I'm calling to order meeting number 109 of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to Standing Order 108(2), we're doing a study of the Canadian transportation and logistics strategy. What would that look like and what should it look like? We're very pleased to be here in Niagara region today to start off.
Witnesses we have from 9 till 10 will be the Hamilton Port Authority, led by Mr. Hamilton, president and chief executive officer, and the St. Lawrence Seaway Management Corporation, with Jean Aubry-Morin, vice-president of external relations, and Bruce Hodgson, director of marketing development.
Welcome and thank you very much. Thank you for finding the time up here, on a wet morning, but you're used to wet mornings, without question.
We'll open it up.
Mr. Hamilton, would you like to start? You have five minutes, and then you'll be followed by our other guests. Then, we'll be doing questions and answers for the remaining time.
Thank you very much, Madam Chair and members of the committee. Welcome to Niagara. It's very kind of you to choose Niagara. I live right down the road, so it's the shortest commute I've had in many years.
My name is Ian Hamilton. I'm the president and CEO of the Hamilton Port Authority. The port authority is one of 18 port authorities in the country. We act as a government enterprise with a mandate to facilitate trade and manage federal assets with the exercise of good stewardship.
We're the largest port in Ontario. We have 10 million tonnes of cargo, representing $2 billion in value, supporting supply chains in steelmaking, agri-food, construction materials, petrochemicals and manufacturing. Cargo that transits the Port of Hamilton supports $6 billion in economic activity and 38,000 jobs. We employ 2,100 people on our property, on 630 acres with 130 individual tenants.
Because we're here in Niagara today, I'll focus my comments more on the Hamilton-Niagara region. Our message is pretty clear. We at the Hamilton Port Authority truly believe in the potential of the Hamilton-Niagara region. Our vision is to see the region grow into a true Canadian gateway.
In order to achieve this we need to develop multimodal industrial hubs that really capture the value of the transportation assets, integrating multimodal assets both outside and inside of the region so that everything can create a conducive network. This includes marine, of course, but also rail, air and road. I think there's a real potential on the road side to develop a mid-peninsula highway here in the region. I'll talk a bit more about that later.
This region has all the right ingredients: proximity to the United States; an active, co-operative business community; world-class educational institutions; entrepreneurially minded government representatives at the local, provincial and federal level, certainly not least of whom is ; industrial land to develop; and a great base of transportation infrastructure.
The last few years in Hamilton, the accessibility of investment-ready brownfield and industrial land, supported by multimodal transportation infrastructure, has been critical to our success. In the last six years, we've attracted about $350 million in third party investments in the areas of agri-food, food processing, logistics and construction materials. We've built the Port of Hamilton into a true multimodal industrial hub. In recent years, up until this year, we've actually spent almost as much on rail infrastructure as we have on marine infrastructure to create that multimodal environment.
Our challenge now in Hamilton is that we don't have capacity any longer. We have more demand for multimodal-service industrial land than the port can provide, but we believe that the Niagara region can truly help to meet some of that demand while supporting growth in the seaway traffic, increasing trade and growing the local economy.
In achieving this vision, good partners like the St. Lawrence Seaway Management Corporation are essential. In the Niagara region, the canal is vital to successfully developing a multimodal industrial hub. It needs to be efficient and reliable. The St. Lawrence Seaway Management Corporation truly delivers on that. HPA's strength is on the land development side, with expertise in this very specific market of port land development and transportation-intensive industrial land. Our two organizations complement each other very much. We share objectives of facilitating trade, maximizing the use of the marine mode, and moving more and more cargo through the Great Lakes and the St. Lawrence River.
The first step in developing a multimodal industrial hub in the Niagara-Hamilton region is the creation of a true trade gateway. It is to begin to integrate some of the transportation assets around the region and connect them to one another, both in Hamilton and elsewhere in southern Ontario. Currently, our transportation and marine-industrial land assets have fractured ownership, and many of them are underutilized. We see this as a place where the Hamilton port could bring real value by being able to integrate the various assets, invest in them and maximize the transportation infrastructure, ensuring that businesses looking for space have it and can grow.
Through the seaway review and the ports modernization review, Transport Canada has been seeking ideas about what policy or legislative changes can make the system work better. Our feedback is included, as well as several recommendations, such as ensuring that port authorities have the ability to partner with one another, and with municipalities and other entities, to acquire, lease and manage land as part of the effort to create an integrated network. Another key point is ensuring that industrial lands, essential to supporting our economic growth, are protected.
Once employment lands are gone, unfortunately they're gone forever. As we see more and more, there's increased pressure from the residential developments and municipalities to encroach on these industrial properties, which are essential to facilitating our trade.
There are some other priorities on our minds. Many in this region, including us, strongly support the mid-peninsula highway initiative and would like to see the project revisited.
The way we see it, Niagara's future prospects are brighter than ever, but that means that better goods movement is required and it has to be given more attention. The mid-peninsula highway is an important piece of the puzzle in ensuring that Niagara fulfils its potential as a true Canadian gateway.
I focus today on Niagara, but this approach to building networks of integrated assets is the right approach throughout southern Ontario, and essentially all of the country. We need to look to the future and how we are going to support the industries that are the biggest job creators, preserve the space we require for industry in the face of an ever-intensifying urban development, and make sure that the use of marine for its ability to counter congestion and reduce greenhouse gases is truly exploited.
We, at the Hamilton Port Authority, want to be part of what we see as an exciting future for economic development, trade and sustainable transportation in southern Ontario, and we believe we have a lot to offer. We are ready, experienced and motivated, and we look forward to working with you.
Thank you, Madam Chair and members, for allowing us to be here today. We believe that the St. Lawrence Seaway is a vital linchpin connecting the Great Lakes and the St. Lawrence corridor. Today, we will give you a brief overview of our operation and structure, and some of our activities within the Welland corridor.
The St. Lawrence Seaway Management Corporation is a not-for-profit corporation incorporated in 1998 under the Canada Marine Act. As part of our mandate, the SLSMC operates, manages and maintains the St. Lawrence Seaway, as well as marketing the entire Great Lakes—St. Lawrence corridor under the Hwy H2O brand. Prior to commercialization in 1998, the Canadian portion of the seaway was operated as a federal Crown corporation. The Canadian government maintains ownership of the assets, which we operate on its behalf.
The St. Lawrence Seaway is a binational operation with 13 Canadian locks operated by the SLSMC and two U.S. locks managed by the Saint Lawrence Seaway Development Corporation, a U.S. government entity. Our mission statement captures who we are. We serve our customers by passing ships through a safe, secure and reliable waterway system, in a cost-effective, efficient, and environmentally and socially responsible manner, to deliver value to the North American economy.
The Great Lakes—St. Lawrence corridor is a marine highway that extends from the Gulf of St. Lawrence to the Great Lakes, serving as a trade route to the heart of the continent. The eight states and two provinces that border the Great Lakes—St. Lawrence corridor constitute the world's third-largest economy. Just as a point of interest, within an eight-hour drive of the Great Lakes there are 150 million people, so there's access to a very sizeable market.
Since the seaway was incorporated in 1959, over 2.9 billion tonnes of cargo has moved through the waterway. We enable trade with more than 50 nations overseas globally. If we take a look at the entire waterway, from the Gulf of St. Lawrence to the head of Lake Superior, cargo moving over the waterway supports 329,000 jobs and $60 billion of economic activity in Canada and the U.S., split roughly fifty-fifty between the two countries.
Over the past 20 years, over $1 billion has been invested in asset renewal in the seaway, of which 60% has been spent in the Niagara region, generating tremendous economic activity when all spinoffs are taken into account. The recently updated Martin economic study points out that cargo moving through the Welland Canal supports approximately 50,000 jobs in Ontario, many of which are found in the Golden Horseshoe area.
Since it was established in 1998, the SLSMC has brought about substantial advancements in our operations and has met the objectives set for us by the government and our users. Thanks to the investments in asset renewal, the seaway consistently realizes a level of system availability exceeding 99%. We are a free-flow system. Our customers do not make appointments, so system availability is critical to the ongoing operation of our system.
We recently completed our modernization program, which includes hands-free mooring and remote operation of locks from our centralized operation centres. This represents the greatest advancement in seaway operations since their inception in 1959. Lock transits have become faster and safer, and the end result is that we are realizing reduced operating costs and substantially improved productivity, leading to a more competitive system. For our role in developing hands-free mooring, in 2015 we were awarded the Promising Innovation in Transport Award, sponsored by the International Transport Forum.
We've also optimized the length of our navigation system, so over the last 20 years, we've brought the navigation season to 280-plus days, and we're continually striving to lengthen it as we move forward.
We enabled the transit of a broad range of commodities, including grain, iron ore, coal, salt, potash, petroleum, liquid bulk, iron and steel, and general cargo. Last year, we handled 38.3 million tonnes of cargo, which was an increase of 9% compared to the amounts in 2016.
Under the Hwy H2O brand, we have a number of market initiatives enlisting our industry stakeholders, so we very much play a catalyst role in bringing all of them together in a coordinated effort to promote the waterway.
We offer incentive programs and have brought into the system some $37 million in new business over the last 11 years. Revenues cover our operating costs and now consistently provide a surplus, which contributes toward investments in asset renewal. This year, we're projecting cargo to be up over last year, where we should be in the $40-million range, so we continue to see positive results. However, we would say that continuing discussions on NAFTA, tariffs and trade wars make for a level of uncertainty in forecasting cargo.
From a real estate perspective, we manage the lands adjacent to the seaway on behalf of the Government of Canada. The market development team continues to bring operators and investors together to best utilize the real estate and facilities, including landholdings on the Welland Canal, to generate economic growth and employment opportunities.
Two recent examples of how this has worked are the redevelopment of the Port Weller dry docks, which provides employment and economic benefit to the region, and the expansion of wharf 12 in Port Colborne, which now facilitates container handling and allows access into the U.S. northeast market. Those were two very critical initiatives for us, working with our tenants and stakeholders. These two initiatives have brought 34 full-time jobs and 100 full-time seasonal jobs to the local Niagara economy.
With our capacity to double the amount of cargo moving through our locks and channels, we present Canadians with a means of supporting ambitious economic growth and job creation in what we consider to be a very sustainable manner.
I hope that today we've been able to show you how the seaway contributes to a strong national and international trade corridor. We strive to provide a cost-efficient trading route and are using innovative technology to become more competitive and to ensure the waterway's sustainability over the long term.
For my first comment here at committee, I want to thank Mr. Badawey for his kind hospitality in hosting us here for these two days and for everything he does for the community here.
On this side of the table, you're dealing with two prairie guys, so I'd say this is more of a fact-finding mission on our end as to how this operates. Please forgive me if some of my questions are maybe a bit naive, especially early on, as we go across the country this week.
You touched on a couple of things. In particular, Mr. Hodgson, in your presentation, you touched on some things in NAFTA that maybe we should be watching for and that would be helpful or hurtful to you, but also on some of the interprovincial challenges you face with Ontario and Quebec by being located where you are. You have a fulsome statement here in your presentation—thank you for this—on the impact for the province of Ontario. I am curious to know if this is similar within the province of Quebec. Could you comment on those two aspects?
We might be sharing our time, depending on how this goes.
Thank you, Madam Chair.
I'll preface my questions by stating the fact that obviously you all know that the Niagara—Hamilton area is a very robust trade corridor, attaching itself to over 44% of North America's annual income within a day's drive. In line with that, there's the ability we have to be multimodal in nature when it comes to water, rail, air and road. With it, there are some challenges, as we all recognize. It's a 1950s system, somewhat archaic, and we're trying to bring it up to 2018, with a 30-year plan beyond that, if not a 50-year plan.
I'm going to throw questions to both of you at once and give you a chance to take the time to answer. I'll start with a few questions to Ian, from the Hamilton Port Authority.
The first question is, can you explain more in depth the partnership between Hamilton and Niagara, and with that the participation that you would have to bring the trade corridor up to current standards? The second question is, who do you expect to be additional partners? What are your expectations of the St. Lawrence Seaway as a partner? What bottlenecks can you try to overcome with respect to the current situation, not just with water but multimodal?
My next question is for the St. Lawrence Seaway. Bruce, you explained a lot about your strategic plan as it relates to your in-house demands and aspirations as they relate to the growth the St. Lawrence Seaway Management Corporation is going to have. What I'm even more interested in is how the St. Lawrence Seaway Management Corporation points itself to break through those walls and become an economic partner beyond its own mandate, to contribute to a true trade corridor well into the future.
On multimodal, are you working with rail, road and air to create more fluidity and integrate more the distribution and logistics systems? How are you working with partners to bring your land portfolio to the next level, through a strategic plan with partners, with respect to enabling even more that land investment to accrue over time? The last question is on dock 12. You mentioned dock 12 and the work that's happening over there. Could you explain a bit about that?
I'll start with Ian, and then we'll go to St. Lawrence Seaway.
The first question you brought up was about the HPA role. As we mentioned, the Hamilton Port Authority has been very successful in creating what we call a multimodal industrial hub. We believe we can bring those same skills into the Niagara region in starting to develop some of the available properties here. We will certainly continue to use Hamilton as a key hub. I think that Quebec, at the provincial level, has done a wonderful job in creating a marine strategy. In that marine strategy, it truly identifies not just ports but ports as multimodal industrial hubs, so we're no longer just a place where cargo transits through. I think this is particularly important in the Great Lakes and the St. Lawrence region, in that it's also where businesses locate themselves, where products are processed. Certainly we're seeing in Hamilton examples such as the first flour mill to be built in Ontario in 75 years, which is located on port property. Quite simply, that's to take advantage of the savings in the supply chain in proximity to the markets.
As I mentioned, the Hamilton Port Authority has done a good job in Hamilton. We're running out of land and believe that we can share some of that expertise with the region of Niagara. That's where I would touch on the partnership you asked about, particularly on the seaway. We certainly see that the seaway, as one of the most important modes of transportation, is critical in that chain for what we would be trying to achieve. The efficient operation of the seaway—the continued movements of goods, the efforts to reduce costs with hands-free mooring and to make it more accessible, the safety record—all of these areas make the gateway that much more attractive for people to move cargo.
The challenge is around capacity, and I think it's sometimes misunderstood. The seaway certainly has capacity available to grow. The challenge is finding the capacity to locate businesses along the seaway property so that new businesses that would utilize the seaway can be attracted. Until we can open up those opportunities and create these industrial hubs, it's hard to find the value proposition to attract businesses to the seaway lands, which would then generate more cargo through the seaway and, again, use the gateway to access international markets.
