Spring 2014 The Shipper ADVOCATE - FMA and Publications...Spring 2014 5 President’s Message 6...

Spring 2014

ADVOCATEThe Shipper

Official Publication of the Freight Management Association of Canada

www.fma-agf.ca

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Spring 2014

5 President’s Message

6 International Trade and Global Sourcing

9 Connecting to Compete 2014: Trade Logistics in the Global Economy

12 Port of Halifax: Infrastructure Investments Fuel Growth

15 Building Hamilton’s New Logistics Powerhouse

17 Port of Montreal: A Facilitator of World Trade

19 Do Business the SmartWay

20 Improving Safety in the Rail Transportation of Dangerous Goods

22 Index to Advertisers

Cover photo: Halifax, Canada on July 21, 2012: Historical Pier 21 in Halifax as viewed from the lighthouse on George’s Island.

Chair: Doug Hackett

President: Robert H. Ballantyne

Vice President: Cindy Hick

Special Advisor: Forrest Hume, LLB

Published for The Freight Management Association of Canada 580 Terry Fox Drive, Suite 405 Ottawa, ON K2L 4C2 Phone: 613.599.3283 Fax: 613.599.1295 Email: [email protected] www.fma-agf.ca

The Shipper ADVOCATE is published semi-annually by J.M. Levi & Associates Ltd. PO Box 30039 RPO New Westminster Thornhill, ON L4J 0C6 Phone: 877.305.6587 Fax: 905.756.1115 [email protected]

Publisher: John Levi

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SPRING 2014 | 5

THE TERM “supply chain” came into the language in 1982 to describe the total process of getting the right stuff from origin to destination, at the right time, and in the right quantities.

A supply chain is a series of complex links, from purchasing decision to delivery; where a supply chain starts and ends is open to some debate. There is a supply chain for moving Canadian coal to steel manufacturers in Japan and a supply chain for moving finished automobiles from Japan, made from that steel, to consumers in Canada. Are these separate supply chains, or all part of one supply chain?

The old adage that “a chain is only as strong as its weakest link” is relevant here. The Journal of Commerce reports that Zurich Insurance Group found that 73 percent of companies surveyed suffered a supply chain interruption in 2012. In the past few months, we’ve seen two significant examples of the fragility of the links in Canada that interrupted important supply chains.

The western Canadian grain industry has experienced a weak link in the supply chain serving its overseas customers. The inability of the railways to move the record grain crop to export positions and to the U.S. since the end of the last crop year has caused major problems for grain farmers and the western Canadian economy, and has damaged Canada’s reputation as a reliable supplier on world markets. This has resulted in an unprecedented intervention by the Canadian government, which has ordered CN and CPR to each move 5,500 cars per week, with penalties of up to $100,000 a day for non-compliance.

While this band-aid fix may help the grain industry in the short run, it is not clear what the implications may be for other major Canadian industries that depend on an effective rail link in their respective supply chains. There are a number of factors in play in the failure of this “link.” It was a record crop; sales were strong; and the winter was long and particularly harsh. These factors and others had an impact on the ability of the railways to meet the demand. Long-term solutions are needed to ensure that rail is not the weakest link. This will require detailed analysis and research to determine demand, the capacity limits of the

PRESIDENT’S MESSAGE

The Fragile Supply Chain

rail network and system, the investment needs, the communication links between supply chain partners, and how to integrate the overlapping supply chains of various industries that depend on a robust and reliable rail “link.”

The other recent example was the withdrawal of drayage service at Port Metro Vancouver (PMV) by independent owner-operator truckers, followed by a strike by the unionized drivers. This had a major impact on the handling of containers, both import and export, through PMV and exposed the impact of that local link on complex international supply chains. It took about a month of negotiations between the truckers, the port, and the federal and BC governments to reach a conclusion that saw drayage service finally restored.

While the immediate problem has been solved, this “link” also needs long-term strengthening. Recent reports indicate that drayage is a major problem at many North American ports on both the east and west coasts. Services such as drayage evolve over time and what was effective at an ear-lier time may no longer be working. Moving from the status quo becomes difficult, as the various players’ initial response is to protect their respec-tive positions. There are many players involved in the PMV drayage situation and there may now be enough pain for all participants that they will come together to strengthen this link for the long term.

Both of these examples point out the fragility of our complex global supply chains, the widespread damage that can result from the failure of one link in the chain, and the need for greater collaboration by supply chain partners. What is the best way to study, analyze and improve complex supply chains to the benefit of all stakeholders? Should the government lead, or shippers, and where would the funding come from? Is there one or more of our universities that could play a major role in bringing all stakeholders together?

I don’t have the answers, but I see a need that, if tackled properly, will improve supply chain reliability, lower costs for all participants, and result in improved customer service.

Robert H. Ballantyne, P.Eng.

Bob Ballantyne President, FMA

Zurich Insurance

Group found that 73 percent

of companies surveyed

suffered a supply chain interruption

in 2012.

6 | The Shipper ADVOCATE

The “new normal” is often described as a business environment that is changing fast and often, an accurate description of today’s global supply chain environ-ment. Logistics service providers (LSP)

need to be aware of these changes to best plan their own infrastructure network, service offerings, operating strategies and resource needs.

Global Sourcing PatternsOnly a few years ago, the focus of many

firms in North America was on low-cost-country sourcing, particularly from China. But many of the underlying cost drivers that once made China the off-shore sourcing location of choice for U.S. and Canadian firms have moved in the opposite direction. Rising labour, energy and transportation costs, a stronger Chinese currency, persistent quality and intellectual-property problems, and reduced tax incentives from government have caused firms to look to other Asian countries, like India or Vietnam, to near-shore from Mexico, or to consider sourcing or producing back in Canada or the U.S. The changing sourcing and production patterns will have a substantial impact on the origin and destination of freight flows to be managed by LSPs. LSPs need to understand how the total landed costs compare between countries as a general indicator of the trade potential in specific country-to-country origin-to-destination points. LSPs need to appreciate the benefits and risks that existing and potential customers face, in their decision to strategically target customers with the greatest potential for the LSP’s service offerings. Who benefits more from nearshoring and who benefits more from offshore sourcing? What type of companies and characteristics of products are more amenable to domestic sourcing and what should be offshore sourced? What are the characteristics of industry sectors or products that are moving back all or some production to North America?

Alternatives to China have their limitations and risks, as well as benefits. Though labour costs have gone up in China, transportation

International Trade and Global SourcingBY GARLAND CHOW, PhD

GLOBAL TRENDS

and communications infrastructure has been improved (some say overbuilt) with each 5- and 10-year national-development plan. Southeast Asian economies, such as India, Vietnam and Bangladesh, have a lower-cost labour force but their logistics infrastructure, regulations governing transport and trade, and logistics expertise are overall barriers to seamless movement to and from those countries. Mexico has low-cost labour, a skilled labour force and location, location, location, but potential security and safety issues that may cause supply chain disruptions. These logistical limitations are both challenges and opportunities for LSPs serving such countries.

Many jurisdictions in the U.S., especially in the south and right-to-work states, have relatively low labour costs, and N.A. labour productivity is generally higher than any Asian country’s. But this productivity improvement has been the result of years of investment in advanced technology and the widespread adoption of management practices such as continuous improvement, total quality and lean management. Further productivity improvement may be increasingly hard to achieve as the point of diminishing returns sets in. In contrast, low-cost countries that depend on low labour costs have virtually unlimited opportunity to increase productivity through the substitution of capital for labour and adoption of advanced management practices. It is too soon to determine exactly how the business costs in the U.S. will be impacted by Obamacare and increasing demands for higher minimum wages, or so called “living wages.”

International Trade DevelopmentInternational trade patterns are also evolving.

North America will remain the main destination of manufactured products from low-cost-manufacturing countries in Asia for decades to come, but is its growth slowing? The BRIC countries and other developing countries are rapidly becoming destination markets for low-cost-manufacturing countries, and trade agreements facilitate trade between countries in the agreement

Many of the underlying cost

drivers that once made

China the off-shore sourcing

location of choice…have

moved in the opposite

direction.

