Good morning, Madam Chair and members of the committee. Thank you very much for the opportunity to be with you today, and welcome to British Columbia.
My name is Sonterra Ross. I am the chief operating officer for the Greater Victoria Harbour Authority. On behalf of GVHA, I would like to commend you on this study you are undertaking. This is very critical for Canada as a whole, but especially here in B.C.
As a coastal province that serves as the country's gateway to Asia, we are in a particularly important position to offer and share valuable perspectives with you in the context of this study.
The Greater Victoria Harbour Authority is a non-profit corporation that owns and operates deep water, marina and upland land holdings in Victoria's harbour. These include Ogden Point, which is Canada's busiest cruise ship port of call.
During the 2017 season, we welcomed 239 ship calls. This year we'll have 245, and next year we're expecting close to 300 ship calls. This represents over $130 million for the local economy in Victoria.
This is only one illustration of just how important the travel and tourism sector, and specifically the cruise business, is to Victoria and also to the well-being of British Columbia.
Any future strategy aimed at maximizing the potential of the western Canadian transportation logistics network must address how to further develop the capacity needed to support the booming cruise business here in British Columbia. Part of this consideration must focus on determining the capital investments required to enable Canada's incredible position as a key international destination for cruise ships.
Furthermore, it must look at the new processes and allowances that will allow the cruise business in B.C. to continue growing. One of these is to offer more U.S. pre-clearance sites.
We at GVHA have developed and are currently realizing our Ogden Point master plan. This is an expansion that will transform Victoria and allow us to capture even more economic benefits from the surging cruise business in British Columbia.
It is important to highlight that this major expansion is currently being done in collaboration with our first nations partners. We have two in Victoria, the Esquimalt First Nation and the Songhees First Nation, each of which has a board seat. They are also founding members of the Greater Victoria Harbour Authority. Partnership with our local first nations has always been of critical importance for us at GVHA, and we look forward to continuing that partnership with them as we realize our master plan.
As you continue your deliberations on the central planks of the future Canadian transportation and logistics strategy, I strongly encourage you to ensure that this plan takes into account the importance of cruises not only to the B.C. economy, but also to the Canadian economy, and what measures and decisions can be taken by government to ensure that this continues to be a profitable business.
Thank you, again, for allowing me to join you today. I am happy to answer any questions you may have.
Thank you very much for giving us the opportunity to appear.
You'll hear a common theme across the port authorities around the importance of ports to the Canadian economy. I'll be brief about the Vancouver Fraser Port Authority. We're responsible, obviously, for the port of Vancouver. Our mandate under the Canada Marine Act is to ensure that port infrastructure is in place to meet Canada's trade objectives, while protecting the environment and considering the impact of port activity on local communities. That, as you can imagine, is becoming increasingly complex as we, like Victoria and Nanaimo, are experiencing tremendous opportunities for our gateways, and thus the Canadian economy.
Vancouver, of course, is the largest port in Canada by a significant margin. For those familiar with the Lower Mainland, our jurisdiction includes Burrard Inlet, the surrounding lands in downtown Vancouver, and much of the Fraser River, totalling 16,000 hectares of water and 1,000 hectares of land.
Interestingly, and significantly, we also have 16 municipalities that we interact with in terms of trying to facilitate that trade, and of course we intersect with the asserted and established territories of several treaty lands of the Coast Salish first nations.
Ports are important, as I've said. One in three dollars in Canada's trade in goods outside North America goes through the port of Vancouver, as well as significant volumes of regional and North American trade.
Capacity is needed. The port of Vancouver, together with other ports, acts as the gateway to Asia, and trade with Asia is expected to continue to grow, in particular with China and India, but many other nations' trade patterns with Canada are also increasing. In 2017, the port of Vancouver handled 142 million tonnes of cargo, up 5% from the prior year. We anticipate that number to reach 200 million within the next decade.
With forecast growth of 4% a year through the port of Vancouver alone this year, and even with all the planned expansions at west coast terminals, additional capacity in our container sector is also required.
A lot has been done to improve the port and surrounding infrastructure to increase capacity, much of it through various federal funding initiatives. We are thankful to have been successful in securing funding from them. With our partners in terminals and other stakeholders, the port has redirected most of the profits of the port authority back into increasing capacity to enable Canada's trade.
There are a number of barriers we're facing with regard to growth that, if left unresolved, will result in economic loss for Canada.
First and foremost, trade-enabling land needs protecting. We're very concerned about the critical shortage of trade-enabling industrial land in the Lower Mainland. Vancouver has the second-lowest availability rate across North America. It's predicted that Vancouver could run out of industrial land supply in the not-too-distant future.
Road and rail capacity constraints require continued focus. Since 2014, the port has been working with the province, the regional transportation authority through TransLink, and the industry to identify bottlenecks in the roads and railways that serve the port. One of the impacts of this has been the ability to extend hours of operation and reduce impact on commuters.
Key focus areas have been the CP Rail Cascade subdivision, servicing the south shore of Burrard Inlet, and, more recently, the joint link section between New Westminster and Burrard Inlet, which serves the North Vancouver terminal complex and also hosts traffic from CN, VIA, Amtrak and Rocky Mountain Rail Tours.