Let me start with fluidity. You asked about that, Vance. We spend a lot of time with our customers. Where we find the benefit is in data exchange. That's where we've been very successful in working with both the railways and the western Canada shippers, for example. That contributes to a fluidity model.
In terms of the Welland Canal, we continue to work with both our domestic and our international customers on data exchange, because we feel that it's important, from a planning standpoint, to know when vessels are arriving. That is an area we continue to work on, and we see technology moving forward as being very critical.
We'd like to keep the canal fluid. Obviously, that's not always possible, like today. We probably have a number of wind-bound vessels today. Safety is paramount to us, so we continue to ensure that.
This is just a comment on the assets. We have a very detailed asset renewal management process in place. It's ongoing. With Transport Canada, we agree upon a level of risk to attach to the assets—which is very low, I might add. We then work with Transport Canada to update those assets in terms of our operation. I referred earlier to a 99% availability. From an operational standpoint, we are actually available 99.9% of the time.
In terms of land, again I would go back to the Port Weller dry dock. When we went out and worked with the market, we actually went through a very detailed RFP process in order to find the right operator for that facility. One thing we recognized very early on was that we had to diversify the revenue streams. The vessel repair business is very cyclical, and we needed to develop other revenue streams.
Thank you, Madam Chair.
Gentlemen, thank you for being with us this morning.
I don't know if you're following the election campaign in Quebec, but when it started, the three main topics seemed to be health, education and work. A few weeks ago, a fourth point was added, a point that is so important that it could become decisive on election day: the whole issue of the environment. When we talk about economic development, we often hear that it must go hand in hand with the environment, but we talk very little about it. So I have a few questions with an environmental bent.
The first is for representatives of the St. Lawrence Seaway Management Corporation.
You mentioned earlier that the seaway's navigation season has been reduced to 280 working days. Is this longer season due to our technological advances, whether it be icebreakers or other things, or climate change?
Thank you for the question. Allow me to give three points in response.
First, over the past 18 years, the corporation has increased its expertise in operating the seaway in winter. In particular, we have developed technologies that allow us to operate in increasingly difficult winter conditions. As a result, our season has increased from 262 days to 286 days, which is now our norm.
Second, climate change has allowed us to operate the seaway in winter for a much longer period than we could have imagined 20 years ago. Water and ambient temperatures have changed by about two and a half degrees, allowing us to extend the navigation season in a safe and continuous manner. We look forward to continuing to optimize the navigation season in the future.
Third, we have learned to better work with our sister bodies, including the Canadian Coast Guard and its American counterpart, as well as other pilotage companies. This has allowed us to optimize the use of our assets to extend the navigation season.
Dust is one of the biggest issues we deal with in the interface between the community and the port authority. Through our work in developing a sustainability model, the biggest single point the neighbourhoods were bringing up was dust. We're putting that as one of our key areas in building integration.
A real material example of that is the speed with which we're covering salt piles and dust piles, and the introduction of conveyer systems so that material can be moved under cover, as opposed to in the open air, and be less exposed to the wind and the risk. We're paving over some of the sites that are currently unpaved and become a source of dust. We've invested heavily into street sweeping and cleaning up the area that way. We took a model from the Port of Quebec and put a dust monitoring system in place to truly understand where the dust is coming from and then analyze that to see if we can pinpoint the problems.
That's one area that was of particular concern.
The other one is traffic. We've also spent a lot of time working with the City of Hamilton on its transportation master plan to try to understand how best to deal with the truck flows in particular—how to minimize the impact on the community and create truck routes that prevent that.
The final area is a lot of communication. In Hamilton, they're developing a new residential community 200 metres away from the flour mill I mentioned earlier. There's a lot of communication around how we develop that community. Taking some pages out of what happened in Toronto with the Redpath site, we're asking how we can configure the buildings to minimize the creation of dust at the source point. In that situation, the grain mill there has invested almost $10 million in the most modern spout in the world to minimize the dust impact.
I will call the meeting back to order.
Thank you all very much for being here and participating in our opening session. We appreciate it very much.
From the Canadian Marine Pilots' Association, we now have Captain Mike Burgess, vice-president for the Great Lakes region. It's great to see you again, Mike.
From Great Lakes Stevedoring Co. Ltd., we have Claudine Couture-Trudel, senior director of strategy and communications, and Bruce Graham, vice-president, Hamilton, Port Colborne.
From the Seafarers' International Union of Canada, we have James Given, president, and Chris Given, director of government relations. We've seen you many times before the committee. Welcome again.
We will open it up for up to five minutes for whoever wants to present. Do you want to start, Mr. Given?
That's okay. I'm going to cut through all the fluff and get right down to it, Chair.
Thank you, Chair and committee, for having us here today to speak on behalf of the Seafarers' International Union. As many of you are aware, the SIU represents the majority of unlicensed seafarers in Canada working on Canadian flag vessels. As you will no doubt hear from many witnesses appearing today, maritime transportation plays a pivotal role in supporting the nation's economy and moving goods to and from market.
In all likelihood, 90% of the goods that we use on a daily basis, including the majority of items we find in this room, arrived in Canada by vessel. Likewise, Canadian vessels transport many of Canada's exports through the Great Lakes and St. Lawrence Seaway system, unloading cargo at ports throughout the country, where it is often refined or stored for a period of time before foreign vessels move it overseas.
The main focus of SIU Canada is and always will be maintaining regulations pertaining to Canadian cabotage through the Coasting Trade Act. We believe that any development can and must be done with the goal of supporting and benefiting Canadian workers first and foremost.
The SIU could not support any initiative that involves the use of foreign vessels or workers in Canadian marine cabotage. Maintaining cabotage regulations on domestic shipping is supported by every maritime labour union in the country, as well as the vast majority, if not all, of ship operators under the Canadian flag.
With this said, the Golden Horseshoe and the Welland Canal could be the hub of any Canadian short sea shipping initiative, especially in the area of containers, which is really an untapped area in the Canadian industry.
We have all travelled the 401 corridor and many of you, the QEW yesterday, and we have witnessed the congestion of trucks moving goods from Montreal and Quebec City to the Ontario area and beyond. With the development of short sea shipping, one vessel could potentially remove hundreds of trucks from the nation's highways.
The Niagara region is unique in its proximity to the U.S. border by both truck and rail. Rail lines extend and meet up with other lines that go directly into the U.S. Midwest.
Our ability to transship containers on smaller short sea shipping vessels to areas like Chicago, etc., would further open markets and trade routes that are yet to be fully established.
Montreal and areas east have been operating at close to capacity but recently announced plans for expansion. In order to develop trade, the next logical step is to work on the Great Lakes area to handle small to medium container ships, be it through already existing vessels or tug-and-barge operations.
Europe is far ahead of North America in short sea shipping and taking advantage of its water highways. The benefits of increasing short sea shipping have already been seen in the EU. One example is how short sea shipping results in more frequent port calls, which in turn increases traffic, loading and unloading services, storing and logistic businesses in ports.
As has been, and will be, stated numerous times, the seaway is currently operating at only 50% capacity, so it could handle and would likely welcome a large increase in traffic.
In a similar vein, Canadian marine operators are already highly invested in this market, and many new vessels being purchased or built specifically for operating in the Great Lakes and St. Lawrence Seaway could create a niche market with a high concentration of Canadian-owned and operated vessels employing thousands of Canadian seafarers. These investments would only increase with the reassurances provided by a government-backed short sea shipping policy.
An initiative such as this also lends itself well to the government's priority to invest in environmentally friendly industries.
As we've mentioned, not only could promotion of shipping remove thousands of trucks from the road, but shipping is already the most energy-efficient mode of transportation and will only become greener with the IMO 2020 regulations to decrease marine fuel sulphur content to 0.5% instead of the current limit of 3.5%.
Investments spur growth in the industry and will provide for even more employment opportunities in both shipping and logistics. The SIU is proud to represent seafarers from all across Canada in well-paid middle-class jobs. We recommend that any future transportation policy also take into consideration the importance of promoting and maintaining this vital skill set and the essential role that Canadian seafarers occupy in our overall supply chain.
Let us continue to work together as partners to ensure that the future of the Canadian maritime industry is both prosperous and beneficial for Canadian seafarers and all Canadians alike.
We thank the committee for its time.
Good morning, Madam Chair and committee.
As a long-time pilot and member of the executive of the Canadian Marine Pilots' Association, the CMPA, I welcome this opportunity to talk about the role that pilots play in Canada's transportation system.
I understand that you will be in Vancouver later this week, and two of my colleagues from the Pacific region will also be participating in your study.
Pilots are responsible for safely conducting commercial vessels through designated high-risk waters. Pilotage is regulated pursuant to the framework established by the Pilotage Act. Over the years, pilots have contributed significantly to various legislative and regulatory processes initiated by the federal government to improve the safety and competitiveness of shipping.
The CMPA is a member of the International Maritime Pilots' Association, IMPA, which represents pilots from over 50 countries around the world. Incidently, the CMPA's president, Captain Simon Pelletier, has also been IMPA's president since 2014, and was recently re-elected for another four-year period.
First and foremost, Canada's pilot system is focused on ensuring that safety is the first priority. Pilots are proud of their record. There are 50,000 pilot assignments that take place every year in Canada, and 99.99% of them unfold without incident. This near-perfect safety record, in a context where the average size of vessels is constantly increasing on waterways that, for their part, remain the same, greatly contributes to the competitiveness of Canada's maritime trade corridors.
Pilots also play an important role in navigation efficiency and the development of navigational improvements. The first importance is the benefit to the efficiency of supply chain operations and the near certainty that pilotage provides that access to critical marine infrastructure will not be compromised.
Pilots have developed innovative practices for navigation on the Great Lakes and St. Lawrence River, thereby extending the operating seasons of both the seaway and ports on the river, especially Montreal. Also, nighttime navigation during the winter on the St. Lawrence has been greatly enhanced in recent years by the innovative application by pilots of e-navigation and portable pilot units.
The positive impact of an extended navigation season in the Great Lakes region, and the vital role that pilots play in facilitating this when seasonal aids like lighted buoys are not available to ships—that is, when the Coast Guard has either removed or not yet installed them at the beginning and the end of the season—was substantiated by a case study that I have shared with the committee.
I believe that the case study makes a compelling demonstration of the marine mode's competitive advantage as the most cost-effective means for moving grain and other commodities and of the key contribution of pilotage towards this. The case study is part of a larger study analyzing the cost-benefit of pilotage in Canada, which is available on the CMPA's website.
There is another dimension to the Great Lakes trade corridor that highlights the flexibility of Canada's pilotage system and the role it plays in maximizing efficiency. Despite the compulsory nature of Canada's pilotage regime, Canadian shipping companies can avoid having to engage pilots and therefore paying pilotage costs, by taking advantage of provisions in the Pilotage Act regarding pilotage certificates.
Pilotage certificates may be issued to Canadian ship officers who have demonstrated skill and local knowledge of the waters of the compulsory pilotage area equivalent to that required of a pilot. This approach is widely used by Canadian companies throughout the Great Lakes region, and it is also available in other regions of the country.
In closing, I know that one of your focuses has to do with what can be done to improve the efficiency and competitiveness of our trade corridors. Recognizing the important return on investment for both safety and approved operations, we believe that the Government of Canada should undertake the capital projects necessary to ensure adequate and reliable icebreaking, as well as optimally functioning buoys on Canada's waterways, and in particular on the Great Lakes-St. Lawrence waterway.
I thank you for your attention and will welcome questions.
Thank you very much, Madam Chair.
I would like to thank each of the witnesses for being with us today.
I will start with you, Mr. Burgess. First of all, I was very impressed by the assessment you made: 50,000 pilotage agreements per year and an incident rate of not quite zero.
This summer, in need of reading, I picked up the Grégoire report, which raised a number of issues.
When we talk about improving the economy through economic corridors, I have the impression that we often try to increase the speed and fluidity of transportation. Security is treated as another element, just as important, but different. I have the impression that the two go hand in hand.
If there are zero incidents on the seaway, or something like that, it increases fluidity. As soon as there is an incident, the corridor is congested for an indefinite period of time. It seems to me that a number of the measures proposed in the Grégoire report go against this, particularly when it comes to offering a competitive market for pilots.
I don't know if such a market exists or ever existed; it's up to you to tell me. If there were a competitive system of pilots on the St. Lawrence and the Great Lakes, in your opinion, would there be a risk that a pilot would lose his independence under pressure from a shipowner?
Thank you, Madam Chair.
I'm going to ask you a few questions and then give you guys the time to fill in the blanks following that.
It was mentioned earlier that the seaway is at 50% capacity. Also mentioned was the need to integrate. I believe it was Bruce who talked about integrating the supply chain.
I have to say this. It was Ken who leaned over to me and said that it seems like, in the last two sessions we had, everybody has been working in their little silos versus having a broader strategic plan that takes advantage of all the partners.
With that in mind, including the lack of workforce, the need for further training in safety, the need for a broader picture that looks at the supply chain, and of course, the methods that help fluidity within the supply chain vis-à-vis transportation, my question to all of you is this. What can you contribute to that overall bigger picture from your own teams, adding to the robust trade quarter or strengthening the trade quarter that we have available here in Niagara-Hamilton and the southwestern part of Ontario? How can we strengthen the economic cluster utilizing its stronger multimodal integrated systems? As well, can you speak of the specifics that you guys deal with on a daily basis that can contribute to that overall strategic plan?
We'll start off with James.
Thank you. It's a great question.
We met several years ago. We have maritime port councils, which are us, the teamsters and different unions that operate marine, rail and trucking, the whole scenario. During the meeting we had several years ago, we looked at the possibility of that intermodal method of moving cargo through the system. All of the unions agreed that, in order to get things running and get things maintained, we have to look at compromises. We have to look at long-term labour agreements and we have to look at stability.
When it comes to labour, labour is all on board. We want to see it get done. We see we're missing the boat—pardon the pun. Right now we see containers moving straight through the canal into the Port of Cleveland at a lower rate.
When we look at transshipments, when we look at the Port of Montreal, which container-wise is full, we have to move those containers to this area and give us the opportunity to then ship them by rail or truck down into the U.S. Midwest. We can do that more cheaply and probably more efficiently than they do bringing them on the east coast of the United States. Excuse me, my U.S. partners.
That's how we see labour playing a role. We want long-term agreements in place in order to move the logistics hub along, to get things moving, to get things rolling and to make sure that it's stable. We're committed to doing it. You can't face a situation where you have labour trouble every few years.
I will split my time with Mr. Iacono again.
