A fast boat to China could leave loaded from Rupert

The opening of the Fairview Container Terminal could see an increase of Canada’s natural resources leaving our country packed into containers for shipment.

It would be a new arrangement for the Port of Prince Rupert, which for years has been a bulk goods shipper in the world of natural resources whether it is coal, grains or lumber products.

With a number of containers arriving in our country on a regular basis, a good number of them remain empty as the conduit of trade in finished goods is weighed heavily in China’s favour at the moment.

By using the empty containers to ship any number of goods back to Asia, a good number of those empty containers could be full in the foreseeable future.

It’s a controversial topic however, as a number of Canadians would rather have our resources developed in Canada, providing a finished product and jobs for Canadians. It could help shore up a value added industry that at the moment seems on its knees.

But in the end, we suspect that the demand for our natural resources will outstrip the ability to develop any massive value added infrastructure, meaning that trade along the Northwest Corridor and through the Port of Prince Rupert will be in a two way direction. With our trade to the Orient and beyond in its rawest form, while the containers returning from Asia will still be full of the consumer goods that line our store shelves on a daily basis.

The Daily News featured the export developments as the front page story of Wednesday’s Daily News.

PORT LIKELY TO HAVE KEY ROLE EXPORTING GOODS TO CHINA

By Leanne Ritchie
The Daily News
Wednesday, November 14, 2007
Pages one and three

Canadians may be hungry for imported goods from the Far East, but the Chinese are even more eager for the natural resources that Canadian businesses produce, says a new study by Statistics Canada.

According to the study released on Thursday, Canadian export volumes are growing at twice the pace of imports, and most of those exports are natural resources.

Between January and July 2007, Canada's exports to China surged 43 per cent from the same period in 2006, while its imports from China rose by 17 per cent.

This rate of growth in exports in 2007 surpassed that of any other G7 country, and put China neck-and-neck with Japan as Canada's third largest export market.

The Prince Rupert Port Authority, CN Rail and Maher Terminals recently opened the Fairview Container Terminal, with the idea of not only capturing imports from Asia to North America, but also of handling outbound shipments of pulp, paper and other commodities, that will be stuffed into containers for the return journey.

While CN has been confident it will see full inbound containers, it has been looking to the natural resource sector as a way to fill the returning containers.

Meanwhile, Canadian import volumes continue to grow, although not as quickly as in previous years. Canada's exports to China rose sharply between 2002 and 2006, from $4 billion to nearly $8 billion. In 2005 and 2006, gains were subdued after a surge in 2004.

"Canada is clearly benefitting from the magnitude of China's demand for natural resources. The nation of more than 1.3 billion people is expanding its manufacturing base and building massive infrastructure projects, from ports and bridges to facilities for the 2008 Olympic Games," reads the study.

"This demand has propelled world commodity prices to unprecedented levels. In 2007, metal prices were more than three times higher than in 2002, and crude oil prices quadrupled to more than $90 US per barrel. By pushing prices higher, China has boosted Canada's natural resource exports to other countries."

Increasing exports to Europe and Asia, combined with relatively little growth in exports to the United States, resulted in a sharp increase in the share of Canada's exports held by countries other than the United States.

Nearly one-quarter (24 per cent) of Canada's exports headed to non-US destinations in 2007, compared with 16 per cent just five years earlier.

Not only does the rise in trade potential prod more trade through Fairview, but also Prince Rupert Grain and Ridley Terminals.

Forestry and agricultural exports, notably wood pulp and grains, comprise 16 per cent and 14 per cent of Canada's exports respectively, with machinery (12 per cent), energy (3 per cent) and consumer goods (1 per cent) rounding out the total.

Canada's metal exports to China between 2002 and 2006 registered faster growth than those to any other major market.

During that period, exports surged from $300 million to $2 billion. So far in 2007, metal exports to China have been running 70 per cent higher than in 2006, a much faster pace than in previous years

Exporting through a fire hose, importing through a straw

In his column for Macleans magazine this week, Paul Wells explores the prospects of Asian trade through Canada’s Pacific Ports and suggests that in order to capitalize on the booming Asian economy, Canada needs to make its ports much larger and do it rather quickly.

With the amazing statistic that Shanghai exported more containers in one month (July) than Vancouver received in a year, you begin to understand the scope of the situation that is unfolding on our doorstep.

Wells says that Canada’s west coast ports will have to get bigger and be prepared for the continuing wave of trade; otherwise that trade will migrate to those ports that are ready for it.

