Memphis readies itself for Octobers first container ship

The first 5500 containers of consumer goods will arrive at the Fairview Container Port on October 31st, 133 hours later a good number of those containers will find a southern welcome that could change the economic dynamic in Memphis, Tennessee.

The Memphis Commercial Appeal sent correspondent Jane Roberts to the Northwest to get a first hand look at the Pacific port that is going to have such a huge impact on the American south.

Their website features her findings about Prince Rupert, the Fairview container port and the infrastructure that CN is building in Memphis, three unique pieces of a puzzle, all set to come together at the end of this month.

Far-west Canadian harbor closes distance between Memphis, Pacific markets
By Jane Roberts (Contact)
Memphis Commercial Appeal

Sunday, September 30, 2007

PRINCE RUPERT, BRITISH COLUMBIA -- On the foggy, rainy shores of this outpost in northern Canada, a statue of Charles Hays stands like a sentry over the comings and goings of what until now has been a quiet Pacific fishing and logging town.

Nearly 100 years ago, Hays, an American, was in charge of building the grand trunk rail line across northern Canada, what was to be major link in the silk trade between China and Europe.

He chose Prince Rupert because it not only had the deepest warm-water harbor of any city on the West Coast, it was also closest to China.

When the line petered out after Hays went down with the Titanic, the little town with the deepest natural harbor on the continent faded.

On Oct. 31, when the first Asian shipping vessel docks in what Canadians call The New World Port at Prince Rupert -- loaded with 5,500 containers of consumables, electronics, clothing and all manner of goods North Americans buy every day from China -- the whole economy will change.

The magnitude will ripple across the continent -- arriving in Memphis 133 hours later by train -- in an uptick at Canadian National's Intermodal Gateway Memphis terminal in Frank C. Pidgeon Industrial Park.

In the first year, CN expects 30 percent of the shipping containers -- or 75,000 -- will come through Memphis for storage and shipment across the region.

By the time the port's second phase is built in 2011, Prince Rupert will have capacity for 2 million containers. About 300,000 a year could be headed to Memphis, more than doubling CN's container business in Memphis.

"It's the opening of a brand-new trade route between North America and China," said John Moore, president and chief executive of the Memphis Regional Chamber. "That's very significant for us because China is Tennessee's No. 3 largest trade partner.

"As that extra capacity comes online, it allows for more expedient shipping of goods arriving from China, which is good for our distribution companies who will be managing more and more of these containers. That means more revenue, and more revenue generally means jobs."

Quite suddenly, Memphis and Tennessee will have cheaper and faster access to Asia, which experts say will do more to recruit business here than almost any combination of other factors.
Prince Rupert is nearly 58 sailing hours closer to Far East markets than Long Beach and Los Angeles, giving shippers the equivalent of an extra round-trip a year.

Transit times will be so quick, fishermen in Prince Rupert figure they will be able to ship their famous halibut fresh to the center of the United States.

"We think there will be tremendous market for beef and pork from the prairies of North America headed to Asia," said Barry Bartlett, spokesman for the Prince Rupert Port Authority.

"Really, anything going to Seattle from here would be in Memphis by the time the load gets to Seattle."

The reason is that Prince Rupert will unload directly from ship to train.

"That means there won't be any trucks going through the city," Bartlett said. "That takes a link out of the supply chain."

Without the congestion and the time it takes to get a load of seafood from Vancouver to Shanghai, Bartlett says transportation costs will go from 17 cents a pound down to 6 cents.

"We're creating opportunities in other potential markets for value-added products,'' he said.
With oil trading at $83 a barrel and competition for global markets rising, CN says Prince Rupert has been an easy sell.

"The reception has been outstanding," said Doug Hayden-Luck, head of international intermodal sales and based in Calgary. "The customers we've talked to in Asia understand totally the value proposition that the new service brings."

CN, the only railroad serving Prince Rupert, has signed contracts with COSCO, the second-largest ocean shipping company in the world, for 25 percent of capacity. Other contracts are expected within weeks after CN announced Thursday it was buying a major portion of a Chicago railroad, allowing it to shave a full day off transit time from Prince Rupert to Memphis.

"All in all, Prince Rupert is going to bring this area a tremendous amount of business," said Pete Aviotti, special assistant to Memphis Mayor Willie Herenton. "This is going to open the eyes to a lot of new industry as far as moving to Memphis because freight will be received here a lot quicker than in other parts of the country."

By 2020, the Prince Rupert Port Authority expects 44 million shipping containers will come through the West Coast ports. British Columbia's goal is to get 17 percent or 9 million. Nearly half of that will come through Prince Rupert, based on current projections.

In Memphis, there's reason to think cotton could ship more efficiently through Canada.