I'll take some of the questions that my colleague Mr. Jeneroux was asking a little earlier about the shipment of oil and oil products. As you know, that's a pretty big issue out west, particularly with the development of the Trans Mountain pipeline. A lot of people out there are setting their hair on fire about the idea of moving oil across the ocean. For some of us, of course, that's not going to be an issue anymore. Is it, Mr. Aubin?
What else is being shipped? You look at diluted bitumen, and yes, it's not the nicest of products, but you know we had an issue in Lac-Mégantic with Bakken oil being shipped on a poorly maintained railway and we had a disaster there. We have to look at alternatives.
What else is in the ships now that, if people knew, would normalize the notion of transporting oil by ship in the Great Lakes system?
I'll let you know where to write the cheque, if you want to help us out. That's not an issue.
We've launched the initiative with our member companies, our partner companies. Like I said, it's called "Be a Seafarer". It's working. We now have apprentices going to school in order to fill the gaps, and we feel that we're going to get there. There's a worldwide shortage of seafarers, and as a Canadian industry, we're addressing it as best we can. I think we're going to be very successful in that challenge.
One of the things that has done a lot for us in the last year or so is that the rhetoric of getting rid of cabotage seems to have died down, which means our companies are willing to invest in the future. When you have someone saying that you might not have a Canadian flag in seven years, like was in the Emerson report, that makes it very hard for Canadian companies to invest, and it makes it very hard for the general public and young people to see a future in seafaring.
We've passed that and we're moving forward. We're getting to where we need to be. We're quite confident that we're going to be able to fill the gaps and look at a path to citizenship instead of temporary foreign workers.
I call the meeting back to order.
Thank you very much for joining us this morning.
We have the Algoma Central Corporation, Gregg Ruhl, chief operating officer. We have the Canadian National Railway Company, Andrew Fuller, assistant vice-president, domestic intermodal and automotive. We have the Chamber of Marine Commerce, Bruce Burrows, president. We also have Lake Carriers' Association, Jim Weakley, president.
Thank you all very much for being here. If you could, please keep your comments down to five minutes or so. The interpreters ask that you don't go too fast. They are trying to make sure that they get everything exactly. They don't want to miss a word.
We'd like to start with Mr. Weakley.
Good morning, Madam Chair and members of the committee. Thank you for the opportunity to be here today.
My name is Jim Weakley, and I serve as president of the Lake Carriers' Association, based in Cleveland, Ohio. On behalf of my members, I would like to congratulate you on launching this important dialogue. A focused and thoughtful discussion on the Canadian transportation and logistics supply chain is well warranted. Given the highly integrated nature of the North American trade and logistics network, this dialogue must include a focus on cross-border issues, maritime trade, and opportunities shared between your great country and mine.
To illustrate just how interconnected we are, when a laker transits the Detroit-St. Clair River system, it crosses the border 17 times. If it were a separate country, the natural trade corridor formed by the eight Great Lakes' states and two Canadian provinces would have the third-largest economy in the world. For these reasons, I have regular and ongoing interaction with many Government of Canada representatives through the course of my work.
LCA was founded in 1880 and is one of the oldest trade associations in the United States. We represent operators of the U.S. flag vessels operating on the Great Lakes. Our members employ more than 1,600 people, and our cargo generates over 116,000 jobs, $20 billion in economic activity, and $3.7 billion in taxes—all in U.S. dollars. The bi-national Great Lakes navigation system creates 237,000 jobs, $35 billion in economic activity, and $6.6 billion in taxes. It also saves the North American consumer more than $3.6 billion in transportation costs.
Our ongoing contributions to both Americans and Canadians are vast. We are proponents of more trade and commerce between Canada and the United States. We strongly recommend that both national governments take a holistic approach to the binational Great Lakes trade corridor when making investments, setting policy and making regulatory decisions. The words “harmonization” and “interoperability” are frequently used when discussing Canada-U.S. trade. The only way to fully enable the incredible economic potential of trade and commerce between our two nations, particularly here on the Great Lakes, is to ensure that decisions are made with these two key elements in mind.
A new transportation strategy must take into account the critical capability needs, such as enhanced and more reliable icebreaking services. We should also electronically integrate the U.S. Coast Guard and Canadian Coast Guard command centres on the Great Lakes, as they do on the west coast. In terms of regulation, taking a binational approach to air emissions, ballast water, and the protection of species at risk through the lens of cross-border integration and harmonization adds to our ability to generate economic development and good-paying jobs on both sides of the border.
I commend you on undertaking this important study. Transportation is the lubricant that keeps our economies moving. The binational Great Lakes trade corridor continues to contribute much to both our nations.
I look forward to your questions and to ongoing engagement with Canadian parliamentarians and other government officials.
Good morning, Chair and members. Thank you for inviting me to present before the transport, infrastructure and communities committee.
I am thrilled to be here in Niagara Falls, located so close to the Welland Canal, a key component of a bigger national transportation corridor, which in its entirety, right down to the bottom of the St. Lawrence, we would call the Great Lakes-St. Lawrence River waterway.
My name is Bruce Burrows. I am the president of the new Chamber of Marine Commerce, or CMC.
The new chamber is an organization that represents more than 130 members of the marine sector in Canada and the United States. Our members do work in the Great Lakes, the St. Lawrence Seaway, the coasts of Canada and the United States, and the Arctic. The CMC works to promote a strong and competitive marine industry in Canada.
I’d like to take a quick moment before delving further into my remarks to personally invite the members of the transport committee to participate in the CMC’s annual Marine Day on the Hill, taking place this year on Tuesday, October 16. CMC members will be in Ottawa to advocate for the importance of our sector to Canadian public interests, and we will cap off the day with an open reception. We will be reaching out to your offices with further details, and I hope to see all of you there.
Let me now highlight the importance of the marine mode in a few ways: its efficiency, its economic contributions and its environmental footprint.
Beginning with the environment, the marine mode has a great story to tell. Members of the CMC are dedicated to reducing emissions and are investing in alternative fuels, for example, to power their ships. We continue our global work at the International Maritime Organization in London to set a level playing field for emissions standards.
Like the airline sector, we are global and regulated at the international level. If you compare the modes, marine wins hands down on environmental efficiency. One litre of fuel can move one tonne of cargo 243 kilometres by ship versus 213 by rail, and only 35 kilometres by truck. In terms of emissions, our existing footprint is already very small. A typical ship will emit almost 12 grams of CO2 per metric ton kilometre, compared with 14 for rail and as much as almost 76 for trucks.
With our new goal of decreasing carbon emissions by 50% by 2050, we're on a path to almost complete decarbonization in the marine mode. Adding to this great environmental story is the efficiency of the marine mode. More than 90% of goods move internationally by the marine mode. It’s the most efficient way of moving bulk cargo. Combined with the right intermodal connections, we can maximize the efficiency of our other transport mode partners—one of them is here, CN—notably rail and also road. With the entire waterway system at 50% capacity, and with St. Lawrence cargo volumes up 9% last year and 4% up already this year, we have a great opportunity to build on this new momentum and increase the amount of goods moving by marine mode to relieve congestion on highways, keeping in mind that the typical ship represents about 1,000 trucks.
There are, I must caution, some challenges to growth, for which we have solutions. I'm thinking in particular about the need to modernize and reform pilotage services, which have become very costly to users, and as Jim was mentioning, the need to replace an aged fleet of icebreaking assets.
Beyond efficiency and the need to harness recent gains, when we look at the economic contributions to the industry in Canada, it is truly amazing. In a recently released study of the impacts of the marine mode in the entire waterway region, it was revealed that in 2017 in Canada—Jim spoke to the U.S. side; it's the same study that we collaborated on—the marine mode creates over 180,000 jobs, and we handle about 185,000 metric tons of cargo every year. That contributes about $26 billion on the Canadian side in economic activity, and it's almost $6 billion in tax revenues in this big region that Jim referred to as the third-largest economy. That's a $6-trillion economy that we're right in the middle of here. It is very substantial.
As you can see by the numbers, Canada’s inland waters are a large contributor to our country’s trade success. These results underline the importance of the waterway as a strategic transportation and trade corridor, not just for Canada domestically but also with our trading partners in the U.S. and throughout the world. This corridor will help Canada build exports and diversify its international markets. We hope to see this vital corridor recognized through increased infrastructure investment in the region as well as through increased utilization rates.
Once again, thank you for taking the time to invite me to present today. I look forward to answering any questions you may have.
Good morning. I'm representing Algoma Central Corporation. We've been in business for over 100 years, incorporated in Canada. We are the largest carrier on the Great Lakes and St. Lawrence Seaway, with almost 30 ships plying these waters exclusively, ships that were purpose-built for the lakes and the seaway and optimized for the infrastructure that exists.
We have spent almost a half a billion dollars in the last few years renewing our fleet, or a portion of our fleet. We obviously have replaced older ships with more modern and more efficient ships, with the size, fuel efficiency and emissions all upgraded.
Our headquarters are in St. Catharines, just a few minutes from here. We have over 1,000 employees, at least half of them employed in the Niagara region and the rest throughout Canada.
In addition to our domestic activities, Algoma recently has expanded internationally with our expertise in what we call “short sea shipping”, which has been done around the Great Lakes for many years before the term was even popular. We're doing short sea shipping now and taking that expertise around the world. We have over 50 ships that we either own or operate in Central America, and throughout Europe and Asia. Algoma is growing and taking the expertise of the Canadian workforce and expanding it really throughout the world.
In terms of what we do in the Great Lakes and St. Lawrence Seaway, we move a lot of iron ore, both Canadian ore mined in eastern Canada into the Hamilton area for production of steel in blast furnaces and ore mined in Minnesota moved cross-border into Hamilton to make steel for the Canadian industries. Some of that steel, of course, ends up going back into the U.S. or into automotive production for export into the U.S.
I mention that because, as I go through some of the commodities we move, you will see a theme. Over half of the cargoes that Algoma touches move cross-border. They either originate in Canada and end up in the U.S. or originate in the U.S. and end up in Canada.
The second biggest commodity we move is grain. We have over 50 cargoes of grain to move here in the next Oct., Nov., Dec., as they say. Most of that will be out of Thunder Bay, elevated in the St. Lawrence Seaway for export, but much of it also goes to millers in Canada for flour and food production domestically.
We carry a lot of road salt. We are the largest carrier of road salt. We move salt mined in Cleveland to the Toronto area. We move salt mined in Goderich and Windsor, Ontario, to places such as Milwaukee, Chicago, and Green Bay, as well as, of course, all throughout Canada as far up as Montreal.
We move a lot of aggregate stone for construction, as well as for use in blast furnaces to take impurities out of the steel as the iron ore is broken down. We move slag for the production of cement. We move cement from Canada into the U.S. for construction. We move clinker from Canada into the U.S., where it's further processed into cement in Detroit.
I will keep going for a few minutes. You are probably catching the theme of my remarks here.
We move aggregate stone that's mined in Ontario into places such as Green Bay for feed for chickens and things such as that. We move a lot of stone mined in the U.S. also into Canada, where it's used for its chemical properties and also in the steelmaking process.
I don't have prepared remarks. If you could wave to me when I'm done, I will be respectful.
I hope I can take some questions later about some of the bottlenecks that we have a vision for helping with. I heard that mentioned earlier. Also, Canadian seafarers are very important, obviously, our lifeblood. More important than our equipment is that we have the people to run that equipment. It would be silly to spend a half a billion dollars and not have trained and qualified Canadian seafarers to operate those ships for the next 30 to 35 years.
In terms of pilotage, we are the self-piloting folks who were mentioned by Mike earlier. We do self-pilotage certification for our employees. As companies, we are also 99.99% safe when we self-pilot our own fleets. We're working together, in co-operation with the pilotage authorities on that end.
Good morning, everyone. I'm Andrew Fuller and I'm the assistant vice-president for sales and marketing for domestic intermodal at CN. We appreciate this opportunity to appear before your committee today on the important topic of trade corridors.
Today marks the beginning of Rail Safety Week across Canada. Our team of railroaders will be on the ground all week in many of our neighbouring communities, sharing a message of awareness and tips about our shared responsibility for safety around rails. CN is a proud partner of Operation Lifesaver, whose 2018 rail safety campaign #STOPTrackTragedies will reach millions of Canadians all over the country. There are actually signs and boards in many communities where you can pledge support for rail safety awareness in all communities across Canada.
CN employs about 24,000 Canadians across the country, and it transports more than 250 billion dollars' worth of goods across a North American rail network that covers roughly 20,000 route miles. As a reminder, our network stretches from Vancouver and Prince Rupert on the west coast to Halifax on the Atlantic coast and to New Orleans and Baton Rouge in the American south. We serve ports on all three coasts. In Canada, we serve all the major ports, including Vancouver and Prince Rupert on the west coast and Montreal and Halifax on the east coast. We also serve Thunder Bay, carrying grain and other products that move on the seaway system.
CN has a significant footprint across Ontario, serving thousands of businesses and supporting a large number of local jobs. We have the largest terminals of their kind in the CN system. Our classification yard in Vaughan and our intermodal yard in Brampton move over one million containers annually.
CN's business is very diversified, both in terms of the traffic we move and where we move it. Thirty-four per cent of our traffic moves across the Canada–U.S. border, 17% moves domestically in Canada, 25% is exported from the west coast ports, and 6% is exported from the east coast ports. You may not be aware that CN also operates a fleet of ships that move iron ore and other products on the Great Lakes system.
CN crosses the Canada-U.S. border in eight locations, but our primary points of entry are the CN rail tunnel between Sarnia, Ontario, and Port Huron, Michigan, and our crossing between Fort Frances, Ontario, and Ranier, Minnesota, which together handle about 85% our our cross-border traffic. We move a significant amount of container traffic, known as intermodal traffic, which comes from Asia through the ports of Prince Rupert and Vancouver, then on through Fort Frances to the U.S. market in Chicago, Detroit, and south to Memphis and beyond.
CN is investing heavily to grow our capacity and strengthen our network in Ontario. Our 2018 capital investment plan includes the investment of approximately $315 million to expand and strengthen Ontario's rail infrastructure. The Ontario investments are part of CN's record $3.5 billion capital program for 2018, which represents roughly 25% of our revenue base in 2018 alone.
Key investments include a new passing siding on our transcontinental corridor through northern Ontario, linking Toronto and Winnipeg, and intermodal rail yard expansions that will improve the efficient movement of containers into and out of the greater Toronto and Hamilton areas. Other capital program elements will focus on the replacement, upgrade and maintenance of key track infrastructure to improve overall safety, capacity and efficiency.