Together, we've submitted funding applications to the federal government, through the national trade corridors fund, for a number of projects that will support Canada's growing trans-Pacific trade and protect the livability of local communities. In the summer, announced more than $200 million for these projects. We are anxious to move forward with them, and we are busy doing so.
We're concerned about the impact that Bill will have on investment in Canada. As a trading nation that aspires to more trade, Canada needs its ports to be ready to manage the increased movement of goods. This, of course, requires increased investment—in our case, usually to develop brownfield sites, to make them more efficient and intensify their operations to handle this emerging trade.
It's critical that environmental reviews of port-related projects be done in a way that protects the environment, first and foremost, but they must also allow for timely development to meet growing trade objectives. One of our concerns is that environmental permitting processes are getting more difficult and certainly more complex and costly, which will make Canada less desirable as a place for investment. As a nation, we need to find a way to protect the environment and make those decisions in a timely way.
Growth continues to put pressure on passenger and freight corridors. We recommend continued investment by Canada to improve road and rail. As commuter passenger numbers increase within the region, we need to look at how we're managing our passenger and cargo rail system. As it stands, we have freight and passenger rail sharing rail lines, which impacts our goods-moving capability and constrains passenger rail opportunities. Because of the growth of the region, both of these things need to be advanced, without prioritizing one over the other.
Turning to efficiency of operations, we recommend that the federal government continue investments made to date through the transportation 2030 program. We have a particular initiative called the supply chain visibility project, which we're working on with Transport Canada. It aims to provide much greater visibility of goods movement from origin to port, to help inform operating decisions, to help collaboration between various stakeholders, and ultimately to identify when bottlenecks require infrastructure investment to be addressed.
We also encourage the federal government to invest in port infrastructure and enable more collaboration with all supply chain partners. The goal is a more efficient and reliable gateway, while reducing the impacts of growing trade on local residents. As I mentioned at the outset, that is becoming more and more complex.
We look forward to your questions this morning, including any questions you have about the port of Vancouver or more generally.
Good morning, Madam Chair. Thank you very much for the invitation to speak here.
The port of Nanaimo is a medium-sized port, of the 18 port authorities that are classed as federal port authorities. Traditionally it was a coal port. It moved on to become a forestry and lumber port, and more recently it has become multi-purpose, simply because people are looking at the island differently than they did many years ago. Everyone considers the island as a place where people go to retire. By way of examples of recent stats in Nanaimo, the population is 90,000 and the average age today is 44.6 years. The average age in British Columbia is 44.1 years. In 2014-15, there was a 27% increase in housing starts in Nanaimo. That is an example of what is going on in the Regional District of Nanaimo and in Vancouver.
One of the big drivers is the cost of living in the Lower Mainland and, as Peter said, the availability of industrial land in the Lower Mainland. There is a lot of industrial land available on the island, as it is 32,000 square kilometres. The cost of land to lease, and the cost of land to buy, is about one tenth of the cost here in the Lower Mainland.
One of the examples of the diversification that we've recently introduced is a vehicle processing centre, which is under construction in Nanaimo. This is to bring cars in from Europe, which are going to be converted or made into Canadian cars: all the software is updated, and all the stickers they want in English and French, etc. That happens in a vehicle processing centre. Those European cars will be shipped back from the island to the Lower Mainland, and eventually into the western provinces. The driver for that was the availability of industrial land right on the water, at an acceptable dollar-per-square-foot rate. That's what drove that project.
We're looking at Duke Point, which is our container terminal and heavy industrial area, where we are feeding products from Vancouver Island to the Lower Mainland for international shipping. A lot of manufacturing is starting to take place on Vancouver Island. There is very limited direct shipping from Vancouver Island to the rest of the world. You have to come into Vancouver, and then you have to move to another ship in Vancouver. Then you go to the rest of the world. Some of the manufacturers have told me that the cost to go from the island to Vancouver is the same as the cost to go from Vancouver to China. That's simply because of the number of times you touch the product. Obviously it adds to the cost of the transportation across the Salish Sea.
We've got to look at this in the future. We're 27 nautical miles away from Vancouver. This morning it took me 20 minutes to fly by helicopter from Nanaimo to downtown Vancouver, and I could probably beat someone to this office today, in comparison to someone coming from Surrey. It's a lot faster for me to come from the island.
I've mentioned to Robin, Peter's boss, that we are complementary to the port of Vancouver, because of our closeness to the Lower Mainland, the availability of skilled workers and the availability of industrial land.
My final point is this. There are 800,000 people living on Vancouver Island today, projected to grow to 1.5 million people. I don't think it's a question of whether we ever have an earthquake; it's a question of when we'll have an earthquake. We have no warehousing on the island. There are two companies that warehouse: Sobeys and Quality Foods, one in Victoria and one in Qualicum Beach. We live in a just-in-time economy. They estimate that fuel, food—even beer and wine—will run out on the island within a week if we're cut off from the Lower Mainland.
We have a growing population. We have a tremendous opportunity to provide more to trade for Canada, yet we are sitting on the edge if there's a major national disaster. If you look at the map of Vancouver Island, you see that one road goes north to south—it's nearly east to west—from Victoria up to Port Hardy. It goes over the Malahat. You've probably heard about the Malahat being cut off by road accidents, etc. You cut that off for a long period of time, and the north of the island doesn't have connections.