SPRING 2014 | 7

at the ex pense of trade with countries not in the agreement. Will increases in intra-Asian trade reduce or slow the growth of inter-Pacific trade? Has the growth in NAFTA-enabled trade peaked or will it expand further? International trade patterns will have a substantial impact on the origin and destination of freight flows to be managed by LSPs.

Global Supply Chain Risk Management

At the same time, firms are getting better at recognizing the many risks inherent in global sourcing and are developing risk-management plans to avoid or mitigate supply chain disruptions, intellectual-property loss, customs and security, poor quality, and environmental and social disasters. Firms are assessing the probability and the impact of supply chain disruptions, such as border closures, natural disasters, strikes and events like the factory disaster in Bangladesh. LSPs can add value to the supply chain by providing the capacity and capability to recover from supply chain disruptions as quickly as possible.

Supply Chain Flow StrategyFirms are continually adapting their

product flow strategy. Increasingly, firms are adopting pull supply chain strategies such as postponement and mass customization, which impact not only a company’s global sourcing choices but also where value-added processes and customization occur. As this trend continues, there will be greater demand for production of goods close to home (domestic and near-sourcing). For products that are still sourced offshore, visibility, premium transportation and short order fulfillment, and the location of finished goods close to customers will be needed. LSPs can provide or facilitate the satisfaction of these customer needs. But for many products, customers will want value-added processing, such as repackaging and final packaging, labeling, configuration and, in some cases, product conversion. This is in addition to the traditional logistics services such as transloading, break bulk, merge in transit, storage, cross docking, order processing and returns processing. These represent new revenue sources for LSPs and the

entry of LSPs into providing the full gamut of supply chain processes.

At the same time, some firms have converted from a pull to a push strategy. Dell used a pull strategy, assembling most of its product from components sourced from Asia, but, in recent years, has shifted a significant portion of its final assembly to Asia. LSPs must meet the needs of different customers with different and evolving supply chain flow strategies.

The Demand for SustainabilitySustainability is becoming an

important aspect of the brand of many firms. Consumers are choosing more sustainable products and investors want sustainability-focused companies. The impact is felt in the entire supply chain, as the decision of a firm to demand greater sustainability from its suppliers causes those suppliers to demand sustainable products or service from their suppliers further upstream. Ultimately, LSPs account for a significant portion of the Scope 3 emissions footprint, especially in extended global supply chains, and are thus a source of sustainability improvement. While most firms are reluctant to sacrifice direct economic profit for sustainability,

pursuing initiatives that improve both traditional supply chain effectiveness and sustainability is the challenge for shippers. LSPs can pursue initiatives designed to increase their competitiveness with respect to both cost-effectiveness and impact on the environment. LSPs can also add value by helping their customers to measure their green footprint and make operating decisions that achieve both economic and sustainability benefits. While not widespread as of yet, incentives such as carbon pricing and carbon taxes will sometime in the not-too-distant future eliminate the distinction between economic and sustainability benefits and costs. Future-thinking LSPs will be the first movers ready to take advantage of that coming era.

Global Logistics PerformanceLogistics can be either a barrier or

an enabler of trade between countries, and logistics-related costs are a key component of total landed cost. The Logistics Performance Index (LPI) developed by the World Bank measures key indicators of the efficiency and effectiveness of logistics across countries. The 2012 LPI global ranking and scores shown for selected countries in Table 1

Co

un

try

LPI R

ank

LPI Sco

re

Cu

stom

s

Infrastru

cture

Intern

ation

al Sh

ipm

ents

Logistics

Co

mp

etence

Tracking &

Tracin

g

Timelin

ess

Develo

pm

ent

Classificatio

n *

Singapore 1 4.13 4.1 4.15 3.99 4.07 4.07 4.39 B

Hong Kong, China 2 4.12 3.97 4.12 4.18 4.08 4.09 4.28 B

Germany 4 4.03 3.87 4.26 3.67 4.09 4.05 4.32 A

Netherlands 5 4.02 3.85 4.15 3.86 4.05 4.12 4.15 A

Japan 8 3.93 3.72 4.11 3.61 3.97 4.03 4.21 A

United States 9 3.93 3.67 4.14 3.56 3.96 4.11 4.21 A

United Kingdom 10 3.9 3.73 3.95 3.63 3.93 4 4.19 A

France 12 3.85 3.64 3.96 3.73 3.82 3.97 4.02 A

Canada 14 3.85 3.58 3.99 3.55 3.85 3.86 4.31 A

Chinese Taipei 19 3.71 3.42 3.77 3.58 3.68 3.72 4.1 B

Republic of Korea 21 3.7 3.42 3.74 3.67 3.65 3.68 4.02 B

China 26 3.52 3.25 3.61 3.46 3.47 3.52 3.8 C

Mexico 47 3.06 2.63 3.03 3.07 3.02 3.15 3.47 C

Table 1: 2012 LPI Global Ranking and Scores

*A – Developed, B – Newly Developed, C – Developing. Classification from International Monetary Fund (2012).


reveal that countries whose economies are well developed and/or highly depen-dent on trade have high-performing logistics components. China has improved its LPI and ranks well above all of the countries now competing for low-cost-country sourcing opportunities. Notably, Mexico ranks far behind Canada. While LSPs cannot directly influence logistics infrastructure, LSPs are a core repository of logistics competencies that impact the quality of customs, timeliness of movements, accuracy of tracking and tracing, and seamless movement of international shipping. Global sourcing patterns are thus influenced by logistics competence overall, and the success of special global sourcing decisions is critically dependent on the availability of competent logistics providers, no matter what the overall LPI is for the country. LSPs in countries ranked low in the LPI should look at this as an

The Shipper ADVOCATE — Future IssuesThe Shipper ADVOCATE provides Canadian and international news and information for Canadian shippers and other industry stakeholders. Many articles that go into the magazine are related to regulations, issues and conditions that are current at the time of publication. We set our lead stories for upcoming issues well in advance of publication and we welcome articles on all transportation-related topics for each issue.

The lead stories (and editorial deadlines) for upcoming issues are:

• Fall 2014 – Accessing Asia – Changing Traffic Patterns (November 1, 2014)

• Spring 2015 – Transportation Infrastructure Needs (April 1, 2015)

Proposals for articles can be submitted to Bob Ballantyne at [email protected].

THE GREEN ISSUE:Sustainability Trends

in Transportation

Fall 2012

ADVOCATEThe Shipper

Official Publication of the Canadian Industrial Transportation Association

PLUS:CITA’s Supply Chain Executive

of the YearRailway Safety and Security

www.cita-acti.ca

Transportation Security: Combatting Fraud and Theft

Spring 2013

ADVOCATEThe Shipper


PLUS:Bill C-52:

Will It Help Shippers?

www.cita-acti.ca

Fall 2013

ADVOCATEThe Shipper


• Revolutionary RORO/Containerships• Oil by Rail• Fallout from Lac-Mégantic

www.cita-acti.ca

Continued on page 22

SPRING 2014 | 9

THE FOURTH EDITION of Connecting to Compete: Trade Logistics in the Global Economy was recently released by the World Bank. The report features the Logistics Performance Index (LPI), which the World Bank has produced every two years since 2007.

The LPI measures the on-the-ground efficiency of trade supply chains, or logistics performance. This year’s edition covers 160 countries. Information in this article is from the report’s introductory summary; the full report is available at www.worldbank.org/content/dam/Worldbank/document/Trade/LPI2014.pdf.

Supply chains are the backbone of international trade and commerce. Their logistics encompasses freight transportation, warehousing, border clearance, payment systems and, increasingly, many other functions outsourced by producers and merchants to dedicated service providers. The importance of good logistics performance for economic growth, diversification and poverty reduction is now firmly established.

Although logistics is performed mainly by private operators, it has become a public-policy concern of national governments, and regional and international organizations. Supply chains are a complex sequence of coordinated activities. The performance of the whole depends on such government interventions as infrastructure, logistics-services provision and cross-border trade facilitation.