We are working with all levels of government to align our inland capacity to support port expansion and population growth in the population centres of southern Ontario. To address increased demand, we plan to invest $250 million in a satellite intermodal facility in Milton, which will enhance volumes and relieve the strain of overcapacity being felt in our facility in Brampton. The Milton logistics hub has been strategically located to support the logistics and warehousing industry in the west GTHA. It will support up to 1,000 jobs while also relieving highway pressure on the 401 and QEW highways, which I took this morning.
This project is good for movement of both goods and people. This project will facilitate the modal shift of goods from long-haul trucks to trains, reducing emissions and alleviating congestion. The project is undergoing an environmental assessment by a three-member independent review panel under the Canadian Environmental Assessment Agency and the Canadian Transportation Agency.
CN will continue to make investment decisions that benefit the supply chain and its users and ensure that product gets moved to market in a timely manner.
We look forward to continuing to work with the Government of Canada to strengthen trade corridors and ultimately the transportation network across the country.
Perfect. Thank you, Madam Chair.
Thank you, everybody, for being here.
It's a shame, Mr. Burrows, that we're always in Ottawa, but you're here today, so it's good to see you travelling along with the committee.
We'll start with you, Mr. Burrows. This is a stat that I've now heard twice today, that 90% of goods are moved by marine. We had a presentation from the transport department prior to our heading out on this trip, which said we're seeing an increase in the number of trucks on the road. I'm hoping you're able to comment on that increase because from what you're saying, that there's ability for added capacity on your end, it would make sense to continue to increase on the marine side as opposed to trucks.
I have two points, if I may. First of all, let me just say we've left a copy with each of you of the March study that I was referencing—that's the blue document. That really demonstrates clearly, I think, that the entire marine corridor is a key driver of activity in Ontario and Quebec, in particular.
Within that, you're making reference to the increase in trucks, and we too are growing. I mentioned the 9% improvement last year, and already it's 4% this year to date. That was with a rather difficult opening to the season with a lot of ice, as my partners at the table here fully understand. We expect a pretty robust fall, and we're on track for further significant growth this year. I think all the modes at the moment are growing.
I'm not sure what CN's growth is, Andrew, but I know you're growing as well this year from last year.
Then it's a question of modal shift in particular with the trucks and what we can do to facilitate more modal shifting. That's really the nub of your question.
I think there are a number of things, particularly at the provincial level, that we can do from a policy perspective. We can perhaps look at some incentives and maybe even disincentives. The Quebec government, if you're not aware, has a very progressive maritime strategy in place. They recognize these environmental benefits and economic benefits that I spoke of. They're very keen to facilitate that modal shift, and to the extent that the federal government can be engaged in that process, there may be some taxing mechanisms that could be deployed here as well. There is an opportunity, I think, even at the federal level to facilitate some of that shifting.
Thank you, Madam Chair.
I'm going to focus on some of the comments that have already been made.
Specific to the cross-border partnership integration, Mr. Weakley, you mentioned that we have a very strong, robust economic cluster when it comes to both sides of the border, especially in the Great Lakes region, including Niagara-Hamilton, and of course, Ohio and even going as far as the eastern seaboard into Michigan, Indiana, and then back into Canada and the GTA and Montreal.
My first question is with respect to how we can strengthen that even more in terms of the dialogue we're going to have on a binational trade corridor as one corridor, not two or three different corridors.
The second question is to the Chamber of Marine Commerce. Mr. Burrows mentioned that we're at 50% capacity on the St. Lawrence Seaway. How can we fix that? How can we bring it up to 100%?
My third question is for Algoma. You mentioned that there are bottlenecks. I'd like to get some more comment on that. That's why we're here. The minister has been adamant that within the trade corridors funding as well as planning he wants to rid us of bottlenecks in all the gateways and trade corridors throughout the country. How can you folks all participate in doing that here in Niagara-Hamilton?
Lastly, to CN Rail, you mentioned the need to deal with issues of overcapacity. I know that in my little part of the world, we have overcapacity in one part of Port Robinson. That creates a lot of headaches for the residents, because the trains crossing the road can sometimes take up to an hour, which obviously holds up the crossing, but it also puts pressure on emergency services if they have to get into certain areas.
Ultimately, with all those questions asked, I'd like to take it one step further to the mindset you're going to be in when you answer those questions, which is to work and focus as one trade corridor entity, versus being in individual silos, on how you can participate and help resolve the overall challenges that the trade corridor presents.
I'll go first and speak quickly, sir.
There are two aspects, and one is icebreaking. If you look at the 1980s, on the Great Lakes we had 19 icebreakers between the U.S. and Canadian governments. Currently we have 11. The U.S. has gone from 12 icebreakers down to nine. The Canadian government has gone from seven down to two.
Now, to the credit of both coast guards, they manage it as a single system. There are Americans working in Canadian waters and vice versa. The challenge is that there is simply not enough icebreaking capacity to go around. We had as many as 11 vessels stranded in Whitefish Bay in the winter of 2014. About 20% of the total cargo moves during the ice season, so to me that's the biggest bottleneck, and the biggest opportunity to increase capacity on the system is to increase icebreaking capabilities.
I talked also about integrating the two command centres. On the U.S. side there are three command centres. In Canada there's one: the regional operations centre in Montreal. To me it's a shame that they're not integrated as they are in Vancouver. In Vancouver, the Americans and the Canadians are looking at the same screen. There are three primary reasons for this: safety, security and efficiency. Efficiency smooths the cargo moving back and forth because the Canadians and the Americans are looking at the same picture. In terms of security, it's an operational backup, and then for safety, again, it's the common operating picture. In order for efficient decisions to be made, the Americans and the Canadians have to have the same data.
You're asking about capacity, better utilization given that we have a big chunk of capacity available. Let me answer that a few ways.
Jim already eloquently spoke to the icebreaking need. He's right on message there. That's a big issue. Both fleets on both sides of the border are old. There's almost no redundancy and backup available anymore. Whenever one ship goes down, which is very frequently, the bad order ratio, to use a rail term, is huge with our icebreaking fleet.
Piloting, here's a great opportunity. I would encourage all of you in fact to contact and give him the simple message that modernization and reform is well overdue in terms of being needed. Let's move forward and get some legislation into the House this fall or next spring to reform the Pilotage Act. We need a very safe and efficient pilotage system with a harmonized approach and regulatory approach across the border—that's very much what Marc Grégoire's report was about—significant reforms to governance, and most importantly, a key recommendation for labour model flexibility, because costs have really not only inflated at a tremendous rate, but the cost levels are really non-competitive. We've looked at various incremental moves on the grain side and you look at the emerging cruise industry and it's just such a big hit from a cost perspective.
Thank you, Madam Chair.
Gentlemen, thank you for being here this morning.
My first question is for Mr. Fuller.
The Port of Montreal has a particular approach to the rail network. Indeed, its competitiveness and performance are linked to the Montreal model, which emphasizes a certain independence between the port and railway companies, including CN. Moreover, the funding provided by the federal government is aimed at improving intermodality to meet increased demand.
I have three questions for you.
Is the CN network able to handle the increase in rail freight traffic?
What are the main obstacles that can hinder the flow of trade by rail?
What steps is CN taking to address these issues?
That's a very good question. Thank you.
First, yes, we would absolutely like to grow with the Port of Montreal as we have grown with that port already and with many other ports in Canada and the United States.
In terms of what needs to be done or what could be the impediment to growth, the first part is how fast and how quickly the growth comes on. If there's good planning in advance and strong dialogue between the ports, customers and carriers, such as CN, I have no issues with it. If the traffic comes on too quickly, then we can't respond fast enough because there are a lot of things that have to be done to prepare for growth, such as new roadways, purchasing new cars, purchasing new trains, etc. With enough advance notice and dialogue in between, it absolutely can be accommodated and we look forward to it.
I'll just highlight again one aspect that's been brought up in terms of silos. The number one thing for supply chain improvement in Canada is that you cannot optimize the supply chain independent of each other. It has to be a shared and committed culture that you're going to look at, have shared measures, and try to improve the entire supply chain, so we can have the best supply chain in the world.
Those are two great questions.
I would say, in fact, that our costs are lower. Don't forget that a single vessel carries 30,000 tonnes, or up to 30,000 tonnes, so the efficiencies that are driven from that are huge. That translates right down to prices that people like Mr. Ruhl and others charge their customers.
To the second question, on impact, the study that I've left with you is all about that. What is the impact? I talked about the general Canadian numbers, but if you were to look at Ontario, for example, there will be probably about 80,000 or more.... Rather, in Quebec, from your perspective, there would be 80,000 or more jobs at stake there from a marine perspective. You'd be looking at probably a good $16 billion in economic activity in terms of impact, direct and indirect.
Mr. Burrows, you made a comment earlier which I want to follow up on, but I want to preface it with a couple of brief comments.
Both Mr. Jeneroux and I represent Alberta ridings. It's no secret that natural gas prices have been extremely compressed over the last few years to the point that natural gas producers are basically capping in any new discoveries of gas.
We also know that if we as a society are serious about controlling emissions, the largest percentage of emissions come from the tailpipe. Conversion to natural gas could make a huge difference.
I heard a comment, I believe by Mr. Burrows, about ships moving to alternate fuel sources. Are there opportunities for natural gas? Do any of you in the shipping business have advice for governments, probably on both sides of the border, as to what we could do relative to controlling emissions, especially from truck traffic? I know in the U.S., Mr. Weakley, it's huge.
I'd just like to hear a few general thoughts and comments relative to emission controls, whether natural gas could play a role in that going forward, either on water or on land, and I guess even on rail, as far as Mr. Fuller is concerned.
It's an excellent question.
The short answer is yes. Keep in mind that, despite the context that 25% of the problem of greenhouse gas emissions lies with transport, and a majority of that by far is from roads from either personal auto use or trucks, maybe 2% to 3% is marine. Therefore, we are part of that solution, if you can switch into the marine mode.
Having said that, we are still contributors, so we're doing our darnedest to reduce emissions. LNG would be part of the solution. We just christened a couple of vessels this year that are polar class dual fuel. That can reduce emissions on the sulphur side by over 99%, I think, potentially, and also there's a good 20% reduction in carbon emissions. That would be part of the solution for carbon as well. Other particulate matter reductions are significant, over 30% on particulate matter.
Would our next presenters please come to the table.
I hope that you were able to solve those problems while you were all in discussion. Vance, were you able to solve some of those problems?
Mr. Vance Badawey: Yes.
The Chair: All right.
From the City of Port Colborne, we have Scott Luey, chief administrative officer; and from Niagara Region, we have Jayesh Menon, coordinator, foreign trade zone.
Do we have anyone from the Tourism Partnership of Niagara? He's not here. Okay, maybe he'll be here later.
Gentlemen, welcome and thank you very much for taking the time to come and speak to us today.
Mr. Luey, would you like to go first?
Sure. I've prepared a few remarks.
Hello, thank you for providing me the opportunity to speak to you this afternoon. I am the chief administrative officer of the City of Port Colborne. We are a small municipality of just over 18,000 people on the north shore of Lake Erie in the Niagara region.
The experience I'd like to share with you today is probably different from what you heard from others. The experience I'd like to share is that of trying to administer a small municipality in a competitive environment of trying to execute economic development initiatives, residential growth, and bringing industrial, commercial and residential prosperity to our community.
In Port Colborne, council and staff have made all the right moves. They have invested in infrastructure including water, waste water, recreation, roads and bridges. We have a beautiful new health and wellness centre that includes two hockey rinks as well as a walking track, pool, gymnasiums and fitness centre. Past councils have created an industrial park that is virtually completely built out, and the city is preparing to bring more industrial lands on line.
But that's not all that the city has done. When rail service in our municipality was threatened, the city stepped in to take over the tracks and enter into a lease arrangement with a local operator. When the federal government was—
Am I going too fast? Sorry.
Okay, I can go a bit slower.
We stepped into another area when the federal government was divesting itself of the local grain elevator on Lake Erie. The city stepped in to acquire it, and entered into a lease agreement with an operator in that case, too.
Sometimes it feels like we're going it alone down here. In the Niagara area and Port Colborne, in particular, upper levels of government have not kept pace with our efforts. Highway connectivity is woefully inadequate in Port Colborne, and the Welland Canal has been poorly administered from the perspective of maintaining the existing infrastructure and unlocking seaway-held lands to provide economic development opportunities in the city.
Port Colborne is connected to its neighbouring municipalities, Wainfleet, Welland and Fort Erie, by two-lane roads. The provincial Highway 406 terminates several kilometres north of the city. Access to the greater Toronto and Hamilton area is through the 406 and the Queen Elizabeth Way. This highway network is the subject of significant volumes of traffic, which is near gridlock during rush periods, and there is no redundancy in the form of alternate routes in the event of closures. For example, just this past Thursday, the Queen Elizabeth Way was closed in both directions for several hours due to an accident and downed power lines. The bottleneck is insurmountable for the flow of goods and people.
However, there is a solution. The previously planned mid-peninsula corridor would connect the Queen Elizabeth Way between Fort Erie and Niagara Falls, near the border with the United States, to Highways 403, 401 and 402 in western Ontario. It would also provide a redundant link to the greater Toronto and Hamilton area, mirroring the Queen Elizabeth Way. The project must proceed to connect Niagara, its industries and its border crossings to the national supply chain. I implore the federal government to join with the province in establishing this important connection for the benefit of the entire country.
On the issue of the seaway, one of the most important transportation and economic development assets in Niagara is the Welland Canal. The canal is administered by the St. Lawrence Seaway Management Corporation. Neglected maintenance and lack of capital improvements have had a direct impact on economic development in Port Colborne. In particular, south of Lock 8, near the mouth of the canal, are a series of wharves that have been undermined due to deteriorating conditions of the cribbing below the water surface. These wharves represent prime canal-side industrial land that could easily be leased and contribute to employment and industry in the city. Furthermore, near the same area, there are tie-up walls along the canal that have been allowed to fill in to depths that are too shallow to accommodate many types of vessels, including Great Lakes cruise ships that could bring tourists to the city's downtown core.
In addition to the lack of maintenance of the Welland Canal, there is also an economic development concern with a large amount of land that is owned by the seaway in Niagara in the form of a buffer along the canal. In the past, the seaway has been reluctant to encourage development on these industrial lands. There is currently a shortage of industrial land in Port Colborne and in Niagara as a whole, yet the municipalities in Niagara stand on the sidelines looking at the potential of the seaway's holdings unable to act to develop these as employment lands.