As the port of Nanaimo, part of our vision is to actually grow that connection to the Lower Mainland, not simply for trade but also for the future, for emergency purposes.
Thank you very much. I'm looking forward to answering any questions.
Absolutely. On all coasts of Canada, there's appropriate scrutiny of species and impacts on species, particularly those that are endangered.
In the case of the port, we are, as I mentioned previously, advancing the notion of a container terminal at Roberts Bank. There is the southern resident killer whale population out there. The port has been analyzing that ecosystem for the better part of a decade, and I would suggest it's probably the most studied ecosystem in Canada—at least that footprint where the terminal will be.
Additionally, we are performing noise-monitoring trials in partnership with industry, to look at the impact of vessel traffic on the resident killer whale population.
Ultimately, we believe that this particular project can proceed without any detrimental effect to that population. That's the suggestion in our submission to the Canadian Environmental Assessment Agency.
It's not to suggest, once again, that there aren't challenges with regard to maintaining Canada's position from a trade perspective. The timeline to work through these processes is our express concern.
Perhaps I can chime in.
Here's the picture that I would paint. In Canada, when your vessel arrives at the port of Vancouver, you come under the Lions Gate Bridge. If you're entering Burrard Inlet, on the left-hand side is a pile of sulphur and coal. On the right-hand side you have Stanley Park, a bunch of condominiums, and Canada Place. We have done an exceptional job in this country, and in Vancouver in particular, of balancing our underlying trade and industrial activity with preserving the coast for all other users, including the residents here.
That means increasingly being focused on the collaboration that was referred to by another committee member, but it also means investing in innovating and in ensuring that we have timely investment in infrastructure through monitoring programs. I mentioned the visibility program that the port is involved in. Ultimately, that allows us to be confident that we're using the corridors that are preserved for trade as efficiently as possible. That will also point us to when we are exhausting that opportunity and either need to invest capital or do something else. Finally, it helps us demonstrate all the measures we're taking to those local constituents, whether they're concerned about impacts on commuters or other things or about impacts on the environment.
At the port, along with different agencies, including Transport Canada, we're investing in technology, as I mentioned previously, supported strongly by both CN and CP. We believe that's the path forward—being able to demonstrate in the Canadian context that we have a solid focus on the future while demonstrating that we're sensitive to those issues that are appropriate to preserve Vancouver.
At the port of Nanaimo, we are in the fortunate—or unfortunate—position of going through change. We're just removing the last sawmill from our Nanaimo assembly wharf site. It's basically 37 acres of flat land with Helijet on one side and our main office on the other. That's where we're building the vehicle processing centre.
Directly to your question about “tomorrow's port”, we are in the advantageous position to actually introduce technology as we build new infrastructure in our heavy industrial area at Duke Point and in our light industrial area of the Nanaimo assembly wharf. I believe that this is the only way we should be going as ports, introducing technology.
I would use Amazon as a classic case. No one would have thought 10 years ago that you could have something delivered to you tomorrow from Montreal if you ordered by 9 o'clock in the morning. Amazon can do that. That's using technology to get the goods to you very quickly, right to your door. Now they're talking about putting it in the back of your car, because they can electronically unlock your car and leave the parcel for you.
Ports are looking at a very infant stage of blockchain technology. The port of Halifax is working with Maersk on that. As to how blockchain technology would fit and work with us as a port, and whether we would become part of the blockchain technology as a port, that's something that has to be answered, but we have to be moving toward the use of technology to get goods to market. “To market” doesn't mean to Nanaimo or to Vancouver; it means right to the customer's door. That's interconnecting all the modes of transport and connecting them very efficiently.
To really do that, you have to understand what's coming at you well in advance, and you have to be able to electronically transfer that information to the relevant people to make the right decisions before the product actually arrives at the port. We're looking at that. We're learning about it, and we're using the car project as our start.
Thank you, Madam Chair.
Good morning and welcome.
My name is Vance Badawey, and I am from the Niagara region. I want to take this opportunity to preface my comments and my questions by stating that this session is not about me. It's not about my personal interests. It's not about the interests of my riding in Niagara. It's not about political interests. It's simply about business. It's about performance. It's about your interests, your partnership with the federal government and your partnership with the people you work with on a daily basis, your colleagues. Therefore, the direction we're trying to take here is to strengthen our global trade performance by enhancing our logistics and distribution transportation system locally, here in B.C., but equally, if not more importantly, nationally and internationally. I am going to base my questions on that.
When we look at your area and the trade corridor here—which, by the way, is performing very well—we understand that it can perform better, hence the reason we're here.
My first question goes to a comment that Mr. Moir made earlier with respect to integration and looking at really integrating our logistics and distribution system here locally, as well as nationally and internationally. Traceability is a big issue.
With that, what direction or what methods or mechanisms are you putting in place not only to satisfy your individual business plans, but to make them more robust, to enhance them and make more capacity available? What are you doing together?
Mr. Moir, in your comments you mentioned working together and integrating, and therefore everybody performing at a higher level, so what are you doing together?
Second to that question, what can you do—and bringing us in as a federal government, what can we all do to help you along—in that direction, not just for a 5- or 10-year business plan, but a 30- to 50-year business plan well into the future?
That's great that you're doing it here locally. How do we do it nationally?
