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An Interview with Michael Cormier
Vice President Business Development and Customer Relations, Halifax Port Authority
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LQ: What advantages does Halifax have over other competitive ports - for the vessel operator, for the importer and for the exporter? This can pertain to transit time, storage, transloading for imports and exports, labor contracts, stability, the Canadian dollar and exchange rates.
Michael Cormier: Halifax has come into its own as a port gateway not only for Atlantic Canada, but for central Canada and the U.S. Midwest and New England areas. The main advantage is Halifax's geography: It is one of the larger natural harbors in the world, deep and well positioned on the great circle route between Europe and the U.S. east coast. For ocean carriers westbound across the Atlantic, Halifax is the first port of discharge and the last loading port, enabling us to serve as an efficient gateway for importing from Europe, the Mediterranean and the Suez from the Indian subcontinent.
An estimated 70 percent of our cargo, goes to or from the railway at Halifax Port. We service shipments from central Canada, the U.S. Midwest-Chicago, Peoria, Detroit and, in some cases, as far as Memphis through CN's rail network. Another 20 percent is moved by truck to serve the Atlantic Canadian market place and 10 percent goes onto another ship to serve Newfoundland, Saint-Pierre et Miquelon and Portland and Boston in New England. However, in 2006 the operator who had been running the New England service discontinued business, so our 2006 numbers might be slightly skewed from that 70/20/10 split, but that is an anomaly.
Halifax is the last port of loading for exporters using eastbound ships destined for the Mediterranean, the Suez and Europe. We're well positioned to top up those ships with Canadian exports, such as lumber, pulp, seafood, frozen foods and manufactured goods from central Canada and the U.S. Midwest.
At our Fairview Cove Container terminal, for example, the depth of water is 16.8 meters (55 ft.), making them the deepest container berths on the east coast of North America. At our other container terminal, South End Container Terminal, we have dredged Pier C to 16 meters (more than 52 ft.). We see ships of 5,700 TEUs calling at the port of Halifax, since we have the water depth, equipment and infrastructure to handle the largest ships deployed to this part of the world.
LQ: What local infrastructure changes/ improvement need to be made to improve the port's position for cargo moving to and from the piers?
Michael Cormier: We have made significant capital investments in the port infrastructure - an estimated CA$10 million annually in capital investment.
Presently, we have an electrical upgrade going into the Fairview Cove Container Terminal, for example, which will support two major initiatives. One is the installation of two brand new super-post-Panamax cranes to increase the number of post-Panamax cranes from three to five, and we're doing an electrical upgrade to support that. This electrical upgrade will increase the number of reefer points to increase the terminal's capacity to handle refrigerated containers and reefer containers. We've also made improvements to develop the rail capacity at that terminal, which will increase the trackage on that terminal from approximately 6,000 to 12,000 feet. We've also done a significant lighting upgrade at Southend Container Terminal, operated by Halterm Container Terminal Limited. We are also installing a new modern truck plaza for Fairview Cove container terminal. The new truck plaza will be a multi-laned plaza with optical character readers.
In the past we have been moving just over half a million TEUs worth of containerized cargo annually and we believe that the current capacity of our two terminals with the current infrastructure is about one million TEUs. Over the longer term, we have plans to increase the port's TEU capacity to two million TEUs.
LQ: Halifax has some feeder services. Will the number of these services expand and to what other areas and ports?
Michael Cormier: We are working with partners to try and reestablish the New England feeder. This is very important to us. With the "mega city," which is from Boston in the north to Washington D.C. in the south, there is heavy congestion in the I-95 corridor, and we've found that traditionally, we have been a good alternative point of access for northern Massachusetts, Maine, New Hampshire and Vermont. However, this service was discontinued last year. Those feeder services, however, are important to us and to exporters in our region.
LQ: There has been a change of ownership at both terminals recently. How do you see new ownership improving the activities at these facilities?
Michael Cormier: We see both of those changes in ownership as being positive for the port. In the case of Ceres being purchased by NYK, for example, that has contributed to a relationship with a large global ocean carrier. We've seen some changes in executive staff, with NYK executives moving into the Ceres organization. Mike DiVirgilio, who was a senior Vice President at NYK, has brought a world of expertise and experience into the Ceres group and they've gone from being a medium-sized North American privately-held terminal-operating company to part of one of the largest shipping groups in the world. (Ceres Terminals, which was founded in 1958, currently provides stevedoring and terminal operating facilities in Halifax, Nova Scotia, and participates in a joint venture with Logistec in Montreal, Quebec, with operations at numerous locations in the United States.)