"We haven't done it yet, but we're studying it," said Billy Dunavant, chairman of Dunavant Enterprises. "Trimming a whole day off the transit between Chicago and Memphis is a big thing."

Since the $170 million port opened in mid-September, Bartlett's been giving port tours nearly full time to Asian journalists and businesspeople, selling them on Rupert's strategy and mind-set.

"CN has purchased 50 locomotives and 2,200 railcars dedicated only to Prince Rupert," he tells a handful of journalists from Asian shipping magazines and newspapers. "We're prepared for ships carrying 12,500 containers. They are so big they haven't even been built yet."

Maher Terminals, the company running the port, also runs the Port of New York and New Jersey, two of the biggest in the United States.

Because Prince Rupert is such an isolated part of the world, there is very little congestion both in the harbor and on the rail lines heading to interior markets, which the port authority says will trim days off the storage and wait times shippers experience coming through Long Beach and Los Angeles, the busiest port in the United States.

CN has capitalized on that by investing $30 million in the port itself and $25 million to lower bridge decks and make its tunnels higher so it can double-stack containers on its cars through to Chicago.

It has spent more than $100 million in Memphis in the last few years, calling Memphis its most important U.S. city behind Chicago for its ability to get goods to and from the populated east and midsections of the country.

"We have ample capacity in Memphis and that is the key for us," said Hayden-Luck, who said competitors in Memphis, including Union Pacific and Norfolk Southern, are running out of space.
"All these guys in a sense are congested and need to build additional infrastructure to take on more business," he said. "We did that two years ago. We're ready."

-- Jane Roberts: 529-2512

Memphis is counting the days as well

While Prince Rupert is understandably excited about the soon to be operational Fairview Container Port, the good vibes are flowing all the way down to Memphis, Tennessee.

The Pidgeon Park Industrial site in that southern city is set to be CN's staging ground for international shipments, with goods and materials flowing through Memphis on their way to the Prince Rupert gateway to the world.

Business Tennessee magazine featured the developments in the south in their most recent issue.

September 2007

The Global Railway

Canadian National sets a stage for reaching the world via Memphis

By Donnie Snow

For a city whose headlines are so frequently occupied by shipping behemoth FedEx, it's understandably rare that major cargo transport stories in Memphis revolve around much else. But over the summer, the Bluff City made major strides in solidifying itself as a pivotal North American supply-chain artery by bulking up its profile in ground transport.

Closing a deal more than two years in the making, Canadian National Railway announced in late spring plans to make Memphis its new staging ground, investing $35 million to link the city's 2,500-acre Gateway Memphis Terminal at Pidgeon Industrial Park to a burgeoning deep-water port on Canada's Pacific coast in Prince Rupert, British Columbia. CN is touting the intermodal park connection as a boon to businesses eager to shave days off shipping times between Asia and America's heartland. The Pidgeon Park announcement is CN's second major investment in Memphis in recent years•the rail company is already well into a $100 million upgrade of its Johnston Yard freight train connection facility.

The developments are turning Memphis from an important cog in the supply chain to a premier gateway linking the Pacific and Atlantic coasts to the Gulf of Mexico, says a leading player in the city's logistics community.

"This will increase Memphis as a preferred destination and origin point in the logistics of supply chain," says B. Lee Mallory, who facilitated the most recent CN deal with the City of Memphis.
Through Memphis, Mallory points out, businesses can reach close to 70% of the country overnight. "You can get from Pidgeon Park to Pusong, [North] Korea, on one rail and shipping line," he says.

Forecasts call for a 10% rise in imports/exports over the next few years, which will press many companies to hunt for a supply route that avoids the already congested ports around New York and Los Angeles.

"Prince Rupert will increase by 200% the amount of traffic coming through Memphis [about 300,000 containers annually], as far as CN is concerned," Pete Aviotti, a spokesman for Mayor Willie Herenton's office, says. "As far as New York and Los Angeles, Prince Rupert, with shipments from Asia, and specifically China, is two days shorter coming to Memphis than any other port."

This is extremely advantageous to local business, Mallory points out, adding that it will offer another transcontinental opportunity for cotton and other commodities produced in the Midsouth area to get from the farms in Mississippi to the factories in China.

"Memphis has all it needs to succeed—the world is waiting for our cotton."

Is it the beginning of a great relationship?

The ties that bind Memphis, Tennessee and Prince Rupert, BC are steel ones, twin rails on the CN lines that stretch for thousands of kilometers, but soon could make each city’s future forever entwined.

The Globe and Mail has examined the sudden interest in a far off port from the heart of the American South east, Memphis a transportation hub for the southern USA is counting on container traffic through the Prince Rupert port to make their town a major gateway into international trade.