Since the first edition, the LPI has shown that good policies matter to develop efficient supply chains but also that many developing countries still lag behind. The “logistics gap” evident in the first three editions still prevails and underscores the importance of consistent policies across sectors (trade, customs and transportation, for instance). The agenda and priorities are evolving. The imperative of facilitating trade through more transparent and consistent border clearance is now universally recognized – and set in stone in December 2013’s World Trade Organization Agreement on Trade Facilitation in Bali, Indonesia. New challenges of environmental sustainability, spatial planning, and the regulation and organization of services are receiving more attention, and not only in rich and emerging countries.

The LPI and its components help countries understand the

Connecting to Compete 2014: Trade Logistics in the Global Economy

GLOBAL LOGISTICS

challenges that they and their trading partners face in making their national logistics perform strongly. The LPI complements, rather than substitutes for, the in-depth country assessments that many countries have undertaken in recent years, and many of them with World Bank support. The LPI scores are not to be overemphasized, however – a country’s actual ranking or score should not be interpreted in isolation, but instead whether it

ranks among the best or worst performers. The LPI allows leaders in government, business and civil society to better assess the competitive advantage created by good logistics and to understand the

relative importance of different interventions. We hope that this fourth edition of Connecting to Compete will continue to support this broad community of policymakers and stakeholders.

Summary and Key FindingsImproving logistics performance is at the core of the

economic growth and competitiveness agenda. Policymakers globally recognize the logistics sector as one of their key pillars for development. Trade powerhouses in Europe like the Netherlands or in developing countries like Vietnam or Indonesia see seamless and sustainable logistics as an engine of growth and of integration with global value chains.

Indeed, inefficient logistics raises the costs of trading and reduces the potential for global integration. This is a hefty burden for developing countries trying to compete in the global marketplace. Since 2007, the LPI has been informing the debate on the role of logistics for growth and the policies to support it in such areas as infrastructure, service provision and cross-border trade facilitation.

Logistics Performance Continues to Converge — Slowly

The results of Connecting to Compete 2014 point to Germany as the best-performing country, with an LPI score of 4.12, and Somalia as the worst ,with 1.77 (on a scale of 1 to 5). (Germany was also the best performer over the period of 2007 to 2014.) A slightly converging trend from previous LPI surveys in 2007,

BY JEAN-FRANÇOIS ARVIS, DANIEL SASLAVSKY, LAURI OJALA, BEN SHEPHERD, CHRISTINA BUSCH AND ANASUYA RAJ

The LPI and its components help

countries understand the challenges that

they and their trading partners face.


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2010 and 2012 is also found in 2014, with lower-performing countries improv-ing their overall LPI scores more than higher-performing countries (see Figure 1).

The modest convergence since 2007 is explained by a perceived improvement in trade-supporting infrastructure in low- and middle-income countries – and to a lesser extent in their logistics services and customs and border management (see Figure 2). This perceived improve-ment attests to the success of developing countries in closing the transport-infra-structure gap with high-income countries.

If Service Delivery is Poor, Good Physical Connectivity is Not Enough

Infrastructure development has assured basic connectivity and access to gateways for most developing countries, a fact consistent with trends in the LPI since 2007. Yet countries have been more successful in delivering quality for some types of infrastructure. Quality of information and communications-technology infrastructure is regarded not only as the highest across all respondents, but also where the gap between lowest

and highest performers has narrowed the most, partly due to automation in border management. Conversely, rail infrastructure inspires general dissatisfaction. Ratings for other types of infrastructure vary by region.

Infrastructure services are delivered by logistics providers that operate under very different environments globally. Usually, the quality of the services they provide is perceived to be better than the quality of the corresponding infrastructure they operate. This “divide” between services and infrastructure quality is wider in air and maritime transport. Railroads, again, have low ratings almost everywhere. And low-income countries still score poorly on road freight services, despite having given them more policy attention recently. Acceptable services in infrastructure can

0

2

4

6

8

10

12

Uppermiddle income

Lowermiddle income

Lowincome

Percentage change

Source: Logistics Performance Index 2007 and 2014.

Customs InfrastructureQuality of logistics services

Figure 2 Percentage change in LPI component as measured against the highest performer, 2007–14

Percent

Source: Logistics Performance Index 2007, 2010, 2012, and 2014.

30

40

50

60

70

80

90

Topquintile

Secondquintile

Thirdquintile

Fourthquintile

Bottomquintile

2007 2010 2012 2014

Figure 1 LPI score as percentage of highest LPI score by LPI quintile, 2007, 2010, 2012, and 2014

0

2

4

6

8

10

12

Uppermiddle income

Lowermiddle income

Lowincome

Percentage change

Source: Logistics Performance Index 2007 and 2014.

Customs InfrastructureQuality of logistics services

Figure 2 Percentage change in LPI component as measured against the highest performer, 2007–14

Percent

Source: Logistics Performance Index 2007, 2010, 2012, and 2014.

30

40

50

60

70

80

90

Topquintile

Secondquintile

Thirdquintile

Fourthquintile

Bottomquintile

2007 2010 2012 2014

Figure 1 LPI score as percentage of highest LPI score by LPI quintile, 2007, 2010, 2012, and 2014

SPRING 2014 | 11

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be achieved in less-than-ideal circumstances, but differences in service quality can be substantial for similar levels of perceived infrastructure quality, for operational excellence cannot be replaced or necessarily equated with good physical “hardware.”

Trade-Facilitation and Border-Management Reforms Matter

Supply chain reliability is a major concern for traders and logistics providers alike. In a global environment, consignees require more certainty about when and how deliveries will take place. This increases the demand for quality in logistics services, posing challenges for private agents and for governments, all of which face pressure to facilitate trade while safeguarding the public against criminal activity, health concerns or terrorism threats.

Efficient border management is critical for eliminating avoidable delays and enhancing predictability in border clearance. Coordination among government control agencies will remain essential in trade-facilitation efforts – as will introducing best practices in automation and risk management in non-customs control agencies, which have generally been less open to reform. Accordingly, customs agencies have obtained higher LPI ratings than all other agencies in border management, particularly sanitary and phytosanitary control agencies and, less so, those enforcing standards.

The World Trade Organization Ministerial Conference Agreement on Trade Facilitation, agreed to in December 2013 in Bali, marked the importance of the facilitation agenda for expanding trade. After more than a decade of negotiations, the Bali Ministerial Declaration renewed the impetus to reform trade facilitation. It also created some urgency for the donor community to support developing countries in this endeavour.

Increased Complexity, No More Low-Hanging FruitPrevious editions proposed a typology of four broad groups

of countries, based on how friendly their logistics environments are. The most in need of attention from the international commu-nity and their neighbours are those with governance challenges – such as postconflict countries and fragile states – as well as those challenged by their economic size or geography in their connectivity to global markets – such as landlocked developing countries and small island states. Long-standing, but still mainly unresolved, implementation challenges in these countries, such as regional transit regimes, remain key for future progress, as many now have the basic connective infrastructure in place.

Despite least-developed countries’ efforts to improve their logistics, there is a growing need for consistent action plans where complexity is higher, as in most middle-income countries. The notion that there may be low-hanging fruit that countries can pick easily is less and less true. Further, reforms with many stakeholders can be slow to implement, or even reversed by governance weaknesses, as in Tunisia. More detailed, accurate data for policymaking and information sharing is needed. For instance, the trade-facilitation concept of “single windows for trade” requires alignment of several government control agencies, which takes time, but can be implemented in least-developed countries, as in the Lao People’s Democratic

Republic. Countries that introduce far-reaching changes have combined regulatory reform with investment planning, interagency coordination and incentives for operators.

The LPI shows that the quality of services is driving logistics performance in emerging and richer economies, too (see Figure 2). Yet developing services like third-party logistics, trucking and forwarding may be the most complex policy agenda ahead, with few success stories so far. In “logistics-friendly” countries, manufacturers and traders already outsource logistics to third-party providers, and focus on their core business, while managing more-complex supply chains.