In addition, the Macquarrie Infrastructure Partners recently purchased the Halterm terminal operations, representing a CA$170 million investment in the port.
Also, Toronto-based Consolidated Fastfrate will soon open a 65,000 square foot transload/distribution facility in Halifax, with an investment of CA$14 million. Canadian Tire, a national Canadian retailer, is one of its key customers.
This transload facility will enable this client to take the cargo out of 40-foot ISO standard ocean containers and transload those shipments into 53-foot high cube domestic equipment, much of which will go directly to Canadian Tire's distribution centers in central Canada.
In peak seasons - for example during back-to-school, Christmas and Easter - they can serve direct to the stores from this facility. A major retailer, Canadian Tire has more than 10 percent of their stores east of their most eastern distribution center, which is based in Quebec. Using Halifax enables them to reduce their empty moves, because they must supply those Atlantic Canadian stores from those distribution centers. Under this arrangement, they can use the same domestic equipment to go back to the Quebec-based distribution center taking in products from Halifax that have been transloaded.
The U.S. embargo on Cuba has also helped Halifax to develop trade relations with Cuba both taking Canadian exports to Cuba - including foodstuffs, fish, frozen potatoes and other foods - and bringing Cuban materials into Canada. We also move some significant quantities of nickel sulfate from Cuba through Halifax to Fort Saskatchewan, Alberta, for Sherrit Gordon.
In our traditional markets we're seeing only single-digit annual growth rates. And we want to double or quadruple this port's business. So we have looked at India's emergence in the global economy. After all, Halifax is 1,840 nautical miles closer to Mumbai than Vancouver. China is also a significant player in the dynamics of logistics and transportation, but Halifax is not as well positioned to serve most of China. In regard to China's ports in the south, including the Pearl River Delta, Shenzan, Ghouzhou and Hong Kong, it is a tipping point - you could almost go in either direction. And we do have some retail shippers who are moving product from the Pearl River Delta to their Canadian distribution centers through Halifax.
As you start getting further south and west - through Vietnam, Singapore, Indonesia and Malaysia, India and the Indian subcontinent, including Pakistan, Bangladesh and Sri Lanka - this is where we see some huge opportunities. Last year we opened our first office outside of Nova Scotia in Delhi and Mumbai, India, by partnering with a stable long-term Indian company. It's a fourth generation family-owned company, Jeena and Company. The group that brought us to India on our first trip was the Canadian Retail Shippers' Association (CRSA), and due to their help our entry into the Indian marketplace was probably fast-tracked by two to three years. Jeena now has dedicated Port of Halifax business development staff working in their Delhi and their Mumbai offices. We now make regular trips to India and we're bringing them here on a regular basis. This summer, we'll be bringing a group of 10 to 12 executives from major Indian firms who are either doing business through Halifax or are potential port clients. In summary, the trade lane that we're most excited about is India and the Indian subcontinent and the Suez Canal. We will certainly maintain our share in the Caribbean, the U.S. east coast and in Europe, but we see the bulk of our growth coming from India.
LQ: Other than Quebec and Ontario, what are other target market areas with inland transportation?
Michael Cormier: In regard to containerized traffic, we are a port for the Port of Montreal as well as ports on the Great Lakes such as Oshawa, Toronto and Hamilton. These Ontario ports serve largely bulk and liquid bulk cargo, moving steel, grain, chemicals and petroleum. These containers, which are vitally important to Canadian importers and exporters, move through Halifax and Montreal ports.
If you look at the CN railway network superimposed on a North American map, it is essentially a "T," running east-west across Canada from Halifax, Nova Scotia, in the east to Prince Rupert and Vancouver, British Columbia, in the west, and it connects downward into Chicago and the former Illinois Central Line, which runs north-south along the spine of the Mississippi River down to New Orleans and Mobile. Approximately 12 to 15 years ago, they increased the height of the tunnel at St Clair, which allowed Halifax, from that point onwards to run direct doublestacked trains from Halifax direct into the U.S. Midwest. We now have two trains a day moving from Halifax through the CN system into the Midwest and an estimated 14 percent of our containers are going into the U.S., some of those by ship to New England, but the majority of them by railcar into Detroit, Chicago and Peoria.
