Will Barack Obama throw a wrench into the Fairview Container expansion plans? Yes He can!

While there is no immediate impact on Prince Rupert's new $170-million, 500,000-TEU (20-foot-equivalent units, the measurement for a shipping container) port, it could dampen enthusiasm for a massive $650-million expansion just getting under way that is designed to increase capacity to four times that size.— From a Globe and Mail article on Prince Rupert’s Fairview Port and the effect that local politics in Chicago may have on potential expansion…

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Who knew that the Northwest could be caught up in the vortex of American presidential politics?

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The Globe and Mail has an interesting article on CN’s trials and tribulations in buying up an Illinois based railroad and running trains through suburban Chicago , a purchase that could have major implications for Prince Rupert's Fairview Port.

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The purchase of the E J and E line would allow CN to run trains from Prince Rupert to Memphis in 100 hours, making it competitive with the huge American container port at Long Beach, California. CN is anxious to get the line under its wing and up and operational in order to further the expansion plans of Fairview.

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However, in it's quest to buy E J and E, CN has run into a fair amount of community backlash over their plans, making for a controversy that is attracting some high profile supporters.

One of the key opponents to CN’s plans is none other than Illinois Senator and would be Presidential hopeful Barrack Obama, who sent a letter to Barrington village president Karen Darch expressing his opposition to CN's plan.

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A Chicago Tribune article outlines the Senators concerns and the response of CN President and CEO Hunter Harrison to the high profile intervention.

CN’s inability to push the purchase forward and run its trains through the contentious areas of Chicago, could as the Globe puts it “make the Prince Rupert/CN option less competitive with other ports/railroads over time."..

Overall the article provides another fascinating snippet of inside information on the machinations of the transportation industry and how events thousands of miles away could change the dynamic locally…

SHIPPING
Prince Rupert casts a wary eye on Chicago
Much of port's success hinges on CN's fight to bypass Illinois bottleneck
DON WHITELEY
Special to The Globe and Mail
May 21, 2008

VANCOUVER -- As Canadian National Railway Co.'s Chicago expansion plans draw new high-profile opposition from the likes of U.S. Democratic presidential hopeful Barack Obama, Don Krusel is looking on with more than a little self interest.

For the chief executive officer of the Prince Rupert Port Authority, his success rides at least in part on CN's completing a $300-million Chicago-area railway deal.

CN has run into significant public opposition in its bid for approval of the acquisition of Elgin Joliet & Eastern Railway Co. CN wants the rail line so it can bypass Chicago through the suburb of Barrington and cut nearly 30 hours off the time it takes container trains to reach destinations in the American Southeast - and that means a faster route from Prince Rupert into key U.S. markets.

"It certainly would add tremendous market weight to our gateway," Mr. Krusel said of the EJ&E acquisition. "If they are successful in getting that line, it will be 100 hours [from Prince Rupert] to Memphis. We'll be just as close in time as L.A./Long Beach - maybe closer."

Dexter Muller, senior vice-president with the Memphis Regional Chamber, echoed that assessment: "If they get the acquisition completed, it would take off more than 24 hours from the [current] travel time. So many companies are trying to bypass L.A./Long Beach - Wal-Mart for example now goes through the Panama Canal just to avoid it. Clearly that opens up an opportunity for Prince Rupert."

The latest setback to CN's plans was a letter from presidential hopeful and Illinois Senator Obama to Barrington village president Karen Darch expressing his opposition to CN's plan.

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While there is no immediate impact on Prince Rupert's new $170-million, 500,000-TEU (20-foot-equivalent units, the measurement for a shipping container) port, it could dampen enthusiasm for a massive $650-million expansion just getting under way that is designed to increase capacity to four times that size.

The new port's performance has been mixed since it began receiving container ships in November, 2007. Over a four-month period, the port has handled less than 40,000 TEUs, well below the four-month capacity of 160,000 TEUs.

"They had the bad luck of bringing this port on line at a challenging time," said Edward Jones transportation analyst Dan Ortwerth. "I think with any new service you have to figure in a fudge factor for initial hiccups that weren't expected."

Prince Rupert is no stranger to "hiccups," having suffered serious economic losses from forestry mill closures and declining bulk commodity volumes (now rebounding) at the port. Other projects that may, or may not, sprout up at Prince Rupert include a potash exporting terminal, a pipeline to ship oil to Asia, and a liquid natural gas import terminal.

Asked about the impact on Prince Rupert of CN's success in Chicago, CN spokesman Mark Hallman said in an e-mail response: "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/railroads over time."

Mr. Ortwerth called the EJ&E acquisition "the icing on the cake" for Prince Rupert, but agreed the impact - positive or negative - will be long term.

"The initial capacity of 500,000 TEUs will find more than enough takers without the added reliability and speed," he said. "But as Rupert continues to expand up to two million TEUs, the larger network comes more into play."

Mr. Krusel pointed out that while the performance is well below initial expectations, Prince Rupert is holding its own while other West Coast ports are seeing declines in container shipments now.

"A year ago we would have expected a second carrier here," he said. "That hasn't happened. Carriers are reducing service on the Pacific, everywhere. It's hard for them to reduce it in one area and add it somewhere else."

China Cosco Holding Ltd. is the only carrier bringing containers into Prince Rupert and did not return calls seeking comment. Mr. Krusel added that he expects Cosco to begin ramping up traffic over the next month or two.

Mr. Hallman, despite the lower traffic, said the railway is meeting operational and financial expectations through Prince Rupert, including the time it takes to get a container to a U.S. destination.

"CN is delivering fifth-morning availability of containers in Chicago and sixth-morning availability in Memphis," he said. "CN's operating plan for the EJ&E assumed that we would receive all of the traffic that could move through Phase 1 of the new Prince Rupert Terminal. But we haven't filled that capacity yet, so CN continues talks with various parties about securing increased volumes of container traffic over Prince Rupert."

Countering disappointing inbound container traffic, however, is that 37 per cent of the outbound containers are now carrying a variety of products - grain, logs, waste paper, cotton, and even aluminum ingots from Rio Tinto PLC's aluminum smelter at Kitimat, B.C. - to markets in Asia.

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"We're maxed out on the backhaul," Mr. Krusel said, explaining that the 37-per-cent figure is based on volume, while the ship's capacity is based on weight. "The imported goods are very light, while our exports are very heavy."

Mr. Krusel said Phase 2 of the Prince Rupert container port remains "on schedule" despite an economic slowdown, and is now working its way through the environmental assessment process. Construction of the $650-million expansion will start in 2009 with completion set for 2013.

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Despite some uncertainty about existing and future projects, these are heady days for Prince Rupert. The city appears to have broken up the black cloud that hovered over the local economy for nearly 100 years after ambitious entrepreneur Charles Hays, on a financing mission in England for another big port development scheme, booked passage home on the Titanic.