Supply chain sustainability concerns are stronger in this edition. About 37 percent of respondents shipping to countries in the Organisation for Economic Co-operation and Development recognized a demand for environmentally friendly logistics solutions, compared with just 10 percent for low-income destinations. Governments will need to make long-term policy changes that improve and maintain the competitiveness of these services, consistent with fast-changing industry practices. So developing countries will have to not only consider the environmental footprint of their logistics, especially in trading with developed countries, but also revisit governance and operational models for environmentally friendly infrastructure and related transport modes, especially railways, that seem to perform poorly relative to those in the top performers.

ConclusionLogistics performance is strongly associated with the

reliability of supply chains and the predictability of service delivery for producers and exporters. Supply chains – only as strong as their weakest links – are becoming more and more complex, often spanning many countries while remaining critical to national competitiveness.

Comprehensive reforms and long-term commitments from policymakers and private stakeholders will be essential. Here, the LPI provides a unique reference to better understand key trade logistics impediments worldwide.

Jean-François Arvis, Daniel Saslavsky, Ben Shepherd, Christina Busch and Anasuya Raj are with The World Bank; Lauri Ojala is with the Turku School of Economics. Access their full report at www.worldbank.org/content/dam/Worldbank/document/Trade/LPI2014.pdf.


THE PORT OF HALIFAX, located in historic Halifax, Nova Scotia, is one of the deepest natural ice-free harbours in the world. The port is able to handle large volumes of

containerized cargo and project cargo of any size. It is the closest full-service container port to northern Europe, two days closer than any other North American container port on the East Coast, and one day closer to Southeast Asia via the Suez Canal. The port handles a wide range of cargo destined for, or originating in, 150 countries worldwide.

“The last two years have been building years for the Port of Halifax. The stage is set for our port community to grow, and we see it already,” said Karen Oldfield, President and CEO of the Halifax Port Authority. “The Halifax Port Authority works closely with our terminal operators and rail provider to constantly improve efficiency by reducing dwell t imes for cargo containers. When we increase efficiency, we create better conditions for the shipping lines calling on Halifax and for all of the cargo-related businesses moving goods through the port.”

The Port of Halifax is well-served by two commercial cargo container operators. Halterm Container Terminal Limited operates the South End container terminal under a long-term lease agreement. There has been significant investment over the past two years by Halterm, the Halifax Port Authority (HPA) and the federal government into the South End container terminal. This includes a pier extension,

Port of Halifax: Infrastructure Investments Fuel GrowthBY LANE FARGUSON

FEATURE: CANADA’S PORTS

new truck-marshaling facilities, new gates and two new super post-Panamax cranes. The Fairview Cove container terminal is leased to NYK/Cerescorp Company. A pier extension at the Fairview Cove container terminal was completed in January 2014. This extension allows for a more-efficient operation when two large vessels are at berth at the same time.

“The future of the global shipping industry is larger vessels,” explained Oldfield. “The shift is underway, with the first of the ‘big ships’ in the 7500-TEU class calling at Halifax in July 2013. These larger vessels will become the industry workhorses, moving goods up and down the east coast of North America.” Vessels of this size require deep draft and unencumbered infrastructure, making Halifax, with over 16 metres depth, an ideal option for the global shipping industry. “Our most recent cargo figures show that total volume of containerized cargo moving

“The last two years have

been building years for the

Port of Halifax. The stage is

set for our port community to grow, and we

see it already.”

New cranes at the South End container terminal (Halterm) unloading a vessel.

SPRING 2014 | 13

through the Port of Halifax as measured by TEUs was up 6.1 percent in 2013 compared with 2012,” said Oldfield. “Our goal is to continue that trend. To that end, the Halifax Port Authority is working with our partners and stakeholders to develop several projects for the overall growth of the region.”

In addition to the two container terminals operating in the Port of Halifax, the Port Authority oversees the operation of two common-use multi-purpose terminals in Halifax as well as the Port of Sheet Harbour. Richmond Terminals is undergoing an extensive renovation that will be complete by the fall of 2014. The total investment on this project (by Transport Canada and Halifax Port Authority) will be over $70 million, allowing for growth in breakbulk and project cargo. There is tremendous growth potential in these types of cargo, thanks to the planned $115 billion investment in Atlantic mega projects, the National Shipbuilding Procurement Strategy and work in the offshore oil industry. Many of these projects are related to resource extraction and development, while others will create the necessary conditions for increased manufacturing.

This year, ports and other gateways across Canada will be working to fully realize the potential of the recently signed free trade agreement between Canada and the European Union. The Comprehensive Economic and Trade Agreement (CETA), when ratified, will provide Canada with preferential market access to over 500 million consumers in the European Union. This, coupled with the North American Free Trade Agreement, means Canada will have trade agreements in place with the world’s two largest economies. To fully realize the opportunities that CETA will bring, it is critical that ports

and related stakeholders, such as carrier partners, terminal operators and all logistics operators, make the necessary investments now to be able to ramp up quickly when the changes associated with CETA come online. This will involve upgrading infrastructure, and reviewing and improving upon existing practices and procedures to generate efficiencies that result in better performance and network optimization.

In addition to the longstanding trade relationship between northern

Europe and the Port of Halifax, Asia is another critical market for growth and development. Trade with Asia accounted for 46 percent of containerized cargo moving through the Port of Halifax in 2013. Continued growth in this region remains a priority. In 2013, the Halifax Port Authority and the Shenzhen Port Authority in China signed a sister-port relationship agreement. The purpose of the twinning agreement is to develop two-way trade to grow the shipping business for both ports, and deepen understanding

It is critical that ports and related stakeholders, such as carrier partners, terminal operators

and all logistics operators, make the necessary investments now to be able to ramp up quickly when the changes associated

with CETA come online.

The Berlin Express, a big ship – in the 7500-TEU range – calling at Halifax. Photo credit Steve Farmer.

Wood pellets being loaded into a bulk carrier at Ocean Terminals.


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to build relations between the two regions. The cooperation agreement supports the advice His Excellency Zhang Junsai, China’s Ambassador to Canada, provided during Halifax Port Days 2013. While addressing attendees during the Chairman’s Breakfast, His Excellency discussed the growing demand in China for commodities and resources from Atlantic Canada. “The opportunities are there, and they are enormous,” explained Oldfield. “Take lobster for example. In Halifax, on a busy night at the height of cruise season, we know some popular downtown Halifax restaurants will sell as many as 300 lobster dinners. I think that’s fantastic considering the size of Halifax. But in China, there are restaurants that sell ten times that amount in a single night.” It all adds up to growth potential. This is especially true when it comes to seafood, meat, grains and vegetables.

The agri-food and seafood export industries contribute significantly to the economic output of Nova Scotia and Atlantic Canada. A significant volume of these products moves through the Port of Halifax each year. Thanks to advancements in the cold-storage supply chain and 500 reefer plugs at each of the commercial container terminals, high-value food products, including pork, beef, seafood, blueberries and potatoes, as well as food-grade lentils and grains, can be shipped anywhere in the world from Atlantic Canada.

In addition to the cargo side of the business, the Halifax Port Authority manages 260 acres of federal land and is mandated to achieve the highest and best use of each piece of property. This includes the ongoing development of the Halifax Seaport

as a cultural and tourist destination. Located on the historic Halifax waterfront in the south end of the city, the Seaport is a popular destination for events, local food and recreation. For many, the Canadian Museum of Immigration at Pier 21 is a must-see attraction. The national historic site served as the gateway into Canada for over a million new Canadians until 1971. The Halifax Seaport Farmers’ Market is another revered Halifax institution. With vendors selling fresh local produce, delicious prepared foods and local handcrafted goods, the Seaport Farmers’ Market is a popular destination among tourists and locals alike. Also located at the Halifax Seaport is Garrison Brewery, one of Nova Scotia’s premier craft breweries, as well as coffee shops, galleries and gift shops.