LQ: Other than container cargo, what other cargo activities does Halifax wish to develop?
Michael Cormier: Containers will continue to be our major focus. We also have a number of other lines of cargo business, which includes private terminal operators in our port.
We handle bulk and breakbulk cargos, and while there are not large volumes of exported or imported grain moving through the port, there is an important domestic consumer of that grain, Dover Flour, which supplies a number of the bakeries and consumers in this region. The grain elevator also moves wood pellets and other free-flowing commodities.
We are seeing a shift in the types of cargos that would have traditionally moved in breakbulk now being containerized. The percentage will grow when we link the types the things Consolidated Fastfrate and Canadian Tire are doing by emptying ISO international marine containers in the Port of Halifax and transloading that cargo into domestic equipment. This helps free up a local supply of marine containers for Atlantic Canadian exporters.
Other opportunities include the Autoport, which is a CN subsidiary, a large facility dedicated to import cars. We also have Imperial Oil, with a large refinery moving both imported crude and exported finished product, and National Gypsum, which is shipping gypsum. In summary, there are other cargos beyond containers, but for this port containers are our bread and butter.
LQ: Can Halifax, in the total distribution chain, take advantage of this these kinds of recent developments?
Michael Cormier: We're also seeing a cascading of large ships in the range of 6,000 to 8,000 TEUs. When they were built four to six years ago there were designed for trans-Pacific or Pacific-European trade. Today they are being deployed from South Asia through the Suez Canal to the United States' east coast. Some of those ships are calling at Halifax, as we have good access to the Canadian and U.S. Midwest markets. We see a couple of those ships every week, one eastbound, one westbound.
I think the ports in Canada have really matured and come into their own; we now realize it is not a zero sum game: It's not Vancouver or Prince Rupert or Halifax. There's so much capacity and the shift to containerization for shipping worldwide is so significant that we need to make sure that every Canadian gateway - Vancouver; Fraser River Port; Prince Rupert; Halifax; Saint John, New Brunswick; Montreal - develops the capacity to be able to handle these containers, because for us to get parochial and small world about things - with an "it's Us or Them" mentality - will cause us to lose opportunity. Canadians will lose opportunity and the Canadian supply chain and logistics community will lose opportunity.
LQ: What steps is the port and the surrounding communities taking to improve the quality of the water and the air? Do you offer incentives for "Green Ships" as well as to local operators/stevedores?
Michael Cormier: We have not formally adopted any Green Ship rebates or special fees. We're active members in the association of Canadian Port Authorities and the American Association of Port Authorities and we are looking to learn more and eventually do those kinds of things. We have implemented a lighting upgrade at the Southend container terminal, Halterm. By cutting the electrical consumption for lighting at the terminal by 30 percent and by improving overall operational efficiency of the terminals, we will reduce our green footprint.
LQ: What does the port do to increase the volume of finished vehicles through the auto port?
Michael Cormier: Autoport is a private terminal, owned by CN. The Halifax Port Authority has leased terminals and private terminals, and our marketing initiatives vary for each of those terminals. For our leased terminals, which include both of our container terminals, we work in cooperation with the terminal operators on their business development. We support all terminals in the port, including the private terminals - Autoport and National Gypsum being two. We're not as involved in their business development though. This is an area of the multinational car makers. In Canada there are only two real (significant) gateways for these type of vehicles -Autoport in Halifax and Annacis Island in Fraser River Port. One area in the auto industry where we are players is in the movement of parts between companies like Magna in Canada and Tata in India. We're working with them and others primarily on the shipment of components, knock-down kits and engines.
LQ: Where does the port rank in meeting security requirements and what future plans are there for improvement?
Michael Cormier: We recognize how significant an issue security is. It's one of our top priorities and where we have been investing in infrastructure to make improvements. We are fully compliant with the International Ship and Port Facility Security Code (ISPS), which came into force a few years ago. We're also increasing the number of cameras around the port and connecting the facilities in the port to create a common network with our private and other terminal operators. We work with the Canadian Border Services Agency and with U.S. Customs and Border Protection. We have U.S. Customs and Border Protection officers in the port and they, along with their Canadian colleagues, monitor and screen the cargo coming through the port. Canadian staff are available to either non-intrusively or intrusively monitor U.S.-destined cargo in Halifax before it's put on railcars for delivery to the U.S.