Competing for container capacity on Canada’s West Coast


The long, contentious fight over how to expand container capacity at Roberts Bank has exposed fault lines between the Metro Vancouver port’s managerial and operational factions that may be difficult to heal.

That is because the controversial Terminal 2 debate — where the Vancouver Fraser Port Authority (VFPA) is advocating for a massive, multibillion-dollar landfill to quench the container capacity thirst expected on Canada’s west coast by the 2030s - has essentially put the port authority in the unique situation of being in quasi-competition with its current container port operator tenant at Roberts Bank.

Global Container Terminals Canada (GCT Canada) currently operates the port authority’s existing container facility, Deltaport, at Roberts Bank. GCT Canada has championed its own Berth 4 expansion to the three-berth Deltaport as the solution to upcoming capacity demand, and has become one of the fiercest opponents to the potential creation of a new three-berth Terminal 2.

“We look up north, and we are a little envious of what’s happening in Prince Rupert,” says Marko Dekovic, vice-president of public affairs with GCT Canada, in reference to the relationship between the port authority there and DP World Canada, the operator of that port’s Fairview container terminal. “Their terminal operator up there and their port authority seem to be working hand-in-hand and winning. We want to get back to that environment here in Vancouver as fast as possible.”

GCT Canada and VFPA are currently embroiled in a legal fight in which the former has filed for a federal judicial review of the latter’s alleged bias against Berth 4, in favour of Terminal 2. However, despite how rancorous the fight has become, both sides say they remain committed to working with one another to ensure Vancouver remains effective in its role as Canada’s Asia-Pacific trade gateway.

“We continue to work with GCT at an operating level, and we need to do that,” says Duncan Wilson, vice-president of environment, community and government affairs at VFPA. “They are an important stakeholder and tenant in the port. I would say that we agree with GCT in terms of the need for additional capacity; there’s some disagreement about the sequence of that capacity and how to deliver on that, but that capacity is required. So irrespective of how Terminal 2 turns out, we will work with GCT, DP World and others to continue to develop that capacity for Canada.”

On that point, Dekovic agrees.

“Our day-to-day operational collaboration and work with the port authority remain,” he says. “We are both very committed, and it’s working well. Yes, on the front of these two projects, there are obviously some challenges, and the relationship is stressed on that level. But we are a proven and committed terminal operator here, and we want nothing more than to get beyond this and back to an environment where we are collaborating and winning for Vancouver.”

But despite both sides putting on a brave face, the friction points are glaring. The port authority’s Terminal 2 is scheduled to file additional information to the federal Ministry of Environment to facilitate a final decision (likely to come later this year or in early 2022). Construction could begin in 2024. GCT Canada meanwhile has commenced its own Impact Assessment Agency of Canada process for Berth 4, and is anticipating construction to commence in late 2026 or early 2027, if everything is approved. Neither side is backing down from their positions.

Terminal 2, the bigger and more expensive project, will involve the creation of a new 177-hectare land-fill in the waters of Roberts Bank, and will add 2.4 million 20-foot equivalent units (TEUs) of container capacity per year by the 2030s. Berth 4’s scale is smaller: GCT Canada says it plans to add 56 hectares of landfill to the existing Deltaport to boost annual container capacity by about two million TEUs.

Dekovic says Berth 4’s smaller scale is “right-sized” for the growth expected under current shipping trends, adding that the completely privately funded project would be a much more cost-effective way to address the upcoming capacity crunch.

“We have received comments about our project from our customers - actual ocean carriers who will be using the project — as opposed to the case with Terminal 2,” Dekovic says. “I think that’s a critical component for us... because that’s an integral part of any successful project, to have somebody's who’s going to use it... We are much more in tune to what’s happening in the market.”

Wilson, however, says the port authority is considering a bigger-scale project because of the unique nature of not only Terminal 2 itself, but also the port authority’s own complex mandate to satisfy multiple stakeholders, including the general public. That means, Wilson notes, it is crucial for Roberts Bank to add Terminal 2 — which would be operated by a yet-unnamed operator that’s not GCT Canada or DP World — in order to maintain a competitive marketplace and keep shipping costs low.

“We are not a typical proponent,” Wilson says. “We have a mandate that’s in the best interest of Canadians and Canadian trade. Our shareholders are Canada, and part of our mandate includes ensuring there’s an adequate level of competition in the gateway and reasonable cost to users. So we are not being driven by shareholder value and profits; we are driven by delivering value to Canadians and ensuring their access to markets.”

Wilson again reiterated that the west coast of Canada is going to run out of container capacity in the mid-to-late 2020s, which would pose a major problem for Canadian import and export competitiveness, and could drive some Canadians to ship through U.S. ports at a higher cost — creating a loss of economic benefits for Canada.

He also noted the fact that the port authority has not reached an agreement with an operator for Terminal 2 isn’t concerning and the delay may allow VFPA to secure the best deal (which would in turn benefit the public).

*There’s a tremendous amount of interest in the project, so we are not worried about a shortage of bidders,” Wilson says.

“What’s happening is that we are quickly running out of container capacity on the West Coast, and as that happens, it creates an even more competitive dynamic — which is good for the bidding process. So frankly, we don’t have an incentive to move forward quickly at this stage with procurement.

“We want to have the most competitive field we can [for bid procurement]. Any profit the port makes gets re-invested back into the gateway, so it’s in the best interest of delivering on our mandate to Canadians to have the best commercial solution, and that’s what we are pursuing.”

Dekovic, however, is skeptical. He notes that GCT Canada is actually in the terminal operations sector — and what they have heard about operators’ reaction to Terminal 2 (T2) is quite different from the reaction described by Wilson.

“Look, we’ve been saying from the get-go that — since the time T2 was conceptualized — the world has significantly changed since then,” he says, noting that projections used by GCT Canada show West Coast capacity not being reached until the 2030s at the earliest. “They had five global leading terminal operators all put and respond to their request for proposals in the past, and they’ve all walked away. It’s not the port authority pausing it. It’s the terminal operators looking at the business case and what the port authority is proposing, and walking away.

“On the west coast of Canada, we have a great position where we have two proven, successful operators in DP World and GCT who have been winning customers and driving traffic to Vancouver and Prince Rupert,” Dekovic adds. “If the port authority continues pushing Terminal 2, it will cost all terminals in Vancouver ever-increasing rent and make us less competitive as an Asia-Pacific gateway... How does paying for expensive capacity make us more competitive?”

This article originally titled Competing for Container Capacity written by Chuck Chiang was originally published in Business in Vancouver 2021 Trade Magazine. 

Watch: A Fair Game for Canada