The Seaport also serves as home base for the Halifax cruise industry, a major contributor to tourism in Nova Scotia. This year, the Port of Halifax expects to welcome a record 137 vessels carrying approximately 130,000 passengers. The cruise industry is responsible for an estimated $50 million in direct spin-off expenditures each year. A major development for the Halifax cruise industry this year is the implementation of a shore power system allowing vessels to connect to the electrical grid while in port. Construction for the system is now underway. “Shore power is a highly effective way to reduce marine-diesel air emissions by enabling ships to shut down their auxiliary engines and connect to the electrical grid in order to provide necessary power while docked,” said Cathy McGrail, Cruise Development Manager for the Halifax Port Authority. “Once installed, shore power at the Port of Halifax will have immediate benefits by decreasing cruise-ship idling and will contribute to improved air quality.” The shore power project at the Port of Halifax was first announced in January 2013.Transport Canada will contribute up to $5 million to the project; the Province of Nova Scotia and the Port of Halifax will each contribute an additional $2.5 million. “The Government of Canada is pleased to see that construction of shore power has begun at the Port of Halifax,” said the Honourable Lisa Raitt, Minister of Transport. “Once installed, shore power will reduce air emissions from ships, protect the environment and health of Nova Scotians, and further this region’s economic prosperity.” Nova Scotia Economic and Rural Development Minister Michel Samson said the investment will help grow the local tourism economy. “This project is an example of what we all need to do – identify an opportunity that will drive our economy forward and then make it happen,” said Minister Samson. “The Halifax Port Authority has shown leadership in developing this shore power system, and the province is proud to partner with Transport Canada to support the port’s initiative.”

With over $100 million in infrastructure investments in the last two years that support its strategic location, efficient terminals and superior connectivity, the Port of Halifax will continue to look for new opportunities in cargo, real estate and cruise in 2014 and beyond.

Lane Farguson is Communications Advisor for the Halifax Port Authority. He can be reached at 902-426-7375 or [email protected].

SPRING 2014 | 15

THE PORT OF HAMILTON, ONTARIO, located at the far western end of Lake Ontario, is the largest Canadian port on the Great Lakes and the seventh largest in Canada, with a service area that covers much of southern and southwestern Ontario.

It offers direct connections to the CN and CP railway networks and easy access to Ontario’s major highways.

Traditionally a steel port, the Port of Hamilton has been steadily diversifying over the last few years, increasing its handling of dry and liquid bulk, breakbulk and project cargo. Between 2009 and 2013, the port handled an average of 10 million metric tons (MT) of cargo per year.

Like all modern ports, the Port of Hamilton is a highly inte-grated multimodal network. Cargo worth $2 billion goes through this deep-water port each year, on 600 vessels and 3,800 rail cars. The port is served by all major vessel carriers, and CN and CP railways; it’s located close to major highways and one of Canada’s busiest cargo/courier airports. “Modal choice is attract-ing more customers and cargo,” says Bruce Wood, President and CEO of the Hamilton Port Authority (HPA). “We’re working closely with our tenants to understand their needs for increased rail capacity and storage. We’re making sure our customers have access to the right mode, at the right time.” With complete modal choice, customers can tailor their mode of transporta-tion shipment by shipment, and know that their movements will continue through the annual Seaway winter closure.

HPA’s 600-acre property portfolio is home to 120 tenants. Since 2009, port tenants have invested more than $200 million in their facilities, demonstrating commitment as long-term partners. Recent investments have been made by tenants including agri-business Parrish & Heimbecker, construction/manufacturing firm Bermingham Foundation Solutions, cement, concrete and aggregates company Lafarge, shipping and warehousing provider Fluke Transport, and others.

FacilitiesThe Port of Hamilton’s terminal operators use state-of-the-

art equipment in handling commodities such as agricultural products, slag, iron ore, coal, scrap metal, fertilizers, steel, heavy equipment, power plant components, windmill blades, and other bulk, breakbulk, liquid and project cargo. Two steve-doring companies, Federal Marine Terminals and Great Lakes Stevedoring Co. Ltd., serve the port. The port features more

Building Hamilton’s New Logistics PowerhouseBY LARISSA FENN


than a million square feet of warehouse space, 50 acres of open storage, and capacity to store more than 100,000 MT of grain.

The port also handles a wide range of liquid bulk commodities, including petroleum products, biofuels, chemicals, fertilizers and food-grade products. Its 125 tanks can store up to 200,000 MT of liquid bulk products.

Port of Hamilton: east side.

The Port of Hamilton has been steadily diversifying

over the last few years, increasing its handling of

dry and liquid bulk, breakbulk and project cargo.

Transload facilities provide for easy transfer of products among all transport modes: rail, ship, truck and pipeline. To ensure that the transloading process is as efficient as possible, the port is making investments in rail-related infrastructure, such as team tracks and indoor sidings, and transload capacity to accommodate specialized goods like heavy equipment. Rail traffic at the port increased by 17 percent in 2013, and the port is investing to ensure it is well-positioned to capture further growth.

For breakbulk and project cargo, the port offers a substantial


Project cargo.

laydown area, extensive indoor warehousing, assistance with project routings, processing and kitting services, and facilities compliant with Transport Canada Marine Transportation Security Regulations.

By attracting a strategic set of tenants, the port has been able to facilitate the development of several key industry clusters – such as agri-food and advanced manufacturing. In the agri-food sector, for example, it is now home to:• two fertilizer terminals;• a biodiesel plant that processes

agricultural products into a green fuel;• two grain-handling terminals; and,• one of Ontario’s largest soybean crush

facilities.The growth of a vibrant agri-food

cluster has been the direct result of a strategy focused on diversification. In 2009, steel-related products accounted for 79 percent and agricultural commodities for 10 percent of the port’s cargo. By 2013, those shares had changed to 73 percent and 18 percent, respectively.

Brownfield RedevelopmentIn a long-time industrial city like

Hamilton, brownfields represent an opportunity for expansion. Having completed several successful projects, the port is actively seeking brownfield properties that would provide the multimodal access its prospective tenants are looking for.

Recent projects in this area include the

redevelopment of a steel rod mill at Pier 22, purchased from then-Stelco in 2006.

After the demolition of the 300,000-square-foot mill, HPA’s team constructed a 330-metre sheet pile wall, driven using a combination of vibratory and impact hammers mounted on crawler cranes. The area in front of the dock wall was dredged to 8.6 metres below datum, involving 130,000 cubic metres of dredged material. The dredge material was placed in a confined disposal facility on site and capped. This was an important cost-saving feature of the project: Not having to dewater and transport the material off-site reduced the cost and complexity of the project substantially.

The team also built a multi-user liquid pipe rack to allow landlocked properties direct pipeline access to vessels.

The redevelopment of Pier 22 involved $70 million of combined investment by HPA and its tenants.

The Pier 22 project was nominated for a Canadian Urban Institute brownfield-redevelopment award in 2012.

The port is now at work on the revitalization of Randle Reef. This multi-stakeholder project will take about 10 years to complete, and is expected to cost approximately $140 million.

Online Portal Matches Cargo and Vessel Capacity

Transportation-industry consulting firm CPCS undertook a study on Seaway competitiveness in 2012 that held good

news for the marine sector. Modal comparisons for a number of commodities showed a marine cost advantage, across sectors such as manufactured steel, grain, petroleum and project cargo. CPCS’s Marc-André Roy, who directed the study, noted that, “shippers make transportation decisions in terms of total time, total cost, from origin to destination. Part of the challenge – and the opportunity for marine-sector transportation services providers – is making better and more complete information available to shippers that captures the full transport chain.”

One issue flagged in the CPCS study was the system’s reputation when it comes to convenience. Feedback from shippers was candid: “It can be difficult to get quotes for Seaway routings,” notes the report. Further, “arranging Seaway-routing transport can be tough – more complicated than for rail routings.”

“It is a blunt assessment, but not surprising,” notes Ian Hamilton, Vice President of Business Development with the HPA. “For many years, we’ve known that marine shipping is green, it’s cost effective, but it hasn’t always been seen as the most convenient, especially when it comes to smaller loads.”

Vessels consequently move through the Great Lakes-St. Lawrence Seaway system with a fair amount of unfilled space, in the form of partial loads or backhaul capacity.

Seeing an opportunity in the underused capacity, the HPA created MarineGateway.net, an online cargo- and capacity-matching service that provides a simplified way to move bulk, breakbulk and project cargo by connecting shippers with available vessel capacity.