The potential for a massive change in the way that goods are shipped to and from North America is making two diverse locations on a map, that much closer and that much more optimistic for better times for each other than anyone might ever have imagined.

Prince Rupert finds Mississippi soulmate
WENDY STUECK
From Tuesday's Globe and Mail
May 21, 2007 at 10:13 PM EDT

Vancouver — Two years ago, Dexter Muller had barely heard of Prince Rupert, B.C., and had no clue it was as much as two days closer by ship to Asia than better-known West Coast ports such as Vancouver and Los Angeles.

These days, Mr. Muller has no trouble finding Prince Rupert on a map. In March, Mr. Muller – vice-president of industry group Memphis Regional Chamber – spoke at a Memphis conference focused on trade opportunities created by the new container port under construction in the B.C. city.

He's handing out DVDs that highlight Memphis-Prince Rupert trade connections. The DVDs, part of a marketing campaign being conducted by the Memphis Regional Chamber, Canadian National Railway Co. and the Port of Memphis, paint Prince Rupert as an alternative to overloaded ports such as Vancouver and Long Beach, and highlight its rail connections to Memphis, a transportation hub with easy access to a host of major cities in the United States.
He's not the only one becoming more familiar with Canadian geography.

“It shows you how globalized trade has become when you have a lot of people in Memphis, Tennessee, who are probably more familiar with Prince Rupert than some people may be in Canada,” says Mr. Muller, a senior vice-president with the regional chamber.

The buzz in Memphis around Prince Rupert comes as the B.C. city's new container terminal is moving from a concept to operations, making good on a decade's worth of planning and marketing based on the northern city's deepwater port, rail connections and relative proximity to export centres such as Shanghai and Hong Kong.

This month, China Ocean Shipping Co. signed on as the terminal's first official customer. The terminal is scheduled to begin operations in October.

“Up until now, we have been building infrastructure,” says Don Krusel, president and chief executive officer of the Prince Rupert Port Authority. “Now we have a customer, which proves that the infrastructure is going to be successfully used.”

Initially, the concept was a tough sell, Mr. Krusel says. Container terminals have traditionally been located in or near major urban centres, allowing for quick unloading of containerized cargo, whether T-shirts, televisions or household goods.

But over the past couple of decades, ships have grown bigger, the volume of goods being shipped between Asia and North America has ballooned and congestion has become commonplace. A recent report by the Boston Consulting Group said companies should consider alternatives such as air freight or relocating some operations to avoid port-related traffic jams.

Prince Rupert provides a different “gateway” model, Mr. Krusel says, based on the idea that cargo coming into the port can be loaded directly onto rail cars and shipped to its ultimate destination.

That's where Memphis comes in.

The city, with its long-time port on the Mississippi River, is hooked into five rail networks, including CN, and so handles many ocean-going freight containers coming from Asia and destined for cities throughout the United States, Mr. Muller says.

Currently, most of the containers coming through Memphis come via Los Angeles-Long Beach, he says. Starting this fall, an increasing number – somewhere in the neighbourhood of 1,000 a week – are expected to come via Prince Rupert.

“We believe this will open up opportunities, because companies are looking for alternatives,” Mr. Muller says.

Memphis is not the only place hoping to take advantage of the Prince Rupert connection. Industry groups in Alaska are keen on the container terminal as an avenue for Alaskan exports, and the terminal is also generating interest in Alberta, Saskatchewan and Manitoba, Mr. Krusel says.

Less expensive, faster container shipping options through Prince Rupert could mean opportunities for Canadian goods such as B.C. seafood, Alberta beef or modular housing components made from B.C. lumber, he adds.

The Prince Rupert container terminal is a joint project of the provincial and federal governments, the Prince Rupert Port Authority, CN, and Maher Terminals, the New Jersey-based company that will run the B.C. facility.

Prince Rupert already has coal and grain shipping facilities and a cruise ship terminal. But the container terminal is seen as the facility's bid for the big leagues of the global shipping game.
The first phase of the facility will have a capacity of 500,000 20-foot-equivalent units, or TEUs, making it a relatively small player compared with, for example, the Port of Vancouver, which handled 2.6 million TEUs last year and has projects under way to boost its capacity to four million TEUs.

The Prince Rupert Port Authority has begun work on the second phase of the container terminal, but those plans are running into stiff opposition from two Indian bands that maintain they have not been adequately consulted on the first phase of the project.

Last month, those bands – the Las Kw'alaams and Metlakatla – said they would not allow phase one of the terminal to begin operations until their concerns had been addressed, threatening “direct protest” if their concerns were not addressed.

In response, the Prince Rupert Port Authority said the federal government signed off on the consultation process for the first phase of the terminal last year and that the port authority has already begun consultations with Tsimshian First Nations, including the Lax Kw'alaams and Metlakatla, for the second phase.