It is imperative for the prosperity of Port Colborne and the Niagara region that the seaway and the federal government make renewed investments in the Welland Canal infrastructure and undertake to partner with municipalities to unlock employment lands along the length of the Welland Canal. This investment will open up employment lands in Niagara and create multimodal transportation assets to form a trade corridor. This in turn will establish fluidity in the movement of goods, connecting the city and region to the national supply chain.
Once again, thank you for the opportunity to appear before you today.
The City of Port Colborne and the region of Niagara are ready to sit at the table to chart a path forward for our shared prosperity.
Thank you very much for inviting me as a witness to the Standing Committee on Transport, Infrastructure and Communities.
I'm Jayesh Menon, representative of the Niagara foreign trade zone located in Fort Erie. It is the first foreign trade zone established in Ontario.
Niagara is an international border crossing that includes a robust multimodal transportation network. As businesses around the globe grapple with ever-increasing challenges of moving goods and services between countries, decisions made daily that impact trade and transportation systems are vital. Also, this gives rise to the concept of foreign trade zones, which remains a viable, fundamental option for any organization to consider.
The Niagara foreign trade zone is a single point of access to information on export-related government policies and programs that can greatly improve a company's operating costs and overall competitiveness. The Niagara foreign trade zone point happens to be the first foreign trade zone point in Ontario. There are nine of us in the country. This point promotes the use of federal, provincial and regional programs that support export development. In Niagara, this partnership has been between Niagara Region and the Niagara Development Corridor Partnership, an incorporated consortium of the Niagara Falls, St. Catharines, Welland, Port Colborne, Fort Erie, and Lincoln economic development offices. I am the conduit, and we all work together as a co-operative team.
As foreign trade zone coordinator, I have a dual role. One, I help our companies learn about export-related trade incentives and opportunities; therefore, I work as expediter for them. Two, I facilitate foreign direct investment through inbound missions, connecting through foreign trade centres, and later, lead outbound missions for identified markets.
The main goal of a foreign trade zone point is to help businesses reduce administrative costs and burdens associated with international trade by facilitating access to various trade programs available to importers and exporters in Canada. Just to give you insight into what has happened in the past year and a half, we have a consolidated database of 400 companies across various sectors, manufacturing services, and so on. I personally have reached out to almost 150 companies, and we have, to date, 42 Niagara foreign trade zone clients we are serving.
Those services typically involve the companies going in for duty or tax exemption programs, or for parking their goods in a customs bonded warehouse, or it could be absolutely in terms of helping these companies into international markets. That's what we refer to as market development programs. They come in to understand the information that is available in terms of government incentives and programs.
I bring to you also a message from economic development director Domenic Ursini, on behalf of Niagara Region, which I want to read into the record. He has written:
||[W]e would like to outline for you two key strategies that encompass the area of transportation. The first pertains to an east-west corridor that would run from the border in Fort Erie all the way to the Hamilton airport.
That is what we refer to as the mid-peninsula corridor. He continues:
||This much needed transportation route would serve as the key travel for commercial vehicles moving goods amongst geographies including the export market. Furthermore, this would in turn alleviate the congestion currently in place for pedestrian traffic looking to travel to work and/or come to Niagara for its numerous tourism offerings and beauty. In order to achieve this much discussed vision, it will require the collaboration of both the province and federal government to assist in the moving forward of environmental assessment and capital commitments for construction. This will prove effective in creating further synergies amongst the Niagara and Hamilton economies along with export into the United States. It will also play a role in Niagara's efforts to explore an industrial hub of land between Fort Erie and Niagara Falls along the QEW corridor. We look forward to working with your committee on this very important initiative.
|| The second pertains to the establishment of a commercial port here in Niagara along the Welland Canal System. In working closely with our colleagues at the Hamilton Port Authority, it has become evident that the demand for this venue far exceeds the supply currently in place. In fact, Hamilton Port Authority is at over capacity. A Niagara port provides a strategic location for commerce activity given its logistical proximity to both GTHA and eastern United States. Within a one day's drive, Niagara is situated next to 2 Canadian provinces, nine U.S. states and approximately half of the entire American population. This port would serve as an economic engine within the Niagara market and also provide another strategic advantage to the prospective global and national companies looking to relocate for commerce. Finally, the port would also fit well with Niagara's Foreign Trade Zone and our commitment to fostering this into a fully functional free trade zone. Again, we look forward to working with the federal government to bring these very important economic initiatives to fruition.
Thank you, gentlemen, for being here this morning.
I want to take it up from where Matt left off, with respect to future direction.
I was the mayor of the City of Port Colborne for 14 years, and I know there were a lot of strategic plans we had put together that identified objectives. What we stumbled on was trying to attach actions to them because other partners—I won't mention any names because there were numerous partners—had different plans.
That said, I do want to ask you both about how important it is—in a sense, it seems to be the theme of this morning—for all partners to sit down together to put a strategic plan together for the trade corridor. Let's face it: The trade corridor is very robust. It's very strong—canal, road, rail, location and the list goes on. However, it does need some attention. It does need some work on the capital side, but also from the operational side, as it relates to integrating our logistics and distribution systems.
With that strategic plan in place and further objectives identified and actions being attached, funding included, what efforts or what directions do you think would be advantageous in whom to work with to create that environment? I think an earlier witness called it a “shared and committed culture” that can be taken upon itself.
From my perspective, as far as the foreign trade zone is concerned, it is vital that any companies that house themselves within the Niagara region look for a couple of things to be in place. One is the best format for moving the goods, in terms of the logistics concerned.
We do understand, as of now, within the Niagara region, that 80% to 85% of the goods are dependent on the United States market. But, at the same time, when we also look at markets beyond, that's where we need to look at a long-term strategy or a medium-term strategy.
From this perspective, it's vital that we have what I mentioned with regard to the mid-peninsula corridor, which means it's an exclusive transportation link right from Hamilton onwards. You enter the Welland Canal, pass by Niagara Falls and Fort Erie and get connected to Buffalo. This is part of an important agenda.
Beyond that, if I look at companies that look forward to having their investment within the Niagara region, this is one of the key challenges the region faces. First and foremost, there is no industrial land. If they are looking for a typical kind of greenfield project, they definitely find it a challenge in terms of scouting. It's fine that we do have a great site selection team, etc. Perhaps they can try to figure out what it means for that data bank to help them identify it, but we are still in the dark on that matter.
It is vital that we identify the particular possibilities for identifying industrial land, because if you have a common transport road that is dedicated to that.... I will just cite an instance. Perhaps you are familiar with the United Arab Emirates in the Middle East. They were just an oasis and desert 25 years ago. All they could link up was east with west, with the UAE becoming a strategic corridor. Today, Dubai has become one of the most recognized and busiest cities as far as its transportation hub is concerned. All they did was to create a transportation-dedicated link, which is called Emirates Transport. That has enabled several industrial clusters to flourish.
One of my points when I am speaking to you is to ask if there can be a kind of collaborative support. We should all sit down together and identify what the key areas are and what synergies we can leverage.
That's a very good question. It's typical. Time and again I meet up with various investors from francophone countries, etc.
What is important is that as of now the region is undermarketed. There is a lot of potential. It's not about the marketing within cities in Ontario. I will cite one example.
Recently, there was a groundbreaking ceremony for a company that is into indoor farming.
All they wanted to know was whether there was a greater opportunity, by having a presence within Niagara, to connect them so they can get into the United States. Beyond that, could companies look forward to any specific incentives to building up their incubation phase, beyond the help on the operational side, and at some point enable them to have market development opportunities?
It is not the marketing specifically of Niagara because we did identify its challenges, but as of now the region is still undermarketed. If you brand it well, this region offers a great opportunity for international companies to build housing. Not only that, if we can create specific clusters.... When I say clusters, in medical clusters there are companies that are opening up their opportunities for medical formulations, or having cancer care smart centres where you will have technology transfer from the international world coming into the region with investments, incubation, and partnering with the local companies.
Through the chair, there are costs.
It's interesting that you also mentioned the social costs. The canal virtually bisects our community, almost on a one-third, two-third basis of the urban portion. We have a very large rural portion on the east side of the canal. That's the opposite side of where the downtown and the city hall are.
We have three bridges that cross the canal, and there's always, except for routine maintenance, at least one bridge in service. Most of the time it's three, but when a bridge is up to allow a freighter to go through, there's always a way to cross the canal. That's important for us.
However, it does impact how we deliver services to the city and to the residents. Fire trucks, waste management, which is done by the region, and municipal transit are sometimes affected by canal crossings. There is a portion of the city that is a little more marginalized—a few more signs of poverty, homelessness, and social issues—that is located on the east side of the canal, while most of the community services are on the west side.
I think there is a bit of a social cost to the municipality. Libraries, stores, even retail financial services and so on, are primarily provided on the west side of the canal, and these residents live on the east side.
I think I just got the consensus here.
Good afternoon, Madam Chair and members of the committee. I am Richard Comerford, regional director general for the Canada Border Service Agency, southern Ontario region. Thanks for giving me the opportunity today to provide an overview of CBSA operations here in southern Ontario.
The southern Ontario region of the Canada Border Services Agency extends across the southern tier of Ontario, encompassing the cities of Windsor, Sarnia, London, Fort Erie, Niagara Falls and their surrounding communities. The region is home to four of the top five busiest land border operations in Canada, with major international bridges, medium-sized airports and marine services. Passenger and cargo services are provided for highway, air, marine and rail modes of transport.
The southern Ontario region is responsible for processing approximately 40% of the national total of traveller mode highway conveyances and approximately 60% of the national total of all commercial mode highway conveyances.
Trade and security remain a top priority for the CBSA. The CBSA is committed to the facilitation of low-risk travel and commerce to support economic prosperity, while protecting Canadians from public safety threats through a risk-based approach supported by pre-arrival and intelligence information.
We work co-operatively with our domestic and international enforcement and security partners on implementing a border strategy that relies on technology, information sharing and biometrics to create a smart and secure border. CBSA has taken a wide range of measures to increase vigilance and maximize its capacity to conduct risk assessments of people and goods before they arrive in Canada. Advance information pertaining to both goods and drivers with strategic risking systems, while leveraging emerging technologies and capabilities, is at the forefront of innovative solutions to reduce processing times while maintaining the integrity of the CBSA mandate.
It goes without saying that we must manage increased commercial vehicle volumes, service demands during peak season summer months, and special events taking place on both sides of the border. In the last five years, our region has consistently processed between 57% and 59% of the national total of commercial conveyances, and we have the highest number of trusted transactional volumes in the country.
In terms of operational delivery, the Ambassador Bridge ranks first in commercial processing across Canada, with approximately 1.5 million commercial conveyances processed in fiscal year 2017-18. The Ambassador Bridge is followed by two other southern Ontario land border crossings for national commercial volumes, namely, the Blue Water Bridge and the Peace Bridge, which processed approximately 820,000 and 580,000, respectively, in fiscal year 2017-18.
In terms of traveller processing, the Ambassador Bridge again ranks first in traveller processing conveyances with approximately 2.2 million cars Canada bound in the 2017-18 fiscal year, followed by the Detroit-Windsor Tunnel and Peace Bridge operations. Overall in the 2017-18 fiscal year, the southern Ontario region was responsible for the clearance of approximately 3.3 million commercial conveyances, 11 million cars and 25 million travellers.
As previously referenced, trade and security remain top priorities for the southern Ontario region of CBSA. This has led to investments in a border clearance model that leverages technological advancements to modernize service delivery. This includes our new and expanded trusted travellers and trusted traders programs that further automate infrastructure to accelerate the low-risk passage of people and goods. It also includes better analytical capabilities so that we can detect and identify higher-risk targets.
Our free and secure trade program is a commercial clearance program designed to ensure safety and security while expediting legitimate trade across the Canada-United States border. As of July 2018, the CBSA has 58,519 active fast drivers. Fast-load lanes are located at the Ambassador Bridge and the Blue Water Bridge, and one was established at the Peace Bridge in February 2017 as a flex lane, to be used as a fast lane or as a regular primary inspection lane.
NEXUS is a joint CBSA and U.S. customs and border protection program to simplify the process of crossing the border for members while also enhancing security. It is designed to expedite the border clearance process for low risk pre-approved travellers into Canada and the United States.
There are NEXUS automated self-serve kiosks at international airports, designated lanes at land borders and advanced reporting of arrival from marine mode. NEXUS has also provided expedited security screening at airports in the CATSA security line. As of July 2018, the CBSA has approximately 1.7 million active participants in the program.
The commercial eManifest program modernizes enhanced screening of goods and commercial processes by improving the CBSA's ability to detect shipments that pose high or unknown risk prior to their arrival and to facilitate the movement of low-risk shipments. The eManifest program requires carriers and freight forwarders to send advanced commercial information about their shipments electronically to the CBSA.
In terms of a simplified commercial process, the single window initiative enables importers and customs brokers to send an electronic integrated import declaration to the CBSA for nine participating government departments and agencies. The integrated import declaration can be for both regulated and non-regulated commodities.
Another key transformation initiative taking place in southern Ontario with CBSA is the secure corridor pilot at the Ambassador Bridge in Windsor. The secure pilot will evaluate the feasibility of using a combination of technologies to expedite the passage of low-risk free and secure trade, what we refer to as FAST eligible shipments, and streamline commercial primary processing. The secure pilot will begin at the Ambassador Bridge with lanes retrofitting and commercial convenience passage commencing this month. In fact, they've already started.
Again, the southern Ontario region strives to ensure that borders are open to low-risk travel and commerce and closed to crime. The CBSA works co-operatively with its joint law enforcement partners in implementing strategies that rely on joint force initiatives and information sharing to secure Canada's borders.
In fiscal year 2017-18, our region completed 3,307 seizure actions. The top commodity comprising more than half of the seizures was narcotics, drugs or other chemicals. Firearms, prohibited weapons and prohibited devices combined to be the second most prevalent seizure commodity in the southern Ontario region.
Likewise, in 2017-18, southern Ontario completed 1,161 immigration inadmissibility reports.
The southern Ontario region is working in collaboration with the national targeting centre as well in a pilot to evaluate commercial targeting technology. This commercial targeting pilot was implemented at the Peace Bridge in late July 2018. The pilot is focused on using advanced data analytics and new evidence-based intelligence-driven targeting methodologies. A final review of the analysis and the pilot was expected to be conducted in late 2018.
I'm the general manager of the binational Buffalo and Fort Erie Public Bridge Authority which owns and operates the Peace Bridge and the customs plazas in both Canada and the United States.