Mr. Xotta, you mentioned that you are in collaboration with other gateways nationally, for the domestic market but also internationally, as you mentioned Rotterdam. I'm going to hit you with both the transport industry and the cruise ship industry. Not only are we trying to bring people here to this area of the country, but we're trying to bring people to the country. How do we work together to do that, starting in the west and moving to the east?
That's the premise of what I'm trying to get at here. Yes, we have assets here locally in B.C. How do we use those assets to bring in more of the national or domestic and, of course, the international market?
Moving forward, how do we do that? We talked about this in Niagara as well. How do we integrate and bring together our distribution logistics system, as well as our tourism and, in your case, the cruise industry?
Southern Railway of B.C. is a short-line freight operator in Vancouver's Pacific gateway. Like other short-line operators, we provide a first-mile, last-mile switching service to our customers, providing them with a critical transportation link to our class 1 railway partners.
In the case of SRY, we connect with the CN, CP, and BNSF in two locations in the greater Vancouver area, with access to the underutilized international rail crossing at the Huntingdon-Sumas border. This connectivity expands the reach of the class 1 railway into areas of the industrial land base within Vancouver.
SRY's role as a short-line operator is to support the fluid cycle of loaded railcars to their final destination and return the railcar to the class 1 in the shortest amount of time. SRY provides a complementary service to class 1s so they can focus on efficiencies through the major rail corridors. Currently, Southern Railway handles around 69,000 car loads annually, and we have experienced consistent and continual growth on a year-over-year basis.
We anticipate railcar volume to increase over the short term with commodities with focused growth in key sectors, including agriculture commodities; export container stuffing, and particularly in the production of animal feed based in the Fraser Valley; and chemical and fuel transport to support various industries, including support to the pulp and paper industry via SRY's Annacis rail-marine barge loading facility.
We also handle import and domestic vehicle handling via WWS and Hansen's. This comprises Canada's largest auto-handling facility on the west coast.
SRY is also well positioned to take advantage of new short-sea shipping opportunities with access to rail-marine interface.
It's not all positive news on the short-line business model. We are being squeezed from many different sides. We experience the same challenges that face the class 1s in terms of increased government regulation, more stringent environmental regulations and the need for capital infrastructure projects. But short-line operators are on an entirely different economic scale as far as operations are concerned. Government support and financial incentives in the form of capital grants or incentive-based programs specifically designed to help short-line railways are needed. Typically, SRY invests around 12% of its revenue toward projects that are necessary to sustain existing operations in a safe manner.
Targeted short-line funding programs would enable short-lines to spend beyond sustainment and invest in projects that support future growth for the movement of goods both internationally and domestically, address capacity constraints and improve efficiency, and invest in projects that reduce public frustration with railways.
Within the background document provided to the committee, we also refer to other key challenges ahead for short-line railways. As mentioned in the previous panel, preserving industrial land is critical for sustaining the efficient flow of goods through Canada's Pacific gateway. Also concerning is the conversion of land to residential use. Government support in maintaining sufficient proximity between railways and heavy industry from dense residential development is important for reducing public frustration with railways and industry.
We also would like to maintain our competitiveness with other modes of transportation. A short-line railway's largest competitor is trucks, which operate on the publicly funded road network. A modal shift away from rail would increase congestion and maintenance on roadways and increase emissions.
In closing, SRY provides a critical transportation link between local business and the North American rail network. When the short-line rail operator is inefficient, there's a ripple effect across the supply chain, so short-lines must remain aligned with our class 1 partners. Government support would enable short-lines to invest in capital infrastructure projects like bridge upgrades, new signal systems and grade separations, which will help maintain our competitiveness and efficiency. All of these investments would ensure that we don't become the choke point within the system.
It's a pleasure to be here. We're really pleased at TransLink to see the federal government weighing in on this area and looking at us and starting a strategy discussion.
As you're aware, TransLink is the regional transportation authority within metro Vancouver, with the very broad mandate of managing the movement of goods and people on the regional network, which primarily includes the road network, and not the heavy rail network but the interface between them. We represent 21 municipalities, one first nation, and an electoral area in that regard.
For many years TransLink had within our mandate this regional goods movement role that had not really been played, and we have started to fill that in over the last few years. I think there are lessons from this that we can learn from now that the federal government is starting to have a discussion and emphasize and maybe amplify as well.
For many years the gateway council was a very effective voice for regional issues, and continues to be to this day. But in recognition that 60% of heavy truck travel within the region has a local destination, it's not just about gateway infrastructure. It's about understanding the interaction between provincial and federal infrastructure and then local infrastructure, to be able to go end to end on the trips and understand how we efficiently move goods through this region.
The last point can be the real choking point, if you talk to some of our partners, on how one deals with community issues. Mr. Ollmann raised the pieces about land use and residential development within the region. TransLink was set up to play part of that role and I think we need a better conversation with the federal government about how we balance those land use needs and those local transportation needs and community needs for a quieter, safer and healthier goods movement, while making sure we're efficient and effective in doing so.
At the urging of our gateway partners over the last couple of years, about a year ago we came up with our first regional goods movement strategy that looks at what role we play with the regional road network on making sure we're doing our part looking into the future on planned proposed investment, for management of the system, and for partnering on the system, and that we have the infrastructure of partnerships to coordinate on those activities.
