Thursday, November 06, 2008

LA wants to play a game of kick the cans

Prince Rupert is about to find out just how tough things can get on the waterfront, as the ports of the West Coast take more than just notice of the new player on the scene, but actively begin to seek out ways to recapture from or divert away container traffic from the Fairview Terminal.

While the market share for container traffic begins to tighten up with the economic troubles washing ashore, the competition for those 20 foot containers is heating up.

The development of the Fairview Container Port has finally gained some serious attention from the more established southern terminals, turning it from a curiosity into a competitor, and one which seems to be worrying those operators as the economic numbers tighten up.

As the American economy continues to slide into its anticipated deep recession, the calls for protectionism and subsidies to keep the American ports performing as one of the main engines of the American economy will begin to grow louder. It’s in that new environment that the Port of Prince Rupert will have to operate, the target for ports from Seattle to Long Beach all seeking to keep their share of the traffic and trying to convince the shipping lines to refrain from signing on with the newest addition to the Asia-Pacific Gateway.

So far The Port of Prince Rupert’s message has found an interested audience, as the Vancouver Sun discovered through its article on the growth of the terminal so far and the potential growth that is in the future.

The Northern View's on line homepage from Tuesday provided two stories on the topic, one outlining the increase in shipments through the port and the other an outline on the view from the MLA for the North Coast, Gary Coons.

He is urging the Provincial government to increase the potential of the Fairview terminal, outlining the complaints of Delta residents for any future expansion there and suggesting that the government is missing out on the advantage of a congestion free location on the North Coast.

While on Wednesday, The Daily News featured the latest interest in the container Port with a front page headline story on the looming battle for market share of the Asian shipping lines.

Los Angeles signals that it will try to grab Rupert’s customers
By George T. Baker
The Daily News
Wednesday, November 5, 2008
Pages one and three

As the new kid on the block, the Port of Prince Rupert hasn’t seen much animosity directed toward it for the business it has been accumulating over the last year.

But that is all changing now, with the Port of Los Angeles now claiming it is going to go after Prince Rupert’s share of the market.

And according to one UBC professor, the port had better get used to hanging tough with the big boys.
“This is the way business normally competes. If you want to say that (Prince Rupert) is no longer under the radar, I don’t think they ever were,” said Garland Chow, an associate professor with the operations and logistics division of the UBC Sauder School of Business.

Chow said that this attention proves that Prince Rupert is being taken seriously as a competitive port and that the local port is impacting other ports up and down the West Coast.

“The shipping traffic (to the Port of Los Angeles and Port of Long Beach) is down significantly and therefore all of a sudden L. A. and Long Beach are saying we don’t want traffic to be down, and the environment is such that they are looking for traffic whereas before they would be happy if someone diverted that traffic because they were so congested,” said Chow.

The port of Los Angeles announced last week that it would be offering a new incentive to attract customers to its shores. The Californian port said it was contemplating a short-term incentive program to pay tenants $10 for every new TEU they bring to the port either by adding a new service or luring an existing service from another West Coast port.

Apparently, the move has annoyed major West Coast ports.

The port of Los Angeles doesn’t see it that way. It said that diverting traffic from the big ports would not be the main intention of the of the incentive plan.

According to the Humboldt Bay Watch, Los Angeles Harbor Commission president S. David Freeman they had a more northerly focus in mind.

“Our primary purpose is to attract business from Prince Rupert,” said Freeman, who also added they would like to take business away from the port of Savannah as well.

The Port Authority of Prince Rupert would not comment on the story. But it did release the facts and figures from its third quarter.

The new numbers might be a reason why they would love to be hidden on the port competition scene.

According to the port, container traffic throughput in Fairview Terminal was up 261 per cent in the third quarter from the first quarter.

The number of TEU’s jumped to 59,220, up from the 21,040 from the first quarter.

Chow said that, over time, a number of shippers will be holding back a bit in doing business with Prince Rupert to see what the actual experience will be for the once the port is running at full capacity – and going through at least one or two winters.

He added that because the port is relatively new, there is no track record to detail how the North Coast weather will impact business decisions going forward.

“We know that the railroads start to get congested on the normal routes from Vancouver to the east in a typical winter. At least if they are stuck on one port, a ship could be diverted to another port. In Prince Rupert, you just don’t have that in the north.”

Coons says L.A. plan shows Fairview is a real competitor
By Shaun Thomas - The Northern View
Published: November 04, 2008 11:00 PM

North Coast MLA Gary Coons says that a report out of Los Angeles shows how competitive Fairview Terminal is on the world stage, but says that it is a fact that isn’t being reflected by Premier Gordon Campbell and the B.C. Liberals.

According to a story published in The Cunningham Report, port officials in Los Angeles are contemplating a $10 incentive for every new TEU brought in by customers. And Los Angeles Harbour Commission president James Hankla specifically mentions drawing traffic from Prince Rupert as one of the reasons for the move.

“Everyone in the business knows that the Port of Prince Rupert is the player to watch out for. If the Premier spent half as much energy working with the Port of Prince Rupert as he has done pushing Deltaport, we’d have every port on the West Coast scrambling to keep up with us,” said Coons.

“Los Angeles specifically mentioned Prince Rupert as target they want to lure cargo from. The major players take Prince Rupert more seriously than the Campbell Liberal government.”
The Prince Rupert Port Authority declined to comment on the article or on the concept of incentives to attract new traffic, but Coons says this shows that the focus of the Gateway program should be further north than Delta.

“I can’t understand why the Campbell Liberals continue to ignore the potential of the Port of Prince Rupert while shoving a port expansion down the throats of citizens of Delta. If Campbell wants to build a gateway that matters he should invest in the Port of Prince Rupert and the northern transportation corridor,” he said.

“Most people in Prince Rupert are behind the port and we don’t have the built in problems with congestion that plague the lower mainland. The Campbell Liberals should invest in Prince Rupert instead of spending millions to pave over Burns Bog for Deltaport.”

TEU numbers up as ships get bigger
By Shaun Thomas - The Northern View
Published: November 04, 2008 11:00 PM

The amount of container traffic at Fairview Terminal is up 281 per cent in the third quarter of 2008 compared to the first quarter.

That equates to 59,220 TEUs in the last three months compared to 21,040 TEUs in the first three months of the year, bringing the total to 102,775 TEUs handled by the terminal to the end of the third quarter.

In terms of a breakdown for the year, 50 ships have called on Fairview, unloading 62,365 TEUs from Asia and taking 40,423 TEUs across the Pacific. Of those containers that are being exported, 33.6 per cent of them were fully laden.

The increase in traffic is being attributed to not only the addition of the COSCO-CKYH Alliance’s weekly CEN service that began calling on Prince Rupert in July, but also to the fact that the service has begun phasing out the use of the smaller ships in favour of those capable of handling more TEUs.

Along with the increased tonnage at Fairview Terminal, Ridley Terminals has seen a slight increase in its tonnage. However, Prince Rupert Grain tonnage declined by 28 per cent and raw log exports dropped by 39,813. Overall the tonnage for the port authority is up 70,000 tonnes.

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