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A Conversation with Brian McDonald
Executive Vice President, Montship Inc., on Developments at Western Canadian Ports from a Customer's Perspective
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LQ: What advantage(s) does Vancouver have over other competitive ports - for the vessel operator, for the importer and for the exporter? This could relate to transit time, storage, transloading for imports and exports, labor costs, contracts, overall stability, the Canadian dollar, or other factors.
Brian McDonald: From a Canadian standpoint, a single point of entry for our goods is an advantage in today's heightened security environment. This relates to both inspections and reporting. It's more seamless to have direct calls at the Port of Vancouver.
Another advantage is the rail infrastructure in Canada. We are not required to interline our rail equipment (rail traffic moving over track belonging to two or more railroads, with interline switching at the gateway) through either Chicago or Kansas City, for example. It's a single rail line into eastern Canada, and that affords advantages to the importer or exporter, from both a transit time and reliability standpoint. On the other hand, the cost competitiveness of the Canadian gateway has eroded as a result of the confluence of several factors: significant increases in rail costs, truck costs and fuel prices and - perhaps most importantly - the strengthening of the Canadian dollar. A $.65 dollar was quite a differentiator.
Clearly, this has changed. Today the Port of Vancouver is as expensive as any of the U.S. west coast ports, or very close. In addition, I would say, the productivity at Vancouver is not at par, from our perspective, with U.S. west coast gateways. It's important that the port and the terminal operators work to develop our competitiveness as a gateway.
Stability is also an important matter for Canadian customers and carriers calling at Canadian ports. And there have been too many disruptions - well covered by the media - in our service levels. Our track record when it comes to strikes or labor disruptions is very concerning. Vancouver, and to a degree Canada, is seen from afar as a relatively unreliable gateway. There is no easy solution to the problems, and it will take time to change the perception, but all the stakeholders have to take responsibility for the problem and for creating the solution. Government also has to take a more active role, I'm afraid. They have been too slow to get involved.
LQ: What local infrastructure changes/improvements are needed to improve the port's position for cargo moving to and from the piers?
Brian McDonald: Infrastructure involves three main links: terminals, rail and trucks.
The terminals in Vancouver have taken strides to increase their capacity. Unfortunately the much-needed Deltaport expansion has taken longer than hoped, as they work through the red tape. These enhancements have increased their capacity. Productivity, however, is still a concern.
The rail component is arguably the most critical right now, and will continue to be in the future. Both railways have enhanced their track infrastructure in western Canada, which has helped. The fact that each railway only has one track through the main corridor in western Canada will be an ongoing challenge, with no expected change to the equation. More sidings can be built, but no one expects an additional main line anytime soon.
On a local level, higher volumes mean more intrusion into the lives of local citizens. With the number of level crossings in the Delta/Vancouver areas, the disruption to the daily flow of traffic raises justifiable objections from the public, which in turn jeopardizes future projects. There are solutions, such as building overpasses and underpasses, that will mitigate the disruption to locals (caused by trains running daily).
From a trucking standpoint, I think the same concern applies. The number of trucks on the road will increase. One way to reduce congestion will be to look at staggering the truck pickup and delivery times. We must be more 24/7 in our approach, and there should be some incentives to accomplish this, or penalties if they don't.
LQ: With the change of ownership of container terminals and, I believe, some bulk terminals, has there been an impact on the activity at the port?
Brian McDonald: It is probably too early in the process to see any significant changes, but I certainly don't see any negatives from the ownership changes.
LQ: How will consolidation of the local ports benefit the shipper?
Brian McDonald: In theory it ought to yield benefits to the shipper. Perhaps administration costs will be reduced and new synergies developed by bringing several of the western Canadian ports under one roof. In reality I believe the impact won't be too noticeable. When you look at some consolidations, for example, among cities in Canada, generally we don't see them deliver the results that were expected. In this instance, you have the big Port of Vancouver and two smaller port organizations. I don't believe the economies of scale will be changed significantly.
LQ: Throughput capacity seems to be an issue. How do you see this improving?
Brian McDonald: The big challenges are rail and truck transportation, with rail being the bigger issue, as the majority of cargo is moved intermodally into eastern Canada. Rail capacity, and the number of trains that can move through the western corridor per day, is a concern; you only have one track for each rail carrier (CN and CPR). They have taken steps to improve the frequency by co-production (running on each other's tracks), but beyond that there are limitations.
A key issue is the rail car supply. I think the railways' focus on operating ratio has been good for their shareholders. I'm not sure this focus has always been as good for the carriers, because we don't always get the number of rail cars we need. This creates backlogs at the terminals. Another challenge, from a rail standpoint, is to mitigate the bottleneck we see in the inner harbor in Vancouver ("N" Yard, which services both Centerm and Vanterm).
LQ: Larger container vessels are here to stay. Can Vancouver, in the total distribution chain, take advantage of this development?
Brian McDonald: They certainly can. It is essential, because the vessels that are calling at Vancouver are doing so in conjunction with their U.S. ports of call.
LQ: The environment is a hot topic today. What steps is the port taking to encourage a "green" operation, both for vessels and on the land side?
Brian McDonald: Let me answer that from the carrier's viewpoint. I believe carriers that demonstrate that environmental responsibility is a hallmark of their corporate policy will prosper. And those that don't will likely be left behind as the focus and importance of "green shipping" will intensify. There must also be an appreciation from the customer that carriers will be required to endure significant cost increases to become more fuel efficient and environmentally responsible. I believe this should be a shared endeavor if it's going to be successful.
LQ: Can you tell us about some of the carriers your company works with?
Brian McDonald: We are very fortunate to have three carriers using the Vancouver gateway: MOL, with three calls weekly at Vancouver serving the full range of Asian ports (calling at Centerm); Hamburg Sud, serving South America and Australia/New Zealand (calling at Fraser Surrey Docks, as well as separate services calling at the east coast ports of New York and Philadelphia); and Swire Shipping, who operate a dedicated fleet of multi purpose vessels carrying a mix of project / breakbulk / bulk and container cargoes between North America and the Indian sub-continent and Australia / New Zealand (calling at Lynterm, as well as the east coast ports of Halifax and Saint John).
We also perform port agency work for a long-time partner, Tokyo Marine, who operate parcel tankers trading between Asia and west coast ports. And we are privileged to represent Bermuda Container Line and Great White Fleet, who call at east coast ports (serving Bermuda and Central America, respectively).
Founded in 1925, Montship Inc. is one of the oldest and most respected shipping agents in Canada. With seven offices across the country and 200 plus dedicated professional employees, Montship handles virtually any type of cargo movement or principal requirement. Montship Inc. is wholly owned by its Canadian directors and officers, all of whom are active employees of the company.