GCT Global Container Terminals and the Vancouver Fraser Port Authority (VFPA) are at loggerheads over competing proposals to build a new terminal in a clash pitting tenant against landlord.
VFPA has long planned to build a container terminal at Roberts Bank in Delta, British Columbia, just north of Vancouver. The project, called Roberts Bank Terminal 2, has been in planning and development for more than a decade and the port authority hopes to complete the project by 2029.
But GCT has proposed expanding its GCT Deltaport terminal by adding a fourth berth. GCT, after a recapitalization last year, is owned by Ontario Teachers’ Pension Plan (OTPP), IFM, and British Columbia Investment Management Corporation (bcIMC).
In February, VPFA rejected the Deltaport 4 proposal on the grounds that it would reduce competition and would not receive environmental approval. GCT sued a month later, disputing both counts and arguing it is unfair for the authority to act as a regulator and a competitor.
If both expansions were built at roughly the same time, it would lead to a glut of capacity, GCT President and CEO Doron Grosman told Inframation.
“You don't need both projects at the same time,” Grosman said. “If ours goes forward, then the next logical thing would be for theirs to follow ours in 20, 25 years, roughly.”
The question is which project should go forward now, and which should be put on the shelf for a couple decades.
VFPA argues that its project is further along in its environmental permitting than GCTs and that the increased capacity is needed sooner rather than later.
“The DP4 proposal would also require construction of new port land, and would require the same intensity of pre-work before entering into the same federal review process, neither of which have begun,” a VFPA spokesperson told Inframation in an email. “As such, it may be a viable project in the longer term.”
The VFPA’s plan requires approval from the Canadian Environmental Assessment Agency.
Grosman acknowledged that VFPA’s plan is further along in the permitting process but said that “we feel like we can catch up pretty quickly.”
Deltaport 4 would increase terminal capacity by 2 million twenty-foot equivalent units (TEUs) to 4.4 million TEUs total, expanding the footprint to 141 hectares from its current 85 hectares. Construction would start around mid-2024, with operations beginning towards early 2029, according to a permitting and construction schedule published by GCT in February.
The project would cost between CAD 1bn (USD .76bn) and CAD 1.6bn, according to a GCT’s website.
In an 8 February letter to the chair of the Roberts Bank Terminal 2 environmental review panel, Grosman called the port’s proposal “outmoded” and “no longer viable given changes in a number of market factors.”
GCT has since stepped up its opposition to Roberts Bank Terminal 2, launching a “#BetterDeltaport” campaign and pushing for the federal review panel to halt the project. GCT contends DeltaPort 4 would have a smaller footprint (VFPA’s proposal covers 108 hectares) and be cheaper to build than Roberts Bank Terminal 2, which is expected to cost CAD 2.5bn-CAD 3bn.
The VFPA spokesperson also pointed to the need for competition among terminal operators. GCT currently operates two (Vanterm on Vancouver Harbour being the other) of the four largest terminals on Canada’s West Coast comprising roughly half the capacity. The other two – Prince Rupert and Centerm – are operated by DP World through its joint venture with CDPQ. That JV had also struck a deal to acquire Fraser Surrey Docks in the Greater Vancouver area earlier in the year and is close to reaching close on the deal.
“The port authority intends to introduce a third competitor with Roberts Bank Terminal 2, something we believe necessary given our public mandate to ensure a competitive environment for Canadian exporters and importers,” the spokesperson said.
Grosman dismisses these concerns, saying experience elsewhere shows that “you don't need more than two marine terminal operators to create very intense competition.” In its lawsuit, GCT also argued that concerns over competition are outside VFPA’s purview.
This article written by Andrew Vitelli and Jon Berke originally appeared on InframationNews.com