“Because this is a brand new business model, it goes against the grain. We don’t have a local market. We’re way up north. The jury was out to see if the service was going to work.”

Prince Rupert poised to triple its business

Nathan Vanderklippe,  Financial Post, with a file from Scott Deveau

Published: Thursday, May 22, 2008

 

VANCOUVER – Billed as the “St. Lawrence of the West,” the Port of Prince Rupert has spent the months since its grand opening last November dramatically under-performing expectations.

Its cranes are capable of off-loading 9,600 standard-sized containers a week. Until April, the sole shipping line that uses the port’s new container terminal delivered just 1,100 a week. In the past month, that number has risen to 1,800 weekly, still less than a fifth of capacity.

Prince RupertBut the faltering start, which comes largely thanks to a sluggish U. S. economy that has decreased container traffic to the entire Pacific coast by about 5%, could soon come to an end. Maher Terminals, the New Jersey-based operator of Prince Rupert’s Fairview container terminal, plans to triple the number of ships calling at the Northern B. C. port beginning in a month or so. Currently, only one ship a week calls there.

“There’s two new ships coming in June or July,” said Odd Eidsvik, a board member with the port.

It’s unclear whether the new ships will come from Cosco Container Lines or Hanjin Shipping Co., the shippers whose vessels currently sail to the port, or other members of the CKYH Alliance, which includes K-Line and Yang Ming Line.

But the boost in scheduled service lends weight to arguments from the port, railways and shippers, who all say the $170-million Fairview terminal weathered its first winter in remarkably good form, despite the low volumes.

“The terminal operation at Maher is just beyond our expectation,” Claude Mongeau, Canadian National Railway Corp. chief financial officer, said on a conference call yesterday. “Everything is humming from an operations standpoint.”

Ships have arrived and departed on schedule and, despite having relatively inexperienced crews, the new terminal has off-loaded containers at the rate of 22 an hour, “which is really quite impressive and very competitive for North America,” said Barry Bartlett, port spokesman.

“To be totally frank, we’re not going to be at the 500,000 [annual 20-foot container equivalent throughput] capacity as quickly as we thought we were, but it is getting there,” he said.

 

“Because this is a brand new business model, it goes against the grain. We don’t have a local market. We’re way up north. The jury was out to see if the service was going to work.”

Many do still remain unconvinced. Take K-Line, for example. Its containers float into Prince Rupert’s harbour aboard Cosco ships, then float out again to be delivered to more southern ports.

“It takes a little doing to convince American importers that [Prince Rupert] is a viable alternative and will be able to service their needs,” said K-Line’s Vancouver general sales manager Quentin Newman, who said existing contracts with competing rail lines also make it difficult for him to ship through the northern port.

One operational element that has been strong, however, is outbound traffic through Prince Rupert.

“Many of our resource commodity exporters in Canada would like to ship more out of Prince Rupert, but we can’t,” because of ship weight restrictions, said Dave Bedwell, executive vice-president of Cosco Canada.

Northern B. C. exporters, who had hoped Prince Rupert would provide cheap backhaul shipping to Asia, have faced other problems. Virtually all backhaul containers have been filled in Alberta and the U. S. Midwest, leaving almost nothing for would-be exporters in small B. C. towns. Even CN’s own Prince George container-stuffing facility, built specifically for Prince Rupert, has almost exclusively packed goods for export out of Vancouver.

“The container terminal itself has had challenges getting itself set up to be really useful for us out of central B. C.,” said Ian McIver, general manager of the global supply chain for lumber producer Canfor Corp.

Still, few are pessimistic about Prince Rupert’s future prospects.

The port itself is pushing ahead with expansion plans that would quadruple its capacity, Canfor’s Mr. McIver said he expects to ship through it as containers become available, and even Mr. Newman said it’s only a matter of time before K-Line comes to call.

“It’s a fabulous terminal,” he said. “It’s not necessarily a question of if — but when — we will go through there with some cargo.”

 

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