Cargo owners, shippers, shipping lines, freight forwarders, third-party-logistics providers and other marine service suppliers can go to www.marinegateway.net to join. It takes just a few seconds to sign up for this free service that provides capacity notifications and cargo quote requests.

When shipping lines have room aboard vessels travelling to or from the Great Lakes and global destinations, they can post their capacity, notifying cargo owners of availability. Cargo owners can,


SPRING 2014 | 17

THE PORT OF MONTREAL is a major international port that welcomes more than 2,000 ships annually carrying all types of cargo to and from all parts of the world. It is a hub for freight transportation, well

positioned at the centre of an integrated marine, rail, road and pipeline network.

“As a core element of the supply chain, the Port of Montreal is the engine that leads trade growth,” said Sylvie Vachon, president and CEO of the Montreal Port Authority (MPA). “Within this role, we act as a catalyst for eco-nomic development for the city and the entire country. We drive business growth for our clients by connecting them to their markets.

And we facilitate supply chain performance for our partners.”

Strategic AdvantagesThe Port of Montreal’s success on global markets is anchored

in a number of strategic advantages. Montreal is on the shortest direct route from Europe and the Mediterranean to Central Canada and the U.S. Midwest.

With its location 1,600 kilometres inland, Montreal is the closest international container port to North America’s industrial heartland. Its market reach is impressive: The port provides access to 40 million consumers within one trucking day and another 70 million consumers within two rail days. It has excellent highway connections to the hinterland, and it is directly connected to Canadian National and Canadian Pacific railways.

The MPA operates its own railway network with 100 kilometres of track. Containers are loaded onto unit trains at dockside before port locomotives transport them to the rail interchange zone. There, they connect with CN or CP locomotives. Conversely, containers arriving in port from Central Canada and the U.S. Midwest connect to port locomotives and are transported to terminals.

Many of the world’s leading container shipping lines, including CMA CGM, Hapag-Lloyd, Maersk, MSC and OOCL, provide dedicated weekly or twice-weekly services through the port. Carriers do not make any intermediate calls before arriving in Montreal: Vessels are completely unloaded and loaded at the port, meaning equipment flows are balanced.

The Port of Montreal handled 1.4 million TEUs (20-foot

Port of Montreal: A Facilitator of World TradeBY BRENT FREDERICK


equivalent unit containers) in 2013, representing 11.9 million tonnes of cargo. It also handled 9.55 million tonnes of liquid bulk and 6.55 million tonnes of dry bulk traffic last year. Total traffic amounted to 28.2 million tonnes. Montreal Gateway Terminals Partnership, Termont Montreal Inc., Logistec Stevedoring Inc., Empire Stevedoring Co. Ltd. and Viterra Inc. are among the private stevedoring companies that operate port

terminals. Six companies handle petroleum products at port facilities, and two companies move other liquid bulk products.

“The Port of Montreal has much to offer in terms of geographic location, international shipping lines, experienced terminal operators, its intermodal platform and two transcontinental railways, and the fact the we are a total discharge port,” Vachon said.

European markets, including the Mediterranean, represent close to 65 percent of the container traffic moving through the port. Ninety-eight percent of Quebec importers and exporters and 93 percent of Ontario importers and exporters choose the Port of Montreal to reach European markets.

The new economic and trade agreement between Canada and the European Union (EU) is expected to provide significant benefits for the Port of Montreal. “We are the leading port on the North American East Coast for trade between Northern Europe and North America’s industrial heartland,” Vachon said. “With our strategic location between the world’s two largest economic blocs, the EU and NAFTA, the Port of Montreal is the natural gateway for Europe.”

Among the main exports that will benefit from the new agreement are agri-food products such as pork and beef, and certain finished and semi-finished products such as aeronautic parts, and pulp and paper.

Market DiversificationBeyond its strength on the North Atlantic, Montreal has

succeeded in increasing its cargo volumes with other regions of the world. Market diversification is particularly evident in the

Sylvie Vachon

The port provides access to 40 million consumers

within one trucking day and another 70 million

consumers within two rail days.


port’s container sector.In 2000, Northern Europe was the

point of origin or final destination for 77.2 percent of the containers moving through the port, followed by the Mediterranean at 18.5 percent, and Latin America and Africa at 1.3 percent.

Fast forward to 2013 and Northern Europe still remains the leading trade route with Montreal. It was the point of origin or final destination for 44.4 percent of the containers moving through the port in 2013, followed by the Mediterranean at 20 percent. But Asia, at 13.8 percent, the Middle East, at 8.3 percent, Latin America, at 6 percent, and Africa/Oceania, at 4 percent, are all now part of the port’s container mix. China alone now accounts for 7 percent of the port’s containerized cargo traffic, and it is about to surpass dominant traditional markets such as the United Kingdom.

“The port has been able to increase cargo volumes with other regions of the world, and benefits from traffic moving through the Suez and Panama canals because shipping lines now provide direct services between Montreal and transshipment centres in Northern

Europe and Mediterranean, and in the Caribbean,” Vachon said.

The Port of Montreal’s new branding strategy, ‘Trading with the World,’ is an integral part of the MPA’s strategic plan to increase the port’s visibility on an international scale.

In another effort to be more active internationally, the port now has representatives to develop specific commercial markets abroad. A Hong Kong-based representative is working to develop new markets in Southeast Asia and India. He joins representatives in Europe and the United States.

“This representation allows the port to have a constant presence in the markets it serves and provides us with opportunities to attract new clients in both current and emerging markets,” Vachon said. “It also demonstrates our desire to help our clients increase their business and it supports them in their growth efforts.”

New Developments and Investments

The MPA maintains its infrastructure to the highest standard in order to provide its tenants with first-rate facilities. It

invested a record $55 million in its infrastructure in 2013, surpassing the previous record of $41 million set in 2009.

The port has increased its container-handling capacity by 13 percent, to 1.7 million TEUs, by completely redeveloping land in the Viau and Maisonneuve sectors. The Viau sector site is 16.5 hectares. Its annual container storage capacity stands at 150,000 TEUs following the redevelopment project. At the Maisonneuve sector, space for another 50,000 containers was added at the site.

The MPA also owns land along four kilometres of waterfront at Contrecoeur, about 40 kilometres downstream from Montreal on the south shore of the St. Lawrence River. This land will be used to further increase the port’s container-handling capacity once its land on the island of Montreal reaches full capacity.

The Port of Montreal has also been working to develop opportunities in the liquid bulk sector. “We are looking to increase traffic in this cargo category by taking advantage of opportunities related to the growth of Canada’s petroleum-products industry,” Vachon said.

In the dry bulk sector, CanEst Transit Inc. will operate a new facility on port territory starting this summer that will specialize in the cleaning and containerization of agricultural products destined for local and international markets.

Continuous ImprovementPort users can also count on supply

chain collaboration among the MPA, ter-minal operators and railway companies. Following agreements that the MPA signed with CP and CN and its terminal operators to improve supply chain efficiency, the average dwell time for imported contain-ers at the port has decreased by 40 per-cent in the past five years.

The port has been working closely with terminal operators lately to enhance the quality of its data, moving ahead with a new partnership aiming to create a more open data-exchange environment. This continuous-improvement process has enabled the port to recently restate its import dwell-time performance based on better information and visibility on


SPRING 2014 | 19

GAP CANADA, Nestlé Canada Inc., and Catalyst Paper Corporation: What do these companies have in common? They are all SmartWay Partners! More than 3,100 companies in Canada and the United States have registered

in the SmartWay Transport Partnership (SmartWay).SmartWay is a free program offered by Natural Resources

Canada. The program helps shippers identify fuel-efficient carriers through SmartWay’s Partner List. The Partner List

identifies all of SmartWay’s Carrier Partners who have committed to reducing their emissions.

SmartWay provides shippers, logistics companies and carriers with uniform metrics and an integrated framework that is supported and consistently applied across Canada and the U.S. In other words, SmartWay helps businesses credibly track the fuel costs and emissions footprint of the transportation component of their freight supply chain. Being aware of fuel costs allows companies to identify savings opportunities and maximize profits.