The Peace Bridge is at the terminus of the Queen Elizabeth Way, which is a key economic, trade and tourism corridor. The Peace Bridge is currently undergoing a $100-million U.S. self-funded rehabilitation project to be completed in June 2019. The Queen Elizabeth Way corridor serves four international bridges between Canada and the U.S.: the Peace Bridge, the Lewiston-Queenston Bridge, the Rainbow Bridge and the Whirlpool Rapids Bridge. Ken will speak about those bridges after me.
In 2017, the Queen Elizabeth Way corridor ranked second in Canada in terms of commercial volume and passenger vehicles. Cars totalled almost 10 million crossings. That's in both directions.
When you compare it to the other crossings, it's amazing actually how much traffic crosses at these bridges. Commercial trucks totalled almost two million crossings. Approximately 85% of all goods traded between the U.S. and Canada move by land transport mode, that is, trucking or rail. Of all U.S.-Canada trade, 54% is transported by truck. The Queen Elizabeth Way corridor accounts for 37% of that trucking volume into Canada and represents an estimated $80 billion in two-way trade annually.
While the Ambassador Bridge carries significantly more commercial traffic than the Queen Elizabeth Way corridor, the nature of that traffic is different in that about 40% to 50% facilitates intra-company automotive trade between the Windsor and Detroit region. The commodity mix within the Queen Elizabeth Way corridor is much more diverse than that at the Ambassador Bridge.
Just to provide some corridor perspective, and Member Badawey will certainly appreciate this, on the Queen Elizabeth Way at Grimsby, halfway between Hamilton and Niagara Falls, the average annual daily traffic, or AADT, is approximately 120,000 vehicles. On Highway 401 at Chatham, halfway between London and Windsor, the average annual daily traffic is approximately 23,000 vehicles, compared to the 120,000 at Grimsby. It's actually quite a stunning number.
The difference is that the Queen Elizabeth Way is not only a trade corridor, but it is also a commuter highway and the primary tourism conduit connecting the greater Toronto area with the attractions of Niagara Falls, the wineries of the Niagara region, the beaches of Port Colborne and Fort Erie, and western New York and the Buffalo region.
Much has been reported about congestion at the borders, often referred to as thickening of the border, and how this impedes the flow of trade and tourism. While infrastructure certainly plays a part, there are much bigger factors in the fluidity of the border. These are the impacts of customs resourcing and management, staffing of booths, which Mr. Comerford spoke about, customs procedures and technology. The best way to describe this is in terms of lift bridges that don't have customs at either end.
As an example, if you came here from Toronto, the Burlington Bay Skyway is eight lanes and carries 150,000 vehicles a day, or a per lane average of 18,750 vehicles. The Garden City Skyway in St. Catharines is six lanes and carries about 90,500 vehicles every day.
Compare that to the Peace Bridge with 14,500 vehicles, or only 4,800 vehicles per lane, or even the Ambassador Bridge with only four lanes but it carries 18,836 vehicles, or 4,700 vehicles per lane. On a per lane basis, the issue is not infrastructure over the river; it's dealing with the customs and procedures at the end of the bridges in either country.
The point I'm trying to make is that border crossings and trade corridors require a multi-departmental approach within government and between government, not just transport. The silos between agencies and governments must be broken down. For example, the federal government is expending over $5 billion on the Gordie Howe bridge, not including the operating costs, which will never be recovered by toll revenue, while at the same time CBSA does not have capital funding for an e-gate program for NEXUS and has approached bridge operators to pay for the capital costs.
No money is allocated for a NEXUS marketing program, even though moving from 25% NEXUS utilization to 50% would eliminate border delays at the Peace Bridge and likely all border crossings.
Unlike the State Department, Passport Canada does not issue RFID passport cards, even though they would significantly improve booth processing times. The Peace Bridge is installing RFID readers in Canada for each inspection lane, with 50% funding from the national trade corridors fund, but there's no commitment to actually do passport cards.
Similarly, RFID-enabled driver's licences are available, but they are not promoted by Ontario's Ministry of Transportation. There are not just issues in Canada; there are also issues in the U.S. U.S. Customs requires regulatory reform to mandate e-Manifest for all commercial trucks and mandatory prepayment of their border crossing fees. Again, that would facilitate exports from Canada into the U.S.
Little is being done to address trade corridor bottlenecks away from border crossings. For example, the mid-peninsula corridor that's been talked about for decades to relieve QEW corridor congestion is not being addressed. In-transit delay is a delay no matter where it occurs.
Thank you for the opportunity to address the committee. I trust my comments will be helpful as you continue your deliberations.
My name is Ken Bieger. I am the general manager of the Niagara Falls Bridge Commission.
As Ron mentioned, we have three bridges. We have the Rainbow Bridge, which is a pedestrian bridge. It's also a high tourist bridge and handles auto traffic. We have the Whirlpool Bridge, which is our oldest bridge. Built in 1898, it is a trusted traveller bridge for NEXUS autos only. Then we have the Lewiston-Queenston Bridge, which I think is probably the most important for the group here. That is our commercial truck and auto traffic bridge. There are no pedestrians on the Lewiston-Queenston Bridge.
We were asked to help the group here come up with ways to maximize the efficiency of Canada's trade corridor. I'll break this down into the three areas I see.
First, ensure that the technology in place is robust and that the downtime is equitably managed by someone who understands, really, the cost of trade. As a border operator between, let's say, CBSA and the government, we see a lot of discussion about trade, but there seems to be a disconnect when it comes down to implementing some of the things that are critical for us as border operators. Technology is a big part of it. I think we all know that there will be issues moving forward with staffing in terms of the number of CBSA officers, and the same on the U.S. side with CBP officers. Technology will be taking over. We need to bridge that gap between now and at the point that technology improves.
Currently we have issues with the advance commercial information system. We've had a lot of downtime in the last three or four years. It has improved recently, but it's been an issue. Better redundancy procedures in place for when these downtimes happen would help. These truckers get stuck at the border when these computer systems go down.
The transparency with metrics would be a big plus for us also. We are truly a partner with CBSA. I have to say that the local CBSA group is great with us as border operators. We have a great relationship between the Peace Bridge and the Niagara Falls Bridge Commission, but by improving metrics even from Ottawa as far as wait times and downtimes and things like that are concerned, we could communicate back and forth and all be on the same page. The way I put it in my write-up is that poor information leads to poor decisions. If we can work together with the metrics and both agree what the wait times are and what the reasons are, I think that shared information would be helpful. Really, we think funding for upgrades in computer and technology systems would be a big plus, from our perspective.
Ron touched on staffing, as did Rick. Again, staffing improved with regard to our wait times here in the last year, in 2017, but 2016 was a difficult summer for everyone.
A lot of things lead to that. The collective bargaining agreement is outside of local control. I think there has to be some communication, some understanding, when decisions are made. Having the front-line officers have guns was a big issue. Not having everyone being able to be on the primary inspection lanes has caused a lot of issues at the port, so the collective bargaining agreement is an issue.
Really, from Ottawa basically just.... I think this again goes back to the disconnect between trade and what's really happening on the line. I think it's great that everybody's here and visiting the Peace Bridge tomorrow. Actually getting out there and seeing the trade and seeing these trucks go across really highlights that connection as to how much money we're talking about when these things are held up. It goes back to having adequate staffing and understanding it first-hand out there, at the primary inspection lane, versus Ottawa, let's say, not fully understanding the trade implications.
Ron touched on the Gordie Howe bridge. Obviously, from a border operator perspective, we're concerned that we have limited resources right now with CBSA. Are resources going to become more scarce when a bridge like Gordie Howe Bridge is going to open in the future?
In terms of the immigration issues with asylum seekers, the impact has affected border operators. I'm not sure if there's a different way in which that could be handled or improved for efficiency. Locally, I know everything's being done to work on different options to improve things.
In answering your question, I believe what you're referring to is “thickening” of the border, or increased border wait times. I think there are a few areas I can approach to respond to that question.
One is, as I mentioned, about resources. Since April 2017 we have had approximately 130 new recruits come into the region. It's a matter of taking those recruits and making sure they are strategically placed within areas where we have need when we have increased traffic. From a resourcing perspective, that has already been done, and we've seen the difference in making sure we're meeting the border wait times.
The other area is in terms of planning. Operational planning is very important when you're running an operation similar to CBSA. It's important to understand all the environmental and economic factors we have. For instance, any increase in the dollar will generate a significant amount of cross-border movement. As you are well aware from your area, people will definitely cross the border to go shopping if the dollar is better or at par. We have a planning process in which we look at that economic factor.
Other factors we look at are historical trends. We look at it from monthly, weekly, daily, and hourly perspectives. We know exactly from a historical perspective how many vehicles may be coming through in that particular hour at that particular POE, and we resource accordingly. Again, in that planning, we try to have flexibility with our resources by moving them from one location to another.
For instance—I'm giving you some anecdotal examples—when there's a sporting event taking place, for instance in Buffalo, you are going to encounter a surge of travellers coming back in a hurry after a sporting event. It's a matter of ensuring we have the right level of resources at the right time to process those people.
The same thing can apply to commerce. The Ambassador Bridge is our busiest land border port of entry for commerce. We operate 13 commercial primary lanes at the Ambassador Bridge from nine o'clock in the morning to nine o'clock at night, and all the lanes are open.
Those are ways that we plan to move this forward and plan to deal with the increased volume, but that's only part of the solution. The other part, as was mentioned, is the technological piece. We need to continue to review and look at efficiencies through technological change, such as RFID.
I have another perspective. We're talking about technology, about the direction of technology and the need and clearly the future of the border. We're talking about the borders of the future and where things are going. It's endless when you hear about what is going on in some of the pilot programs at the Peace Bridge and up at Windsor.
If you're looking for something that you really could do to help, as one of the things, I would encourage the relationship between CBSA and CBP. I've been in this role for a year and a half. Peace Bridge has been nice enough to host a meeting once a year, with CBSA and CBP together, where we've talked about technology and how things are going. When you look around the room of 25 people, you see how excited people are that we can actually share ideas on where the future is.
For years it appeared that there wasn't that communication, that connection, between the two countries, and there are obvious reasons to do with legalities, but the more that this could be encouraged by the government, from Ottawa, to do that from the Canadian side—and the U.S. side also—to get a group working together.... There's no reason to have all these smart technological brains working completely separately when they could be working together on a similar problem.
Thank you, Madam Chair.
Thank you for your remarks, gentlemen, but let me tell you right off the bat that I had difficulty following you. It is not that you were not specific, but, since I do not come from a border area myself, the jargon you use is a little beyond me.
I am going to try to ask some questions that will clear it all up.
First, in terms of a risk-based approach, I understand the spirit of that well, but can you be more precise and tell me whether we are talking about two, three or five levels of risk? How do you define the approach, or the people you examine?
Thank you very much for being here, gentlemen.
We have Accipiter Radar Technologies Inc., with Tim Nohara, president and chief executive officer, and Niagara Industrial Association's Roy Timms, board member and former chair. We have, as an individual, Patrick Robson, a professor at Niagara College, and for the Welland/Pelham Chamber of Commerce, Mr. Milot, director.
Thank you all very much for being here. We appreciate that.
Mr. Milot, would you like to start?
Madam Chair and standing committee, I'd like to thank the committee for hearing us today, as we speak on behalf of our chamber membership on the trade corridor and related transportation issues in Niagara.
I can say unequivocally that maintaining a vibrant and seamless trading hub through the peninsula corridor remains a top concern and priority for our 2,000 members. Many rely on this corridor for their trade livelihood, and it's of paramount importance that we face impending issues on this critical route. It is clear that the federal government can play a key role in many ways.
Of top concern is the continually congested QEW corridor from Hamilton to the U.S. bridge border crossings in Niagara Falls and Fort Erie. A true Canadian Niagara trade corridor strategy will have to deal with the congested Niagara international bridges by providing appropriate infrastructure and systemic border crossing improvements to reduce mounting delay times at the border.
Even more critically, a mid-peninsula highway is needed to address gridlock from the QEW and move commercial traffic and trade in a proven, viable connection, to connect Buffalo to Hamilton, Hamilton airport, and major centres in southwestern Ontario through to Windsor and Sarnia.
Years have been spent tweaking and perfecting environmentally sensitive, relatively inexpensive, and effective highway corridors. It's time to make the move. Following the appropriate environmental assessments that are now under way, we encourage the federal government to work with the province and other stakeholders to help make this link a reality as soon as possible and to ensure that our chronic corridor vehicle congestion along the QEW is lightened.
Indeed, much of our transportation now depends on seamless, fast links between different types of transportation. It is here that Niagara excels in potential, with inexpensive and appropriate lands that can be leveraged to smooth a way to sensible development and transportation links to rail, tidewater access, and other connections. This may include new rail links to development lands. We urge the federal government to use its mandates, leverage, and financial backing to help make this happen.
Welland Canal's shores have also been in development limbo—if you want to call it that—along dozens of kilometres of prime industrial and employment growth lands. This must change. It is here that Transport Canada can play a key role in sensitively opening up those areas and connecting them appropriately to trade transportation routes as part of a more robust industrial hub.
Rail, water, trucking, and related connections must be made more open, seamless, and functional for our future economic security and prosperity. Dormant, developable industrial lands along the Welland Canal are also no longer acceptable if we're to entrench the region in a foreign trade zone in a way that will be robust and credible for decades to come.
In these ways, Niagara's future as a trade corridor of national importance can be secured. Our chamber members can then do business in a future that will bolster their success and potentially add thousands of new jobs.
Thank you for your time.
Thank you, Madam Chair, and thank you for inviting me.
As mentioned, my name is Patrick Robson. I'm actually a registered professional planner and a member of the Canadian Institute of Planners, so while my present role is professor at Niagara College, I did serve as the commissioner of planning for the Niagara Region for a number of years, and it is through the eyes of an urban regional planner that I provide my comments today.
First off, let me give a little history. The notion of Niagara as a trade corridor is certainly nothing new. Indeed, it goes back to our first peoples. The area was the nexus of trade for first peoples, and there's evidence that under the supervision and oversight of the Neutrals, Niagara was a centre to conduct trade for hundreds of years. The Algonquian people from as far north as Hudson Bay, the Seminole peoples from Florida, and all nations in between converged on Niagara as a trade crossroads for the entire eastern portion of North America, so it does still have that critical locational value.
Half the battles of the War of 1812 were actually fought in the Niagara theatre, and the reason is quite simple: Because of the strategic location for the movement of goods and people, if you controlled the route, you controlled the continent. Regardless of who may or even can claim victory in that conflict, there's no doubt that it served as a seminal nation-building exercise for both sides of the border, and that's been followed by over 200 years of binational co-operation on many fronts, not the least of which is trade.
