Dueling Projects Could Slow Vancouver Port Expansion


The port of Vancouver will reach full utilization of its marine terminal capacity within 10 years, but conflicting proposals by the port authority and its largest tenant, GCT Canada, have created uncertainty as to how the port will expand to accommodate future growth.

GCT Canada operates Vancouver’s largest container terminal, Deltaport, which has three vessel berths and an annual throughput capacity of 2.4 million TEU. The Global Container Terminals subsidiary last year submitted a proposal for a 138-acre addition at Deltaport and a fourth berth, which would increase capacity to 4.4 million TEU, but the port authority rejected that plan, citing competition and environmental concerns.

The Vancouver Fraser Port Authority (VFPA) instead has gone out for bids on the construction of a new three-berth facility, to be called Roberts Bank 2 (RBT2), with an annual capacity of 2.4 million TEU, on man-made landfill. Duncan Wilson, the port’s vice president of corporate social responsibility, said that in addition to concerns about the ability of GCT Canada to secure federal environmental approval for expanding Deltaport, the port authority wants to attract a third terminal operating company to Canada’s largest port. GCT Canada operates the Deltaport and Vanterm facilities, and DP World operates the Centerm terminal.

GCT Canada has filed two applications for judicial review related to the proposed fourth berth at Deltaport. Eric Waltz, president of GCT Canada, said that after years of review and preliminary studies by experts, it was determined that the Deltaport expansion project is environmentally feasible. When the port authority notified GCT Canada it would not accept its application for review, GCT’s only option was to file a judicial review against the decision to block the project from proceeding through the required regulatory process, he said.

“All that GCT is seeking is a fair, transparent, and independent review of the GCT Deltaport Berth 4 project. GCT’s Deltaport Berth 4 project cannot have a reasonable and independent review as long as VFPA is our landlord, regulator, and competitor, and continue to advance their proposed Roberts Bank Terminal 2 project,” Waltz said.

Meanwhile, Wilson said the port authority has received 11 bids from potential operators for RBT2, a process designed to encourage a third terminal operator at the port. Waltz responded that GCT has a proven track record of terminal operations in Vancouver and other ports where it has container facilities.

As a landlord port, Vancouver has a mandate to promote Canadian trade and encourage competitive pricing among its terminal operators, Wilson said. “Competition is extremely important,” he told JOC.com.

Time is of the essence

Terminal space in Vancouver is already tight, with terminals operating at a combined 85 percent utilization, Cliff Stewart, the port’s vice president of infrastructure, told JOC.com. Most terminal operators agree that service begins to deteriorate when a facility surpasses 80 percent utilization. This means that when a disruption occurs at Vancouver, whether due to weather, rail service issues, or an unexpected spike in cargo volume, container dwell times soar and congestion results.

The port learned this the hard way this past winter of 2018 and early 2019, when a surge in imports ahead of Chinese New Year resulted in dwell times in excess of seven days in Vancouver. The terminals’ operations are back to normal, however, as metrics published on the port’s website show that in early April rail container dwell times were in the zero- to three-day range, and truck turn times averaged 42-44 minutes, both of which are considered good by industry standards in North America.

Vancouver last year handled 3.4 million laden and empty TEU, an increase of 4.4 percent from 2017, according to port statistics. TEU volume in January and February of this year has grown 11.1 percent compared with the same two-month period in 2018.

The West Coast of Canada is in a race against time to increase terminal capacity amidst growing container volumes. According to a report commissioned by Black Quay Consulting, Vancouver and Prince Rupert combined have a capacity of 5.34 million TEU. Projects that are planned for the next few years, such as an expansion at Centerm, will add 2.77 million TEU, even if the Deltaport or RBT2 projects do not materialize.

“Therefore, according to the Vancouver Fraser Port Authority’s Ocean Shipping Consultants’ base case forecast, and accounting for the desired 85 percent capacity utilization, Canada’s west coast has enough container capacity well into the 2030s,” Waltz said of the study.

However, given Canada’s strict environmental policies, there is an urgency to move forward with securing the necessary permits. Wilson said marine terminal expansion and construction projects can take 10-15 years from conception to completion.

Based on that supposition, the RBT2 project has a better chance of completion by the end of the next decade because the port filed its environmental impact report in 2015 and the environmental assessment process is already under way, Wilson said. GCT initiated the expansion proposal for Deltaport last year, and Waltz said GCT Canada outlined its environmental approach in the preliminary project enquiry it submitted to the port authority.

Deltaport’s productivity received a productivity boost late last year with completion of the Intermodal Yard Reconfiguration, which increased its capacity from 1.8 million to 2.4 million TEU. Due to the intermodal rail yard project, as well as the South Fraser Perimeter Road, Deltaport is now able to handle rail and truck volumes more efficiently, said Philip Davies, principal of Davies Transportation Consulting in Vancouver.

This article by Bill Mongelluzzo originally appeared in JOC.com on April 08, 2019.