I think metro Vancouver is a case study in that regard. The gateway council has been very effective over the years. A Gateway Collaboration Transportation Forum has come together, which includes TransLink, the port, the province and Transport Canada, which identifies the necessary investments and how they work together in bundles.
That's the other piece that TransLink is trying to emphasize. How do we manage both our transport and land use planning? Our sister agency is Metro Vancouver. They look at the industrial land use base and work with the municipalities on ensuring that we have adequate supply, or trying to ensure we have adequate supply. We always say that the best transport plan is a good land use plan, and that is obviously critical in metro Vancouver with our constrained land base and the economic pressures for residential and commercial uses on it.
The final piece of that partnership is not just with the gateway partners, the agencies, but with the railways, our key stakeholders and large businesses as well. We've developed an urban freight council. It would be very good to see the federal government involved in that.
Finally, we will be promoting three ideas for you consider as you go into the strategy. One is an emphasis on funding and supporting plans, not just projects. I know you look at plans, but it's being cognizant of lots of different network plans, whether it be the ports 2050 strategy, TransLink's long-range strategy, or the rail strategy, and how these come together to think holistically so that the sum of the whole is greater than the sum of the parts. That is opposed to doing a project where, if we haven't thought of the interconnected interdependencies, sometimes we don't get the value out of those investments. We want to make sure that the converse is true.
The second piece is supporting and funding really good information so that we have research, we have data analysis, and we're able to make sure that we are effectively monitoring how our investments are doing and what we're trying to achieve. We talk about congestion, but it's really about travel time and travel reliability, how we are adjusting over time and making sure that we are aiming for the right thing.
First things last, I think it is being at the regional table with the partners and understanding what it is that we're trying to achieve, what are our objectives are in terms of goods movement and reliability.
I'm going to stick to my script to make it easier on the translator.
My name is Brad Bodner. I'm director of business development for CN. We appreciate the opportunity to appear before the Standing Committee on Transport, Infrastructure and Communities on the important topic of trade corridors.
CN employs about 24,000 people across North America, transporting more than 250 billion dollars' worth of goods across a North American rail network covering roughly 20,000 route miles. This is Rail Safety Week across Canada and our team of railroaders have been on the ground 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 is continuing to reach millions of Canadians all over the country.
British Columbia, and particularly the Lower Mainland, are an extremely important part of our network. As trade with Asia has grown in importance, the focus on the movement of goods through the west coast ports has grown with it. About 25% of CN's business either enters or departs Canada through the British Columbia ports.
Intermodal traffic—that is, goods moving in containers—is the fastest growing segment of CN's business, with the coming expansion of intermodal terminals in Vancouver and the recently completed expansion of Fairview terminal in Prince Rupert demonstrating the significant increase in this traffic. However, it isn't just intermodal. The majority of bulk products we carry also move through terminals at the ports of Vancouver and Prince Rupert. Grain and coal move through Prince Rupert, while grain, coal, potash and sulphur are among the bulk commodities that move through Vancouver. Vancouver is clearly the preferred gateway for western Canadian grain and speciality crops. Even some grain destined to Europe now moves through Vancouver as the most cost-effective way to reach its destination.
Needless to say, CN and our customers are extremely dependent on efficient operation and timely development of the B.C. ports. CN has been investing on an ongoing basis to ensure we have sufficient capacity to address the growth in business, particularly in western Canada. In 2018, CN is investing approximately $340 million to expand and strengthen its B.C. rail network. The B.C. investments are part of CN's record $3.4-billion capital program for 2018 and include key track expansion projects that will boost capacity, allowing CN to better serve our customers.
In June the Government of Canada announced funding through the national trade corridors fund for two infrastructure projects of great significance to CN and the transportation supply chain in Vancouver. These investments will have a positive impact on CN's capacity in this very busy trade corridor.
These projects, jointly funded by the Government of Canada, CN, and the port of Vancouver, will boost capacity along the rail corridor across the Second Narrows Rail Bridge, linking transportation networks to growing grain, potash, coal and forest products export terminals on Vancouver's north shore. Many of the existing terminals have recently expanded capacity and G3 is currently constructing a new grain terminal on the north shore. This is a significant project as it's the first new grain terminal in Vancouver in many decades and includes a very efficient loop track design, the first on the Canadian west coast. The government also announced funding to expand capacity on the rail line that serves as CN's primary access to DP World's Centerm Terminal and Global Container Terminals' Vanterm Terminal, both of which have expansion plans in the works.
We are very pleased with the government's decision to create an infrastructure fund aimed specifically at trade corridors. The value of this fund is unlike traditional infrastructure funds in that it does not require the participation of a second level of government. This recognizes the reality that much of the value of investing in a corridor, like the corridor to Vancouver's north shore, does not accrue to B.C. or the municipalities, but rather to Saskatchewan and Alberta, whose grain, coal and potash make up the majority of the traffic that depends on the corridor to reach its market.
Going forward there are still many bottlenecks that need to be addressed in order to grow capacity in the Lower Mainland. One key project that needs to move forward is the replacement of the Fraser River bridge. This bridge, which is owned by Public Services and Procurement Canada and operated by CN, is over 100 years old. It is regularly used by six railways, three freight and three passenger, totalling some 40 trains per day. It is an old-style swing bridge, open eight hours a day for marine traffic and with very little capacity for the new volumes associated with the terminal expansions planned or under way. This bridge needs to be replaced and it will be both expensive and complex to do so. We encourage the government to move forward on this project in a timely manner.