The building of the Welland Canal, which actually began in the 1820s, opened up the interior of the continent for trade, and that continues today. In fact, it's been said that if the eight Great Lakes states and Ontario and Quebec were one economy, they'd be the third- or fourth-largest in the world, so it is still a very critical location.
If we scroll forward to 1974, the importance of moving goods and people was recognized in the first Niagara regional policy plan. Specifically it envisioned a mid-peninsula corridor, which you've heard about. From a planning perspective, I would suggest that the inclusion of the mid-peninsula note was not so much a novel vision as it was a recognition that the bones of a trade corridor already existed—the general route of Highway 20 in terms of roads; rail infrastructure such as the still-operative Toronto, Hamilton & Buffalo, or TH&B, line; and the critical intersection that both have with the Welland Canal. However, during those times, the local economy was thriving with steel and automotive manufacturing, so the attention on moving forward with enhancing that corridor was not pursued with enthusiasm. It has been looked at again since the economic landscape of the area has changed significantly with the exodus of a lot of that industrial activity.
That brings us to the late 1990s and early 2000s. Local leaders, including our friends in western New York, were undergoing a similar economic transition and began looking in earnest at how to transition to a renewed economic future. Coincidentally, at the same time the Province of Ontario was considering how to accommodate future growth in the greater Golden Horseshoe. That includes Niagara and Hamilton. Local leaders successfully petitioned Queen's Park to recognize the trade nexus that is Niagara, and part of that success was based on being able to argue for the existence of significant transportation infrastructure—road, rail, marine, and air. When the first growth plan for the greater Golden Horseshoe was approved, there was what I call a Niagara special designation for what is known as the Niagara gateway economic zone and centre. However, what was going to happen there was still to be defined, which actually was a welcome opportunity locally.
I was most fortunate at that time to be the staff lead on the process, and we had political championship from several folks, most notably Mr. Vince Badawey, who was then Port Colborne's mayor and is now MP for Niagara Centre. They developed an entire policy regime with policy tools like financial incentives, and all of that was developed as part of the gateway plan. Underpinning that plan were some basic assumptions and objectives: the reality that we have over 2,000 hectares of developable or redevelopable industrial land that is being entirely underutilized, and the existence of that multimodal infrastructure. Focusing on what we do well in our economy—food processing in this area, advanced manufacturing, and logistics—was a big part of that. Also, it was understood that that gateway serves regional, provincial, and national economic interests. It was in fact the foundation for the granting of a foreign trade zone by the government.
The foundational pieces are all in place. We have federal recognition, provincial designation, and local policies and tools, but we need to effect the coordination and integration of those transportation assets. They intersect, but that doesn't mean they interact anywhere near their collective potential. That's part of the challenge.
It's a pleasure seeing you again. Thank you for having me, Madam Chair and committee members.
Good afternoon. My name is Tim Nohara, and I'm the president and CEO of Accipiter Radar, a Canadian high-tech company located right here in Niagara at the centre of the Great Lakes-St. Lawrence Seaway shipping system.
The shipping system is a critical, green, binational marine superhighway that reaches throughout the Ontario-Quebec continent gateway and trade corridor. About 70% of our trade with our southern partner is done through here.
To maintain and grow vital trade assets requires investment from Ottawa, such as the $4 billion investment in the Gordie Howe bridge, but our competitiveness, job growth, resilience to climate change and terrorism, safety, and environmental protection depend on more than bricks and mortar. They require investment in smarter trade, and smarter trade is both greener and safer because it maintains operational fluidity. With a small investment, Canada can position itself to become the global leader in smart shipping right here where intermodal shipping logistics are optimized in real time.
This investment would be in the form of shared maritime domain awareness technology that would be distributed among ports, the Great Lakes, and the seaway throughout Ontario and Quebec, and accessible by all transportation stakeholders to provide decision support and system-wide collaborative decision-making.
We've all experienced traffic congestion on highways and bridges. We speed in segments where traffic is light, only to hit the brakes and crawl or stop for minutes or hours where there is congestion. We understand that our travel time would be considerably shorter if traffic was spaced out more evenly and if we reduced our speed by maybe 10% or 20%. In addition, we would emit a lot less greenhouse gas and accidents would be fewer.
The same thing happens on the Great Lakes-St. Lawrence Seaway shipping system. A cargo ship or cruise ship may be transiting over 3,000 kilometres from Quebec City to Thunder Bay. En route, the vessel goes full steam, only to hit several slowdowns along the way, often caused by pleasure craft. This results in significant wastage of fuel, which is the number one cost for shipping. If the slowdowns could be predicted, ships would slow down during those segments, saving fuel and reducing greenhouse gases, but no one knows where the pleasure craft are.
Pleasure craft hugely outnumber ships on this marine superhighway, in the same way cars outnumber transport trucks on our paved highways. Pleasure craft are often responsible for these slowdowns as they unintentionally block shipping lanes and access to docks. If harbourmasters and vessel traffic managers knew where pleasure craft were causing obstructions, the authorities could be dispatched to disperse them in order to avoid the slowdowns.
Because there is considerable uncertainty around when a ship will arrive at its designated terminal or berth, the just-in-time arrival of logistics handlers who load and unload freight to and from ships to another transportation mode such as rail or truck is not possible today. If logistics personnel could better predict ship arrival times, they could coordinate intermodal transfers more efficiently. You see, smarter shipping requires a real-time shared understanding of what the traffic looks like, especially pleasure craft, so stakeholders can do their part to manage flow, individually as well as collaboratively, across the shipping system. Investment in shared maritime domain awareness technology is the way to fill this critical traffic awareness gap on the marine superhighway.
We are a pioneer and global leader in this technology, which combines radar information systems and big data analytics—AI—to provide decision support to stakeholders so they can be smarter about managing their shipping operations.
Accipiter is partnered with Canada's leading transportation logistics research institutes in Quebec and Ontario, with our shipping companies in all the major ports in Ontario and Quebec, with the Seaway, with the Council of the Great Lakes Region, and with others. This creates a shovel-ready technology project that could greatly leverage and enhance this Great Lakes-St. Lawrence Seaway shipping system and the continental gateway, and propel Canada as a global leader in smarter shipping for the benefit of Canadians.
This project is also very well aligned with Minister 's transportation 2030 plan, the oceans protection plan, and Minister Great Lakes protection initiative.
I look forward to answering your questions.
Madam Chair, members of the standing committee, I'm Roy Timms, a past chairman of the Niagara Industrial Association, and I'm here today representing our 220 members, who manufacture about a billion dollars' worth of goods per year. Together the association has prepared this submission for your consideration, and we thank you for the opportunity.
We believe in Niagara's future as a critical Canadian trade hub and a vital contributor to our country's economic well-being. Niagara has significant untapped potential and far too much idle opportunity. Niagara is well positioned as a next-generation strategic transportation corridor. We are located between Canada and the United States and boasted $105 billion in trade value crossing our borders in 2015. Three-quarters of the St. Lawrence Seaway's $34.6 billion in economic activity passes through the Welland Canal, which runs through the centre of the peninsula.
Niagara is a day's truck drive in any direction to a growing 140-million-person marketplace in Canada and the United States. We've also been designated as Ontario's first foreign trade zone point. Niagara is a major hub and intermodal freight transport point. We have significant potential for growth. Our proximity to the U.S.-Canadian border is unique. We have inexpensive available land, tidewater shipping access, and a class A rail access connecting to American rail carriers. We also have a short rail line running the width of the peninsula. We have a well-maintained highway network plus a world-class affordable standard of living for new residents.
All told, this gives us a unique situational advantage with tremendous potential to become a hub that complements and reduces overburdened corridors such as the GTA. Ontario and the northeastern United States are forecast for continued growth. Niagara has the potential to accommodate significant increased transportation of Canadian raw materials and finished goods for decades to come. We are certain that creating this trade infrastructure in Niagara is an important piece for ensuring the development and sustainability of Canadian export trade.
We believe the Canadian trade corridor strategy should leverage all this opportunity and natural advantage by implementing enhancements to the road, rail, bridge, and waterway networks creating corridors more accessible to Niagara's industrial sector and employment lands.
Of primary importance, we have a pressing need for faster, more reliable U.S. border access across congested Niagara international bridges. We envision a connection from Buffalo to the Hamilton airport to the Brantford—Kitchener-Waterloo—London corridor utilizing a mid-peninsula highway. This would be a new highway that has been under consideration for quite a while.
Stakeholders agree this powerful link will unleash a strategic bottleneck that is vital to the future economic development of southwestern Ontario. The proposed mid-peninsula highway is undergoing environmental assessment. We urge the federal government to add its support and financial underpinning for the project.
In addition, the strategy would be connected to the development of industrial commercial parcels that have been vacant for far too long along the Welland Canal. As you know, a major transition is taking place with the St. Lawrence Seaway Management Corporation. It's now involved in a federal review, studying possible opportunities for development.
Niagara is a clear candidate for that kind of change. Other ports along the seaway have grown and prospered, but the lands along the Welland Canal have remained stagnant for the life of the agreement.
This is not to cast blame on the seaway for the stagnation, because land development is not their core business, but it is time for a new focus, with energized lead players focusing on the underutilized federal asset, the employment lands along the Welland Canal.
A Niagara trade corridor strategy should also include a corresponding industrial investment strategy that creates jobs to rezone new lands—
Shifting gears a little bit, you guys spoke of it and we experienced it yesterday coming from the airport here. Previous witnesses have spoken about the obvious need or desire for increased road travel, for highways. I've lost track, but I think there were at least one, two, or three possible requests for additional roadways.
Do you guys feed into municipal requests for priorities, which then feed into the province, and then feed into the federal government?
I'm from Alberta, and that's the typical method we seem to follow, but it would seem odd to have requests here saying you need this roadway, and then the federal government would jump in and say, “Great, a roadway. Now get on board, province and municipality.” It seems to work the other way up.
Is there a problem with the ways these are being ranked? Is there a preference that the ranking be different than what it is? I think it would be helpful to hear some enlightening facts on how it works in the region here.
Thank you, Madam Chair.
I have to preface my comments with the following statement. Under the new norm with respect to the need to diversify our trade patterns—to be less reliant on the most obvious market, which is the U.S. market—it is evident that Ontario plays a major part in the economy of Canada with respect to our GDP. For example, when we see a GDP level of about $795 billion, or $56,900 per capita, it's quite evident how we participate in the success of our country's overall economy.
It was mentioned earlier how underutilized the seaway is and how underutilized our current assets are. It seems that the capital is there, and the bricks and mortar, and of course the incentives are there. For example, it has been recognized as a foreign trade zone point.
What more can be done? How do we formally recognize the trade corridor? How do you participate in that? What investments are needed to bring Ontario to the next level of performance, allowing our country to strengthen our international trade performance?
I'd agree with colleagues, but I'd like to take a more 21st century approach, which is that we can do things smarter.
We need the bandwidth where we have the choke points, but moving cargo from ship to port, to terminals, to logistics handlers, to truck, to rail.... We're adding a new major bridge in Windsor-Detroit, the Gordie Howe bridge, and getting the trucks off the bridge, getting them to the points where they get to rail and to ships is smarter work. I think that not only can this corridor lead in the world, but Canada can lead the world in terms of logistics handling and intermodal movement.
That's a piece that I'd like to direct specifically in answer to your question. We can absolutely use more capacity at choke points, but we can be smarter about leveraging the investment and the capacity that we have.
Here in Niagara, and in Ontario and Quebec, I like to view this marine superhighway as a continental marine superhighway. There's great opportunity to leverage those assets with smarter movement of goods and people.
Yes, sir, that's precisely what I'm saying.
If you look in Quebec at CIRRELT, which is a global leading research institute on trade and logistics, and here in Ontario at the University of Windsor's Cross-Border Institute, you see that we have tremendous expertise on logistics that parallels our American and European counterparts when it comes to the tracking and movement of trucks. We can put GPS on trucks. We know where they move. We can build models for the distribution points—export and import—including the choke points and how we move that off. However, we go dark when we bring the intermodal connections into the marine domain. We're blind in the marine domain.
CIRRELT and CBI have partnered with us. They recognize that if we could collect the big data that shows in real time and historically the connections between the terminal and the logistics and the routes and the trains, and then connect that to the marine domain and deal with the pleasure craft and the obstructions we face in the marine domain, that data can be mined. It could be mined not only to provide real-time congestion traffic management across the whole system but also to build and learn from where the obstructions occur and then build best practices.
They say on the research side that we would indeed be the leader, by far, in a world where nobody has tackled that problem. We have all the pieces right now.
Your observations, again, are bang on, sir.
What you may be lacking is that we have the technology today for what we call shared maritime domain awareness, or MDA. It has been developed over the last 15 years because of post-9/11 concerns, but now it's making its way into the commercial and shipping and logistics handling areas as an application.
The Canadian government has strategies at the highest level across all federal departments. In fact, the interdepartmental marine security working group, which is a group of Transport Canada, recognizes the need for federal partners to share MDA.
We have Canadian technology. It's been fielded in small-scale full operations, so we're ready to go. It requires no IT infrastructure, other than your cellphone or mobile device or computer, and access to the Internet. It's already being used in small pockets around this system, the Great Lakes-St. Lawrence Seaway shipping system. It's ready to go.
Expanding the infrastructure so that we can see the entire system and the connections: the training, the ports, terminal operators, seaway users—all the stakeholders—and giving the shipping companies and their planning and marketing groups these tools is what will then result in decision-making that will benefit them. The researchers giving them that big data is what will allow them to look at the patterns, understand the spatial and temporal variations, and then design solutions that would alleviate problems and develop best practices in those areas.
It's a new data source. We are literally mining, both at the raw and refining level, a whole new industry.
Thank you, Madam Chair.
Mr. Robson, I think most of my questions are going to come to you.
I worked for the Greater Vancouver Transportation Authority. We did an awful lot of planning and visioning. There's an economics principle: If there's a limited supply of something, and a suppressed cost for it, you end up with rationing. When it comes to roadways, the rationing takes the form of congestion. While we look at the concept of a mid-peninsula highway, experience would show that in no time it's going to be filled with general-purpose traffic. The question then becomes, what kind of policy issues or mechanisms, in addition to the technological ones, could be used to ensure that higher-value traffic gets priority?
Should we be thinking about road pricing and all the rest, demand management in a larger envelope that has an awful lot more things going on in the peninsula and right up to the GTA than just the movement of goods and services? You have people being displaced because of high housing costs in Toronto, so they're moving farther out and they want to commute. It's a real mixed bag of things going on, but the pattern is that if you build it, boy, they will come in spades, unless you manage it. What are your thoughts on that in the context of this region?
