don’t want to use them for storage,” said Catellier. “We really need to keep them rolling as much as we can.”
The railways also have to improve their logistics and co-ordination to move containers into and out of the Prairies as quickly as possible.
Other factors are also affecting container shipments off the Prairies.
One is a shift away from track trading, in which products are shipped to the port in bulk and then stuffed into containers, due to contractual issues arising from the myriad of bankruptcies that have plagued the special crops industry in recent years.
Instead, most containers are being stuffed on the Prairies, which tends to be a slower process.
There is also growing demand for containers from non-traditional cargoes including malting barley, canola and dehy alfalfa, which is reducing supplies for special crops shippers.
Catellier said the association hopes to organize meetings to bring together the railways, steamship lines and processors to talk about ways to improve the situation.
Barry Prentice, director of the University of Manitoba’s Transport Institute, said the Prince Rupert container port will be a success regardless of whether a significant amount of grain moves through the facility.
One thing that could encourage more shipments of containerized grain would be for the federal government to exempt containers from the cap on railway grain-hauling revenue. The railways face higher costs in handling containers than bulk grain, so with a cap in place they have no economic incentive to haul grain in containers.
“The regulations force shippers to use bulk, which is yesterday’s system,” he said.
Walter Paszkowski, economic development officer for the County of Grande Prairie and a member of the Prince Rupert Port Authority, said he’s confident that agricultural shippers will find a way to make good use of the new container facility at the port, which is scheduled to start operating in 2007.
With customers demanding more product traceability and identity preserved shipments, grain shippers will have no choice but to make more use of containers.
“Canada is well behind in containerization and it handicaps us in world markets,” he said. “There is a huge opportunity for agriculture.”
Paszkowski acknowledged that more work needs to be done to put the right physical and regulatory infrastructure in place to take full advantage of that potential, but said he’s confident that will happen.
“We don’t have an option. If we’re going to be globally competitive, this and other container sites have to be developed quickly.”