As SmartWay Partners, shippers are able to provide customers, shareholders and employees with tangible and credible results – a great resource for corporate sustainability reporting. While many companies know the amount of energy consumed and emissions generated from their buildings or manufacturing processes, this information has been traditionally much more difficult to calculate from the transportation component of the supply chain.

Make Your Business Stand Out — Benefits You Can Expect

Another benefit of SmartWay is that Partners are able to differentiate their company from competitors by associating themselves with an internationally recognized brand that symbolizes more-efficient transportation choices.

SmartWay Partners have the opportunity to enhance their company’s image by promoting their Partner status to customers and employees. Partners, who submit their data according to the program’s deadlines, become eligible to use the SmartWay Transport Partnership logo. The logo is an excellent way for companies to distinguish themselves from their competitors in bidding processes.

Each company also gets visibility on the Canadian and U.S. SmartWay websites by having their company name listed.

Do Business the SmartWayFROM NATURAL RESOURCES CANADA

ENVIRONMENTAL ISSUES

In addition, SmartWay recognizes its top-performing Partners annually with the SmartWay Excellence Awards. Candidates for the awards are identified based on their annual SmartWay data submissions and leadership actions.

How to Join SmartWayTo become a SmartWay Partner, companies should submit

their complete data using the Shipper Tool to report on their activities and fuel use. The data requirements and the Shipper Tool can be downloaded from the SmartWay website, at www.nrcan.gc.ca/energy/efficiency/transportation/commercial-vehicles/smartway/7615.

Matthew Rankin, Partner Account Manager with SmartWay, explains that, “the data-collection tool allows SmartWay shippers to track their environmental performance by incorporating the data of the SmartWay carriers they ship with. This makes shippers’ data more accurate and encourages fuel efficiency throughout the supply chain. Shippers can readily compare freight carriers and identify the top performers.”

A Smart Business DecisionBob Ballantyne, President of the Freight Management

Association of Canada, explains the benefits of SmartWay: “I think joining SmartWay is a smart business decision for shippers because it gives them access to information that will allow them to evaluate their carriers on a consistent basis. And that has got to be in the interests of not only the shippers, but also the carriers and … society at large.”

Many companies have given SmartWay direct feedback on the program. Stelios Chrysandreas, Transportation Manager at Kimberly-Clark, says, “We see SmartWay as both good environmental policy and good business. The transportation strategies that SmartWay recommends are saving us fuel, lessening our carbon footprint, and making a big difference in bringing us closer to our sustainability goals.”

In addition to providing data-collection tools for shippers and carriers to lessen their carbon footprint, SmartWay also works with Affiliates to promote the program. Realizing the fuel savings and other benefits of Smartway, Affiliates encourage their members or customers to become SmartWay Partners. Supply Chain Management Association (SCMA) is one of SmartWay’s Affiliates generating visibility for SmartWay. Alison Toscano, Project Manager of SCMA, says, “Through a series of case studies and events, we have connected with many companies in transportation and the 3PL industry. These companies have

Continued on page 21not only realized substantial


IN BOTH CANADA and the United States, the safe movement of dangerous goods is receiving much attention from federal transportation officials. And since the devastating derailment in Lac-Mégantic, Que., in July 2013, it is also a great deal in the public mind,

particularly because increasingly more crude oil is being shipped by rail across North America.

In mid-January of this year, the Honourable Lisa Raitt, Canada’s Minister of Transport, announced proposed regulatory amendments introducing new standards for certain rail tank cars, replacing existing standards referenced in the Transportation of Dangerous Goods Regulations. The new standards would require, for example, that new DOT 111 tank cars – used for transporting dangerous goods of high and medium danger, such as crude oil – be built with thicker steel, and have added top fitting and head shieldprotection. This proposed amendment turns previously agreed-to tank car standards into regulations.

Transport Canada launched three industry-led working groups (Classification, Emergency Response, and Means of Containment) to provide recommendations by the end of January on short-term and long-term safety actions and enhancements that could be made to the DOT-111 tank cars. It also continued to work with stakeholders involved in tank car design, manufacturing and use, as well as its colleagues in the U.S. government, to determine what additional requirements would enhance the DOT 111 standard. These could include further improving tank car design, or retrofitting, repurposing or retiring older tank cars in the North American fleet.

The amendment will also improve the classification regime for the transport of dangerous goods. Specifically, it requires that the person who classifies a dangerous good before transport keep a record of classification of those goods, as well as a record of the sampling method for crude oil.

Finally, the proposed regulation adds requirements to the shipping document. The consignor’s certification would appear on the shipping document to certify that the person named on the shipping document has prepared the consignment to the regulations that apply.

On Jan. 23, reporting on its Lac-Mégantic investigation, the Transportation Safety Board of Canada (TSB), along with

Improving Safety in the Rail Transportation of Dangerous Goods

REGULATORY ENVIRONMENT

the U.S. National Transportation Safety Board (NTSB), issued three recommendations to improve the safe transportation of crude oil by rail.

The Board’s first recommendation calls for tougher standards for all Class 111 tank cars, not just new ones. In Lac-Mégantic, the Board found that, even at lower speeds, the older, unprotected Class 111 tank cars ruptured, releasing crude oil that fuelled the fire.

The second recommendation calls for strategic route planning, and safer train operations for all trains carrying dangerous goods in Canada. The TSB wants railways to carefully

choose the routes on which oil and other dangerous goods are to be carried, and to make sure train operations over those routes will be safe.

For the third recommendation, the TSB would like to see emergency response

assistance plans along routes where large volumes of liquid hydrocarbons are being shipped. The right resources must be in place to reduce the severity and impact of a spill or fire.

Because North America’s railways are interconnected, the NTSB’s recommendations complement those issued by the TSB.

On Feb. 3, in a presentation to the Canadian Club of Ottawa, Ms. Raitt noted the economic importance to Canada of rail transportation: “Some 70 percent of our surface freight,” she said, “moves by rail, including bulk commodities such as agricultural and forestry products, minerals and energy products, including oil.”

In the presentation, Ms. Raitt noted that Transport Canada is “moving quickly to bring forward new administrative and monetary penalties – essentially, operator fines – to strengthen enforcement of the [Railway Safety] Act.” She indicated, too, that the department now requires that companies importing or transporting oil “conduct classification testing of that oil, to make the test results available to Transport Canada and update the data they provide to the department’s Canadian Transport Emergency Centre.” Further, she said, Transport Canada is examining “how to strengthen our liability and compensation regime, so that sufficient resources are available to adequately compensate potential victims, pay for clean-up costs and protect taxpayers in the event of an incident.”

On April 23, Transport Canada announced actions to address

BY KIM BIGGAR

The new standards…turn

previously agreed-to tank car

standards into regulations.

SPRING 2014 | 21

container movements at its terminals. The average container dwell time for rail imports (elapsed time from vessel discharge until loaded to railcar) in 2013 averaged 2.0 days, just within its set target of 48 hours. “This is considerably less than North American East Coast standards, thanks to our unique rail model,” Vachon said.

A new tool that allows shipping lines to maximize their use of the water column in the St. Lawrence River navigation chan-nel to Montreal is another important port initiative. With the assistance of key part-ners, the MPA has developed a portal that provides in real time the available water column in the channel. With real-time information and computer simulations, ships leaving Europe eight days before arriving in Montreal will now have better-quality information, which will allow them to optimize vessel loading.

The project involved the MPA and major partners including the Canadian Coast Guard (CCG) and the Canadian Hydrographic Service.

Meanwhile, numerous vessels already have benefited from a decision allowing post-Panamax-type ships to sail to Montreal. The CCG authorized in May 2013 the passage of vessels up to 44 metres wide in the Quebec-Montreal section of the St. Lawrence River navigation channel. The previous authorized width was 32.1 metres without restrictions.

The CCG made the provisions following a study commissioned by the MPA and conducted jointly with Transport Canada, the CCG, the Laurentian Pilotage Authority and the Corporation of Central St. Lawrence Pilots.