Canadian exporters and importers depend on a reliable and efficient supply chain in order to remain competitive on the global stage. The Vancouver gateway is a key part of that supply chain. Continued investment and the ability to grow and adapt to meet the changing needs of customers are essential in order to enable Vancouver, as well as Prince Rupert and other Canadian ports, to meet the growing needs of Canadian businesses.
Thank you, Madam Chair. It's a pleasure to be here this morning.
My name is James Clements. I'm CP's vice-president of strategic planning and transportation services. CP is pleased that your committee is studying the efficiency of Canada's trade corridors.
CP's transcontinental rail network across North America is a critical component of the supply chain that connects Canada's exporters with international markets and consumers with goods. Two-thirds of our traffic crosses the border. Thirty per cent of that traffic crosses the Canada-U.S. border, including in the Niagara region—where you were the other day—into Buffalo. A further 37% is imports or exports for Asia or Europe through the Canadian ports.
As international trade increases, our transportation systems throughout North America must develop the capacity to handle growing freight volumes. This includes export-driven demand for Canada's natural resources, such as grain, forest products, coal, potash and energy products, as well as import-driven demand from consumers.
CP has been investing significantly to expand the capacity and efficiency of our rail network, especially in the critical trade corridors, such as the one through the Rocky Mountains from Calgary to Vancouver.
Since 2012, CP has invested nearly $9.5 billion in our infrastructure to improve safety, service and throughput. Over this time, our capital investments have outpaced our growth in demand. This year alone, we are investing more than $1.5 billion to replace basic infrastructure, upgrade the network and expand capacity. In particular, we're focused on capacity and efficiency improvements in the grain supply chain.
We have announced that we are investing half a billion dollars to purchase 5,900 new high-capacity grain hoppers, which will replace the aging low-capacity government hopper cars. The new hoppers will handle 15% greater volume and 10% greater weight while featuring a shorter car body that allows more cars in the same train length.
In collaboration with our customers, we're also developing expanded train lengths of 8,500 feet. Those trains will haul 20% more grain than the current 7,000-foot train model we use to move grain and, when combined with hopper cars, represents 44% more grain per train.
The efficiency gains will yield real improvements in the efficiency and capacity of the grain supply chain, a critical element of Canada's trade corridors.
That said, Canada's trade corridors face future challenges. Looking at grain in particular, our railroad meets the market demand everywhere except the critical gateway of the port of Vancouver. There, the railway is sized to the overall supply chain capacity. There's simply more market demand through Vancouver than there is capacity in the supply chain to accommodate the grain traffic. The supply chain through Vancouver is constrained by terminal capacity, the impacts of inclement weather and the operational complexity of the railways, including having to manage around the West Coast Express commuter rail operations.
We are pleased that the government has announced funding under the national trade corridors fund for important grade separations at the Vancouver Intermodal Terminal in Pitt Meadows and the 50th street overpass in Lambton Park Yard in Edmonton. These projects will help alleviate congestion in the rail system. I give the government credit for committing these funds to these projects.
However, federal infrastructure programs in general need to continue to be targeted to support trade-enabling infrastructure, as this is critical to achieving the efficiency gains in Canada's trade corridors.
We recognize that there are political pressures from other levels of government for the finite infrastructure dollars, but the fact remains that the federal government is uniquely positioned to concentrate infrastructure investments on projects that will generate material gains for Canada's national economic needs. We strongly recommend that future federal government programs focus on this trade-enabling infrastructure and include consideration of the separation of freight and commuter operations in the Lower Mainland.
Finally, it is worth noting that the goal of achieving more efficient trade corridors is undermined by federal policy-making that favours additional regulatory interventions in the marketplace and the imposition of significant new requirements for major projects that fall under federal jurisdiction, such as those proposed in Bill . An overbearing regulatory environment constrains the supply chain and the market's ability to build the infrastructure needed to accommodate market demand.
Thank you for your time this morning.
Thank you, Madam Chair.
I'm going to really drill down on the—for lack of a better word—regional network. As you know, the trade corridors fund is being proposed. With that, the beneficiaries of that fund are going to be those who attach themselves to a broader trade corridor strategy.
I want to start off with Mr. Ollmann with the short-line operators, because you're probably the one who's most in need of that capital funding. The question is going to be broader to all four of you.
How are you folks working together more as a regional network to then be part of a broader local, national and even international trade corridor strategy, therefore creating net benefits from that partnership and/or the contributions from the trade corridor fund to then manage your assets and self-fund your capital projects through healthier, more disciplined annual operational contributions?
I'm sure CN gets that, because you try to do that every year. A lot of times you're strapped, and I'm sure, Mr. Ollmann, that you're definitely strapped.
First, how are you working together to create that network, that strategy? Second, how are you working together to have that ability to tap into that trade corridors fund because of the more networked environment you're creating versus the individual environment?
Thank you, Madam Chair.
I will not repeat the question that I asked earlier regarding the number of accidents. That said, to not leave you in the lurch, I found the quote that my question was based on from the Transportation Safety Board report. It reads as follows: "In 2017, 1,090 railway accidents were reported to the TSB, a 21% increase over 2016".
