Tuesday, July 08, 2008

Rising fuel costs leave Port Authority with mixed thoughts

The rising cost of fuel is leaving the Prince Rupert Port Authority with a positioning statement of sorts, making the location of the Prince Rupert container port beneficial for those shipping lines looking to save on fuel costs. Thanks to its location one day closer to Asia, the Rupert advantage could become a strong factor for growth should fuel costs continue their march upwards.

However, a troublesome US economy could counter balance that benefit as the demand for goods from Asia could drop if the American economic recession continues or goes deeper than forecasters first thought.

All of that economic talk was presented for a Prince Rupert audience last week as the Port of Prince Rupert hosted their annual general meeting last week, the Daily News had details of the economics of transportation in Monday's paper.

Port hoping high cost of gas will help, not hinder
By Leanne Ritchie
The Daily News
Monday, July 07, 2008
Page three

The rising cost of fuel prices is magnifying the Port of Prince Rupert's geographic advantage on the West Coast, according to the head of the Prince Rupert Port Authority (PRPA.)
Don Krusel, president of the PRPA, said during the PRPA's annual general meeting last week that rising oil prices could be both a positive and a negative influence as the port moves to expand container trade.

"It could be a positive impact because this is the closest port to Asia," he said. "If you can convince a carrier to sail between Prince Rupert and Asia they are actually saving on their fuel bill if they are only calling in Prince Rupert."

The PRPA is keeping a close eye, not only on fuel prices but also the economic slow down in the United States and its impact on the development of Fairview. However, the port does expect container traffic will continue to grow.

"Because this is all movement of international goods around the world, we have to pay close attention to international events - what is happening in the economy, what is happening to the exchange rate, what is happening in China, what is happening to oil prices and how does all of this impact our participation in the industry," he said.

"Before, we only had to worry about the local economy and what was happening in the forest industry and fishing industry."

He said the port is concerned about whether or not the U.S. will move into a deep recession because it will have an impact of the flow of containers to the West Coast of North America.
"And therefore it will have an impact on us," he said.

In the first quarter of operations of the Fairview Container Terminal, the port and Maher Terminals saw the movement of 17,000 TEUs (average sized containers.)

On the backhaul (containers moving from North America back to Asia), they are averaging 31.7 per cent, with some vessels up to 50 per cent.

"We can't get any more containers on the backhaul," said Krusel. "Most of the containers coming into North America are filled with lighter products such as clothing, toys and things like that. The products we are shipping out are much heavier, therefore you could not fill every container on that vessel because the product is too heavy. We have reached capacity on the backhaul."

The Port of Prince Rupert, Maher Terminals and CN opened the Fairview Container Terminal this fall. The PRPA has also filled its Environmental Assessment project description for Phase Two, which would see an additional 1.5 million TEU capacity added. The filing of the project description notifies federal agencies of the application. The next step will be for the port to see approval for its terms of reference for an environmental assessment, which will detail the areas to be studied.

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