“This decision is good news for the port, for our shipping lines, and for the shippers who move cargo through Montreal,” Vachon said. “It will allow the Port of Montreal to strengthen its position as North America’s leading port for container traffic with Europe, and it will reinforce Montreal’s strategic position as a logistics and transportation hub of choice for all types of cargo.”

Specifically, the new provisions make it possible for all post-Panamax-type vessels, including 6,000-TEU container ships, to reach Montreal. The port can also now accommodate oil tankers with a cargo carrying capacity of 500,000 barrels, up from 350,000 barrels, and

MONTREAL continued from page 18 dry bulk ships that can transport 65,000 tonnes of cargo, up from 35,000 tonnes.

“Shipping lines, no matter what type of cargo they carry, will be able to substantially increase capacity on their services to Montreal, which will inevitably lead to benefits for the port’s broad customer base,” Vachon said. “We hope that carriers will take full advantage of the fact that the Port of Montreal can now accommodate post-Panamax-type vessels.”

All of these initiatives position Montreal as a major international port. “They will drive trade for our clients, facilitate supply chain performance for our partners, and help open up doors to new markets and new opportunities for growth,” Vachon said.

Brent Frederick is a freelance journalist who wrote this article on behalf of the Port of Montreal.

fuel savings, but also reduced their greenhouse gas emissions.”

To help companies complete the tool with their data, SmartWay offers free webinars in English and French. Matthew Rankin from SmartWay says, “New Partners should inquire about our webinars. They’re free and offer a good introduction to the program and tools, and are an opportunity to ask questions.” The SmartWay website has a list of the next-available webinars. If a company

SmartWay continued from page 19

the TSB’s recommendations. As of that date, Transport Canada:• Will issue a Protective Direction

removing the least crash-resistant DOT-111 tank cars from dangerous-goods service;

• Requires that DOT-111 tank cars used to transport crude oil and ethanol that do not meet the standard published in January 2014 in Canada Gazette, Part I, or any other future standard, be phased out or refitted within three years;

• Will issue a Protective Direction requiring Emergency Response Assistance Plans for crude oil, gasoline, diesel, aviation fuel and ethanol;

• Will create a task force that brings stakeholders such as municipalities, first responders, railways and shippers

together to strengthen emergenc-response capacity across the country; and

• Requires railway companies to reduce the speed of trains carrying dangerous goods and implement other key operating practices.The department will also issue a

Ministerial Order requiring railway companies to develop new rules regarding operating practices for the safe transportation of dangerous goods.

Meanwhile, the U.S. Department of Transportation (DOT) is undertaking reviews similar to those being done in Canada. In a letter dated Jan. 22, 2014, following up on a Jan. 16 meeting with the presidents of the Association of American Railroads, the American

Petroleum Institute and the American Short Line & Regional Railroad Association, Secretary of Transportation Anthony Foxx requested that the three associations provide details, within 30 days, of the “specific actions that shippers and carriers will take immediately to improve the safety of transporting crude oil.”

The letter outlined some of the actions to which the associations had committed during the meeting.

The Association of American Railroads (AAR) agreed to consider, and provide additional details about:• The use of existing federal protocols for

routing hazardous materials, such as toxic-by-inhalation hazardous materials (TIH), for crude oil unit train shipments;

has a number of participants interested in a customized webinar, SmartWay will gladly arrange one.

On top of having access to free webi-nars, each company joining the program is set up with a SmartWay Partner Account Manager, a person who will help them fill out the tool via telephone and email, and answer any questions along the way.

For more information or to join the program, contact the SmartWay team, at 1-855-322-1264 or [email protected].


INDEX TO ADVERTISERS

ASSOCIATIONSFreight Management Association of Canada ...................................... 4Supply Chain Management Association ................................. IBC

CUSTOMS BROKERSSummit Customs Brokers ...............14

FREIGHT SERVICESCP ........................................... OBCProcor ........................................... 8

PORTS AND TERMINALSGreat Lakes St. Lawrence Seaway System ..............................10Port of Montreal .......................... IFCSquamish Terminals .......................11

SEE WHAT FMA CAN DO FOR YOU

opportunity to be the exception above the average.

Challenge and Opportunity Awaits Global LSPs

Global LSPs play an important role in global trade, as they are the logistical links across the global supply chain. They must be aware of trends in global sourcing and international trade, and use that information strategically. They need to understand how firms manage supply chain risk and supply chain flow, so as to better meet needs with the right logistics and value-added services. LSPs have to be ready to be sustainable and help their clients reduce their carbon footprint. They are a key component of the logistics sector that influence overall trade flows and the success of individual clients. The “new normal” is now the standard for the global supply chain business environment. Change is inevitable, perpetual and sometimes rapid. The best logistics service providers are those who see the threats and the opportunities in these changes and take advantage of them.

Garland Chow, PhD, is Associate Professor and Director, Bureau of Intelligent Transportation Systems and Freight Security, Sauder School of Business, University of British Columbia.

SOURCING continued from page 8

in turn, post cargo they need shipped, and request confidential quotes from a list of prequalified suppliers. It’s a one-stop shop that also connects shippers with quotes for insurance, storage and stevedoring.

“Marine Gateway fills a niche by putting top-up capacity out there for shippers and freight forwarders, making it more viable to choose marine for smaller loads,” said Hamilton. “By finding cargo for some of this otherwise-unused marine capacity, it delivers a win-win for cargo owners and shipping lines.”

Since the web portal’s launch in late 2013, more than 60 shippers, shipping lines and other marine service providers have signed up to use the service.

With its diverse mix of high-value tenants and seamless connections between modes, the Port of Hamilton is an economic engine that facilitates commerce and trade, and generates prosperity throughout southwestern Ontario.

Larissa Fenn is Manager, Public Relations & Communications for the Hamilton Port Authority. She can be reached at 905-525-4330, ext. 235 or [email protected].

HAMILTON continued from page 16

• The use of speed restrictions where appropriate on crude oil unit trains travelling through high consequence areas;

• The use of distributed power on unit crude oil trains; and

• Increasing and improving track, mechanical and other rail safety inspections.The American Petroleum Institute (API)

recommended and agreed to:• Share expertise and testing information

with DOT, notably its Pipelines and Hazardous Materials Safety Administration (PHMSA), about characteristics of crude oil in the Bakken region;

• Work on identifying best practices to ensure that appropriate and comprehensive testing and classification of crude oil being transported by rail is performed; and

• Collaborate with PHMSA on improving its analysis of crude oil characteristics.Both the AAR and the API agreed to:

• Improve emergency responder capabilities and training to address crude oil incidents; and

• Recommission the AAR’s Rail Tank Car Standards Committee to reach consensus on additional changes

proposed to the AAR rail tank car standard CPC 1232s, to be considered by DOT, as appropriate, in the rulemaking process.In response to the letter, the Railway

Supply Institute Committee on Tank Cars wrote to Mr. Foxx to recommend adoption of a set of seven principles that represent the consensus of the tank car manufacturing and leasing industry. The recommendations include adding safety features to all new crude oil and ethanol tank cars, placing limits on the use of legacy tank cars, and prioritizing modifications to existing legacy crude oil and ethanol cars over modifications required to meet other DOT regulations.

In mid-February, both the API and the AAR provided more-detailed information about the initiatives to which they had committed at the January meeting.

Then, on Feb. 25, DOT issued an Emergency Order requiring all shippers to test product from the Bakken region to ensure the proper classification of crude oil before it is transported by rail, while

also prohibiting the transportation of crude oil in the lowest-strength packing group. Proper classification will ensure that the material is placed in the proper package and that the risk is accurately communicated to emergency responders.

The federal governments in Canada and the U.S. are both working with stakeholders to improve safety in the transportation by rail of hazardous materials and to support communities in their emergency-preparedness work. These are multi-pronged efforts involving shippers, carriers, manufacturers and governments at all levels. Through this work, all partners hope to prevent the recurrence of a derailment with the impact of that at Lac-Mégantic.

Kim Biggar is editor of The Shipper ADVOCATE.

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Spring 2014 The Shipper ADVOCATE - FMA and Publications...Spring 2014 5 President’s Message 6...

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