I imagine that you will have the opportunity, outside this Committee, to explain to me the difference between the TSB vision and your own. In your case, the numbers have decreased, which is good news. In fact, if there are fewer accidents in your case, that is positive, but how do you explain the difference between the two visions?
Mr. Clements, you said that, in future funding programs for these corridors, projects involving the transportation of goods and the transportation of passengers must be separated.
Are we at a point where growth will involve two different rail networks? In other words, will railways be established that are reserved for the transportation of passengers and others dedicated to the transportation of goods, rather than letting them share the rail systems?
I will do my best, Madam Chair, to do it in five minutes.
Thank you, Madam Chair and members of the committee, for letting me testify here today on behalf of the BNSF Railway Company.
We are the largest private freight railroad in the world. We are headquartered in Fort Worth, Texas, and are a wholly owned subsidiary of Berkshire Hathaway, but have been a part of—and the third—class 1 carriers in British Columbia and in Canada since we came to British Columbia in 1909. We serve several provinces in Canada, and it is a critically important part of our network and our business.
I'd like to say a bit about myself. I'm an executive vice-president with BNSF. In my prior lifetime, I was the chairman of the U.S. Surface Transportation Board, which is the equivalent of the Canadian Transportation Association. Before that, I was the chief counsel of the U.S. House transportation committee, which is this committee's counterpart in the United States House of Representatives. I've testified many times in the United States but never in Canada. I appreciate the opportunity to be here today to talk to you a little about our railroad.
We very much applaud you for looking at the importance of trade corridors and international trade. For our company, international trade is a critical part of what we do. We are the third class 1 in Canada. We provide the port of Vancouver with its critical three class 1 railroads serving the rest of North America.
We work great hand in hand with our counterparts in Canada—the Canadian National and the Canadian Pacific, which were here earlier. We find those to be fine companies and we enjoy working them. We also feel that, in addition to the service that they can provide, our company can provide an expanded network within the United States, which provides a competitive advantage for the port of Vancouver.
Our footprint is vast. We have 52,000 kilometres of tracks—so 33,000 miles. Of that, of course, only 38 kilometres is in British Columbia, but that allows us to connect to the rest of our network in 28 states and across the United States.
In our experience, the Canadian government's public policy support for trade and trade corridors is something that is a real competitive advantage here. We serve every major port on the Pacific and west coast of North America. We very much admire the public policy initiatives that you all have to recognize the importance of trade at a national and local level, with the private sector and communities working together to be able to mitigate the impact of trade and to be able to invest in corridors for trade. That is something that we appreciate having been a part of and is a real differentiator, in our experience, from the ports in the United States. This gives Canada a great advantage.
It's our goal to continue to serve here and to be able to be a part of the market. We've made investments in our line to be able to expand in the Vancouver area. We are committed to safely operating. We are committed to investing in our system. At our company we have made some of the largest capital investments that any freight railroad has ever made in their network. We think that shows in our unparalleled safety record, particularly in terms of equipment costs, derailments, the condition of our track and the condition of our network.
As I promised, Madam Chair, I would be brief and finish before my five minutes.
Thank you for the opportunity to be here. I look forward to answering questions from the members of the committee and from all of the stakeholders who are here. We very much want to continue to be a part of trade in Canada and international trade out of the Vancouver metropolitan area.
With that, thank you.
Good morning, Madam Chair, and members of the committee. Welcome to Vancouver.
On behalf of GCT, Global Container Terminals, I would like to thank you for the opportunity to appear before you today as you undertake this important study on Canadian transportation and logistics strategy, and in particular as you look at western Canadian trade corridors.
Given the multitude of issues—market trends, policy matters, both domestic and international—that are currently facing the transportation supply chain, your study is timely and we welcome it.
Global Container Terminals operates in the heart of Canada's Pacific gateway. We are the country's primary link to trade and commerce with Asia. Not only are we the anchor tenant in the port of Vancouver, we're also the largest container terminal operator in Canada, and indeed the largest maritime employer in the country. We're proudly headquartered here in Vancouver, and we are privately owned by Canadian pension funds.
Global Container Terminals has been a proponent and investor in critical western Canadian port infrastructure for over a hundred years. We also own two terminals in the United States, in the Port of New York and New Jersey: GCT New York, and GCT Bayonne. We have a long history as an economic contributor and wealth generator, in this province in particular. We are committed to Canada, and our current and future planned investments in port of Vancouver will help improve and expand the country's trading capacity as well as our global competitiveness.
We are well positioned to support the right growth strategies needed to meet Canada's trade and capacity demands, while at the same time ensuring best-in-class customer service and being a responsible environmental steward. On this latter point, it is worth emphasizing that Global Container Terminals is committed to continuing to enhance our environmental performance through ongoing innovations in the way we operate, as well as through smart development, namely, growing our company's business by densifying our existing terminals' footprints first.
This commitment continues to be recognized. For example, we were awarded Canada's Clean50 Top15 Projects award for 2017, and have received recognition from Green Marine for our leading results in environmental performance. Most recently, we certified with the Climate Smart program, which is being advanced by the Vancouver Fraser Port Authority. We were awarded the Green Business of the Year Award by the Delta Chamber of Commerce. We were also recently recognized by CN Rail's EcoConnexion partner's award for 2018.