Thanks so much for the question.
I mentioned previously the movement of goods and people. It was actually from Metro Vancouver that I heard a great turn of phrase, and it has to do with mass transit, which works better if you bring many people to a few places, not a few people to many places. I believe the same applies to your question. For instance, if we talk about the way we move people and goods, if there's an appropriate separation, what is the functionality of what we're building?
We don't have to go very far. You can find it in the United States. They have a lot of limited-access expressways. They do not create an interchange at every possible crossroad, bringing the development pressure that you rightly point out. You have other public policy tools. It could in fact be a form of fee-for-service roads, that type of thing, available to you. But I think the primary one among them is limited access, only at the most appropriate juncture points.
We've talked about the Welland Canal. That would be a natural one. I might not be popular for saying so, but I would think that if you were to focus on limited access, we'd have maybe three, four at the most, interchanges throughout the peninsula. The balance would be part of what we can manage and capitalize here, but also recognizing that it's still a throughput.
We should. To use a hockey analogy, to do anything smarter is team play. Whether we're a shipping company, the seaway, the government, the regulators, Transport Canada, we all have an individual role to play. This is voluntary team play because it makes us all better. It's system-wide and enterprise-wide.
For example, there is the operational fluidity I mentioned in my opening remarks, about congestion with respect to pleasure craft. Let me give you a few more examples.
We have environmental concerns. We have climate change and high water levels. In the last couple of seasons, we have seen high water levels. What happens? We have ships, especially foreign ones, moving through our waters for trade. The water level is much higher. We have been flooded here in the area. They can now carry more cargo. It's what they are going to do. They are going to move more cargo. They don't reduce their speed. Now the power of the wakes they are creating is causing massive infrastructure damage at the shoreline. Part of the smarter shipping would be recognizing the connection between climate change and actual operations.
There are many examples like this that come from the stakeholders, the community itself. There are the right whales. We need to enforce the speed of vessels through corridors. We have ice in this region. We use hydro in Ontario and Quebec. We're very proud of our hydro generation, our clean power generation. Would you believe that the operational efficiency of the generation of that power in dams relates to the underwater ice structure in the winter months, and that relates to the speed of the ships during the freezing?
On that example, I can say that it's mainly the port's responsibility to upkeep itself, to improve itself. It wouldn't be a government thing.
Second, if that is the case.... I'll make a reference to my port in Montreal, which I visited recently. They are the ones who brought to me the concept of intelligent ports. When they said that, I asked whether they have visited Laval. This is the riding I represent, which is one of the one or two ranked smart cities.
When we're focusing on smart cities, what are the ports focusing on? Is it going to be an intelligent port city, or what is it exactly? People from the Port of Montreal are going to visit the city of Laval, the STL, which is the urban transport system, to get a lot of their tips with respect to intelligence.
In this case, given that some ports are already using technology somewhat, is there a sharing of information among all the ports of Canada?
Thank you, Madam Chair.
I just have a short comment. It goes to Mr. Aubin's comments with respect to the need to help facilitate and to take the next steps so that we can take all this technology and all these ideas and come forward with a trade corridor strategy specific to southwestern Ontario, and then how it fits into the national agenda as it relates to the national transportation strategy.
My question to you folks is this. With that said, and with us trying to facilitate that discussion, what is your opinion or what are your thoughts on how we actually take the next steps? What is the take-away? We—as in the hockey analogy, “we”—talked about other areas.
Mr. Robson, you mentioned passenger movement. High-speed rail is another example. I know that Mr. Aubin is very much interested not only in railway safety, but also in passenger railway.
When you look at that and walk away from here today and it becomes Tuesday tomorrow, what are the next steps you expect? Also, what would you be willing to participate in?
Thank you for the question. I just have a couple of points on that.
First, we've heard the term “collaboration”. We have multiple jurisdictions. Having worked in a binational area for a number of years, I note that the first thing you do is establish your common objectives. If you have agreement upon those, how you deliver on them is the stuff of concerted effort.
My other comment is that we also talked about integration of systems. Integration is not a concept. It's a verb, so at some point there has to be a strong statement to say, okay, now is the time. If there are partners, levels of government and industry that want to be part of the solution, they have to jump in and actually act in that fashion. That requires collective will and, I believe, some leadership. Certainly, in terms of things like borders policy and programs that come from that, I believe they're a good trigger for prompting that kind of integrated action.
I've travelled the country, and we've deployed solutions across the country into the United States and around the world. I'm a very proud Canadian.
One thing I recognize is that this region.... The Great Lakes seaway is bigger than Niagara. It's the entire 3,700-kilometre border through the middle shipping trade corridor, which hits all the next points along the way, with Niagara of course being at the centre. This is a vibrant, hugely valuable asset.
I do binational trade and international trade. I want to be here, but we need this region, this area recognized for what it is. I also believe that if it's recognized we can make a contribution nationally and internationally. We're equally active on the west coast, and a little less so on the east coast. With the contribution we can make by doing the kind of work that you ask questions about, and with the big data and the research institutions here in Niagara and in Quebec and Ontario, and exporting that around the world, I think it's just very impressive.
I'd like it to be recognized. I'd like all the partners recognized. You talked about smart cities. All the CEOs from the major ports and small ones are part of this initiative in terms of a dream, in terms of recognizing it. If we're recognized, I think we might be able to attract the investment. The collaboration is already there.
I'm proud to say that we're the fastest-growing airport in North America. Almost 600,000 passengers flew from Hamilton last year, an outstanding increase of 80% thanks to the market stimulation being created by the entrance of low-cost air carriers. The federal government has recognized the growing consumer demand for low-cost travel and enabled new entrants to our market.
We are also Canada's largest overnight cargo airport. We facilitate the movement of goods across the country, into northern communities, across the border and into global markets. In 2017, our cargo grew 14%, a result of e-commerce activity and high-value and time-sensitive goods such as pharmaceuticals, perishables and automotive parts. Our partners are extensive and they chose Hamilton for its strategic location, acting as a key link between the ground network and global markets. Our region is broad. With a 12-hour drive, you can reach key markets such as New York, Chicago and Boston.
Growth creates demand for aviation-related services. Maintenance facilities are expanding and in need of a highly skilled yet constrained workforce. Developers in industries such as aerospace manufacturing are signalling interest to build on our land. Emerging opportunities are attributed to the fact that we are part of the GTHA, a population of 9.2 million people, yet disadvantaged by having only one major mobility hub, unlike U.S. metropolitan areas with similar population sizes that have at least two.
We are part of the Southern Ontario Airport Network, a group of the most commercially significant airports in southern Ontario. More than 110 million passengers and over one million tonnes of cargo will flow through this region by 2043. These opportunities align to our vision—to be recognized by the world as the best global gateway in Canada for affordable travel and goods movement.
Three key matters, with your support, will enable our growth potential.
First is the need for adequate transportation infrastructure. Increased activity and aging infrastructure exist in Hamilton, and airfield rehabilitations are costly. Our 24-7 operation supports diversion activity from Toronto airports, adding further pressure on our infrastructure to support the region. Moving people and goods efficiently through security and border crossings is challenging, and commitment is needed from CATSA and CBSA to reduce bottlenecks. Infrastructure must be viewed as a key government priority by further supporting growth opportunities.
Second is the need for reducing costs and relaxing rules. U.S. tax structures are much lower and compete with those in Canada. Each year, five million Canadians drive through U.S. borders to fly with low-cost carriers. Let's repatriate these travellers back to Canada.
Finally, there is a need for integrated intermodal connectivity, a viable ground network system that links our airports to all markets. The mid-peninsula highway would traverse the central part of Niagara region parallel to the Queen Elizabeth Way and connect to Highway 401 to provide congestion relief and unlock a key trade corridor.
As governance is split between municipalities and the province, it is difficult to implement plans to address congestion and coordinate improvements. Truck drivers will say that it takes them three to nine hours to cross the border. This is costly. Highway congestion challenges the timely and efficient movement of goods by truck, where minutes do matter.
The government understands the importance of Canada's trade corridors, which are key to the success of doing business in the global marketplace. I want to commend its leadership.
The Hamilton airport is a critical link in the supply chain of Canada. As low-cost travel emerges and cargo activity exceeds global forecasts, some may view our recent successes as an experiment. However, since 1996, under private management of an airport that was deemed surplus by the government, we continue to be a creator of jobs and an economic engine for the region.
Together with our partners, who have invested and committed millions in facilities and training for the future to ensure success and seize the enormous market opportunities, the role of the government must be investment in its vital transportation network, very much inclusive of the John C. Munro Hamilton International Airport, as underscored by our address today.
My name is Andy Gibbons. I'm WestJet's director of government relations and regulatory affairs. It's my pleasure to be here today to join you in a timely and valuable discussion about transportation corridors and the movement of people and goods.
On behalf of over 14,000 employees of the WestJet group, I thank you for your interest in how our investments are growing the economy in this region, and our recommendations on government policy overall.
Our investments in growth over the last 22-plus years have led to lower airfares for Canadians, overall market stimulation, and incredible job creation in many sectors of the economy, including aerospace, tourism and regional economic development. Our success in a very tough low-margin industry has been hard-earned.
I will focus my remarks today on our current investments at John C. Munro Hamilton International Airport, which we have chosen to be the eastern hub for our ultra low-cost carrier, Swoop. Abbotsford, British Columbia is our western hub. The good news is that Abbotsford is in the west. As for Hamilton, that clearly depends on where you are geographically located. Air service in this region has had its ups and downs, but with our valued partner we are witnessing some very positive news. Stakeholders in this region have asked for years for a company to invest and grow this market. We are so pleased to be in the initial phase of meeting those demands.
Prior to that, I would like to touch briefly on some of our current investments that are relevant to Canada's overall trade corridors and how we are furthering those objectives.
The first is that we are Canada's Atlantic gateway airline. We serve four destinations in the U.K. and Europe from both Halifax and St. John's. From Halifax, we have service to Paris, London and Glasgow, and from St. John's we have daily service to Dublin, Ireland. In developing an Atlantic gateway, our investments are driving the aviation side of leisure.
Second, we have signed a joint venture with Delta Airlines for Canada-United States transborder service. This agreement requires regulatory approval on both sides of the border, but when it takes effect it will have a positive impact on the integration of Canada-U.S. aviation networks. This is an area of aviation that will benefit from increased competition and choice and our partnership with one of the world's best global airlines to enhance economic connections and opportunities between our two countries.
Third, in a few months we will be taking delivery of our first Boeing 787 Dreamliner. Canada will have two global network scheduled carriers for the first time since Canadian Airlines went bankrupt. This is an incredible achievement for an airline that started with three planes in five cities in 1996. We are looking forward to bringing more of Canada to the world and more of the world to Canada.
With respect to our current investment in developing a low-cost hub in Hamilton, I have a few notes.
Service began in June with domestic service only to Abbotsford, Edmonton, Winnipeg and Halifax. This October, service will commence to Orlando, Tampa, Fort Lauderdale and Las Vegas, and December marks the launch of service from John C. Munro Hamilton International Airport to Montego Bay, Jamaica. Currently, we are operating at over 95% load factors. We are seeing many first-time flyers, and we are beginning to see U.S. licence plates in the parking lot at Hamilton airport. This is a superb development that we're very proud of.
Because of the unique cross-border element here in this region, government policy with respect to aviation is critical. I have a few notes.
Buffalo airport openly boasts of two million Canadian travellers last year. They cite government fees and third party charges; that the airport has very low operating costs; the 12-minute wait times at security; and low parking charges. This competitiveness gap has nothing to do with our airline or Canada's airlines. It is 100% related to our cost structure and user-pay system. I'd encourage all committee members to review the website of the Buffalo Niagara International Airport. They aren't shy about how much economic activity they are taking from this region. The cost structure that Canadian air carriers operate under is of importance to this region and its ambition to continue to build.
Given that importance, we recommend the following to this committee, and we'd be pleased to follow up with submissions.
One, to ensure the flow of people at border crossings at Canada's airports, the committee should recommend a review of facilitation services to ensure intermodal equity, world-class standards and cost competitiveness. This should include CBSA and CATSA.
Two, to ensure Canada's global access to markets through air, the committee should recommend that the government review Canada's aviation cost structure with the aim of reducing barriers to growth. This should include all fees levied on Canadian travellers and should be comprehensive.
I would be happy to take your questions on these matters.
Let me thank you for your interest and your time to hear from us today. We value and appreciate our relationship with the communities and elected representatives at all levels of government.
Thank you very much.
Thank you for using WestJet dollars to book your travel.
Voices: Oh, oh!
Mr. Andy Gibbons: We really appreciate that.
It's a big subject area. A couple of years ago, the Canadian Chamber of Commerce identified the cost of travel as one of their top 10 barriers to economic growth. We don't like to talk about it in strict commercial terms. It is a larger economic issue.
Your question is about where to start. I think we need to start with a review of all third party fees and surcharges on Canadian tickets. Then we can have a shared understanding of what the lay of the land is. Transportation 2030, which is the government's transportation plan, talks about costs. It says that lower costs will provide more opportunities for travel and make it more attractive to come to Canada.
So it's a shared objective, but decisions have to be made. Tying the air traveller security charge directly to screening is one example. Taking a very close look at the impact of a price on carbon for aviation would probably be number two. Three, I think we're looking forward to potential changes to airport governance and public accountability. That's something that was in the Emerson report. We look forward to potential movement in that regard.
That's a very good question. There are a few different parts there.
With respect to security funding, we have always advocated that the money collected from the air travellers security charge be directly allocated to screening services at Canada's airports. That doesn't currently happen. That money does go to other places. The vast majority does go to screening. I don't want to give the wrong impression, but there is an element that does not. We have requested that it be directly tied, given that it is the user-pay model.
On the issue of cost recovery for CATSA services, there were two elements in Bill . One allowed larger airports to top up, and the other allowed smaller airports to basically purchase those services. Until we fix the element that I discussed first, we don't like that trend line. If there are services the government provides to other sectors that are from the public purse, the trend line of cost recovery is a concerning one, and it should be particularly concerning when it comes to regional travel.
Your third part was about regional travel in Quebec. That's been challenging for us. We recently announced that we were ceasing service between Montreal and Quebec City. That is not typical for our company. Typically, when we launch regional service, the fares come down up to 50% and the overall market stimulates up to 70%. That has been true in most of the country. It was not true for that route. We also discontinued another one. The expansion there did not go so well. We never want to do that, but it is a very challenging market for our company.