Containers to leave Rupert empty?

Hewers of wood, drawers of water and unloaders of the canoe.

The possible economic boom from the Rupert container port may turn out to be in Asia and not North America. While the containers will arrive in Prince Rupert loaded with goods, it’s quite possible that they’ll be returning to Asia empty. This would in effect, leave Canada’s exporters sitting on the docks, waving goodbye and waiting for their chance to stuff a can or two.

In a speech to an Alberta Farmers forum Jeff Burghardt explained how at this moment, container shipping lines can receive four times the price for goods coming to North America from China and other Asian nations, meaning they don’t want to slow down the return trip by filing those same containers with Canadian products.

Burghardt also suggests that West Coast labour is too expensive to fill the containers here and that inland container farms in Edmonton and Grande Prairie might be best situated to benefit from the opportunities that may one day arise.

One imagines that would result in a slow down to any economic spin offs in the short term for manufacturing and is rather indicative of the world’s economic shift of late. It also would mean that the Rupert port and area would probably be nothing more than a transit stop on the world’s great economic merry go round. We also wonder if it will have an impact on the long anticipated boom to the local economy if we're only going to unload ships and send everyone on their way.

Burghardt also touched on the grain industry and its status in Canada, with poor crop years he recounted in his speech, that Prince Rupert Grain’s debt load has increased. But he’s confident of volume levels in the future, that will allow both Prince Rupert and Vancouver grain ports to do well over the long run.

Those and some of his other thoughts on the world of imports/exports can be found in the Edmonton Journal story below.

Exporters out of luck at new B.C. terminal
Lucrative Asian imports trump Prairie products

By David Finlayson
The Edmonton Journal
Thursday, September 14, 2006

EDMONTON - Prairie manufacturers may not initially benefit from the new Prince Rupert container port because of the huge demand for containers in Asia, a gathering of agricultural producers heard Wednesday.

Container shipping lines can get four times the price for goods coming to North America from China and other Asian nations, so they don't want to slow their return by filling them up with less lucrative goods from Western Canada, Prince Rupert Grains Ltd. president Jeff Burghardt told a Growing Alberta meeting.

"The opportunity on the container side is in importing, and we have to find a way in five or six years to turn them around full.

"But it's a substantial challenge," said Burghardt, who also sits on the non-profit Northwest Corridor Development Corp.

Inland container collection facilities must be strategically located to get the economies of scale to compete, he said.

Container facilities in Edmonton and perhaps Grande Prairie will become increasingly important because West Coast labour is too expensive to fill containers there and still be competitive, Burghardt said.

And it would take a six-month shutdown at Prince Rupert to break that, he said.
"It's all about creating value and not adding cost. And it's not solely for the 340,000 residents of northern B.C. It's also for producers who want to lower their transportation costs."

The first $170-million phase of the container port is scheduled for completion next year, with a $250-million second phase to follow.

Prince Rupert also plans to expand its grain and coal handling facilities, and has 1,200 acres of industrial land ready for development. Burghardt also sees opportunities in sulphur exports, and in plans to develop British Columbia's offshore oil and gas fields.

Prince Rupert is the closest port to the huge Asian markets, as well as the deepest and safest harbour on the west coast of North America. And this year rail rates were lower than to Vancouver.

But so much depends on improving the road and rail networks as transportation has taken a back seat to social services and health in federal government funding, Burghardt said.
And there's a funding inconsistency problem when the Great Lakes St. Lawrence Seaway system is allowed to run a $75-million annual deficit, but if you want to open a customs office out West to make it easier for tourists it has to pay for itself from day one, he said.

It's expected over the next 15 years that $1.4 billion in private money will be spent on railways and port terminals in Western Canada, and $2.6 billion in public funds for highway improvements, Burghardt said. But it's key to have east-west connections as well as north-south to bring processing closer to the raw materials, he added.

Burghardt acknowledged grain exports through Prince Rupert have dropped substantially in the last five years, mainly due to poor crops. And debt has grown at Prince Rupert Grain, which is owned by Canada's five largest grain companies.

However, there will be enough volume in the long term for the two Vancouver grain terminals and Prince Rupert all to do well, he said.