Part of the problem is the limitations on borrowing that the federal ports face, and Wells suggests if Canada is going to get serious about its Pacific Gateway there will have to be changes made in the way we finance our gateways.

It’s an interesting look at the world that is soon to come to the shores of Prince Rupert and reading the article makes you realize that Phase II and even a Phase III of the Fairview Container Port may not be as far off as one might think.

Macleans
October 24, 2006
Trying to unclog Canada's gateway to riches
Harper's $591 million for B.C. port expansion won't be enough to lure the Pacific Rim's lucrative cargo trade
PAUL WELLS

Stephen Harper popped up in Vancouver last week to confirm the Conservative government's commitment to a $591-million British Columbia port expansion originally planned by Paul Martin's Liberals. The next day, I telephoned a prominent Vancouverite who likes to keep an eye on Canada's relations with Asia. Excellent announcement, this person said. Great news. Good on Harper for seeing the opportunity in a British Columbia that's open to the world.

"Now," he said, "can we go off the record?" Sure. I'm easy.

"There's nothing surprising or new here," my source said. "This investment is about two decimal points too small" -- that is, one one-hundredth -- "to catch the attention of major players in Asia."

Whoa. We're supposed to regard half a billion dollars as chump change?

But when some Vancouverites talk this way, it's only because they've been looking west, across the Pacific, and paying closer attention than some of us in Canada's landlocked centre. One direct result of the stampeding growth in Asian economies, especially China's, is a massive expansion of cargo exports. Those exports are a direct source of considerable wealth for whichever port can handle them -- a central theme of one of the year's most surprisingly readable books, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, by New York economist Marc Levinson.

It is exceedingly difficult for Canadians, used to comparatively poky changes in the pattern and scale of our trade relationships, to wrap our heads around what's happening off our left coast. Container-port traffic in the Asia Pacific is growing by about two million tonnes per year -- which happens to be the total current capacity of the port of Vancouver. More cargo traffic went through the port of Shanghai in July than the entire Canadian Pacific coast sees in a year. And that's just Shanghai. Busan, in South Korea, quintupled its port capacity -- starting about where Vancouver is today -- between 1990 and 2004.

So some people in British Columbia worry that, while the Asians are sending cargo out of their ports through a firehose, Canada is drinking it in through a straw. And while nobody is willing to say a harsh word about the very substantial federal investment, they worry that widening the drinking straw may not be quite enough. It makes tremendous sense for that traffic to come to Vancouver and Prince Rupert, the closest North American ports to Asia. But Asian shippers, too, are easy: if Vancouver and Rupert aren't ready, the cargo will simply go to ports that are.
One of the people pointing this out is Gordon Campbell, the premier of British Columbia, who ventured east to Toronto this week and stopped to chat with Maclean's reporters and editors while he was there. "I'm pleased to have the money," Campbell said of Harper's investment. "But we need a lot more. For sure we need a lot more."

Let's be clear. I intend no specific criticism of Harper's government, which has gone substantially further than Martin's did in putting the so-called "Pacific Gateway" money to real use. During his visit to Vancouver, Harper committed $321 million of the total $591-million envelope to specific projects, twice as much as Martin committed. Again, that's largely because we're a year further along and more road, rail and port projects are ready to receive federal cash. (I also intend no criticism of Martin's government, you see. I'm trying to be a nice guy this week.) Taxpayer money simply can't account for investment on the scale that's needed to transform our Pacific coast.

Indeed, as Marc Levinson pointed out when I interviewed him, taxpayers shouldn't be on the hook for most of a container port's cost, because a port will always be a somewhat risky investment. A collapse in the Asian economy or another change in shipping patterns could empty a once-bustling port. Mostly you need private investment, with risk carried by private investors. But public seed money can help greatly. So can close attention from all governments, to straighten out regulatory and jurisdictional kinks that would otherwise simply make British Columbia too much of a hassle for foreign investors to bother. Up at Prince Rupert, for instance, the Port Authority's main worry is the Canada Marine Act, which allows a port to borrow only up to $22 million for capital expansion. Raising that limit could radically increase the scale of port expansion in Prince Rupert.

That'd be nice for two reasons. First, it's already getting congested farther south. The Delta Optimist newspaper has become a twice-weekly chronicle of the way traffic out of Deltaport, near Vancouver, complicates local residents' lives. Second, there's a hint of destiny involved. Charles Hays founded Prince Rupert in 1906 in hopes of making it a key port of trade with Asia. Hays drowned on the Titanic. But maybe he was just a century or so ahead of his time.

Read Paul Wells's weblog Inkless Wells