We are proud of these accomplishments, and we will continue to embed sustainability in all our operations and decision-making going forward.
Like other marine transportation operators in B.C., GCT is focused on running the most efficient business we can, while growing volumes. Our ability to do so, and thereby enabling western Canadian trade corridors to perform to their fullest extent, is largely predicated on a reputation of reliability, predictability and consistency across all facets of the supply chain in which we operate. Reliable relationships with our suppliers and commercial partners, honest and good faith collaboration with our landlord and regulator, and a level playing field for developing sustainable and affordable capacity are all key elements required for fully optimizing Canada's western trade corridor.
As Canada's trade relationships continue to diversify, it is critically important, both in the short and long term, that we fully maximize access to those markets. In order to build the strongest trade corridor possible, we strongly encourage the Government of Canada to continue focusing on making the most strategic and informed capital investments in key western Canadian port infrastructure as well as in the marine environment.
These investment decisions should be made through collaborative frameworks like the Gateway Transportation Collaboration Forum, and be based upon informed input from relevant industry stakeholders. They should include suitable funding mechanisms, and fully leverage B.C.'s trade potential by investing in prioritized common user projects that have demonstrated support from the private sector. If these investments are not made based on these principles, they will not generate positive results that benefit the supply chain as a whole.
We welcome the committee's engagement on these important matters and look forward to seeing the culmination of your work.
Thank you again for your time, and of course I welcome any questions.
Why Rob Booker and why Neptune? I'll give two quick answers to that.
I have my third career in front of me. All my years have been related to export: mining, a career in longshore as a unionized person, and finally in management and the development of port and terminal growth.
Why Neptune? Neptune is on the north shore. If you get the opportunity, please come and visit us. Marko has talked a little about density and intensity. We have 29 hectares, a little less than 3% of the port land area. We will handle 11% of the volume this year. We will be $4 billion of export for Canada this year. We are exclusively Canadian. Everything we receive is mined in Canada and exported for Canada. Every job associated with that is a Canadian job. It's a taxed job in Canada. It is all by rail. We do no trucking. We are 100% on rail.
Out of the many presentations you will hear today, eight of them directly impact our ability to compete or operate. The port of Vancouver, the railways, the port authority, the pilots—six others indirectly impact. If the Port of Nanaimo this morning decides there will be no more anchorages for the port of Vancouver, I'm in trouble, as a business. The interconnection in logistics is massive.
Our experience with the federal government and infrastructure has been exceptional. The north shore trade area was ready to go in 2008-09, and finished $400 million of work with the port. The federal government put up $268 million of that $400 million. Industry will put up the remaining $232 million. Neptune will be responsible for $120 million of that payback for that infrastructure in the end.
Out of that $400-million investment on the north shore, a billion dollars in infrastructure was built. That was round one. When you hear about G3.... Peter Xotta hates it when I say this. He's talked about the port of Vancouver being the largest port on the west coast and the largest port in Canada. The north shore alone, if the rest of it fell into the ocean—and the earthquake people hate it when I say that—we would still be the largest port in Canada, just that string of terminals along the north shore. When CN and CP talk about the intensity of rail activity to the north shore, that's a piece of that.
Neptune alone is responsible for 400 direct jobs in Vancouver. Those jobs pay well enough to allow you to buy a house here. That's no small feat. The indirect jobs associated with us as a primary outlay are about 20:1. Mines, rails—all those indirect jobs are fabulous.
Where do we go next?
We're excited about the current proposed round of funding. Much of that is beyond the north shore, but it facilitates access to the terminal. That's great news. It answers an immediate concern. We're investing $500 million. CN and CP talked to you today about investing $340 million. We're in a two-year, $500-million investment process to take our terminal capacity to 30 million tonnes. Today we're exporting 17 million tonnes. By the end of 2020, we expect to be exporting between 28 and 30 million tonnes through Neptune. That's a growth of 160,000 railcars annually to almost 320,000 railcars annually, and from 300 ships a year to 650 ships a year, through 3% of the footprint, or 29 hectares. It will double our impact on the economy—close to $10 billion by 2021.
The challenge in front of you.... I'm afraid you have the unlimited problem. You have the end of unlimited rail capacity. During my entire career I've been the beneficiary of that, but I think you've heard today that that's coming to an end. It doesn't exist. We've had the benefit of unlimited industrial land. That's coming to an end. You also have the benefit of unlimited demand for Canadian products—unlimited demand for Canadian grain, unlimited demand for Canadian potash, unlimited demand for Canadian steelmaking coal.
It's a difficult task. You've been challenged with current capacity issues, and you've heard some long-term capacity issues. I think there are significantly different strategies required to address this. Should significant damage to the rail bridge occur, we would be in significant trouble economically.
I'll close with that.
I was thinking about that very well-posed question.
Given our experience in Canada and our experience in the United States, do we see any part of the United States that would have regulatory lessons for Canada? I was thinking to myself, can I even think of one? There are some that go both ways.
I would say that in terms of the permitting and right-of-way maintenance process, there are some procedures for categorical exclusions, let's say, from environmental review. They take maintenance practices that are happening routinely and repeatedly over and over again and say that they'll just review those once and determine that they don't need individual reviews.
We're a very capital-intensive business, as you heard from CN and CP. Even for our investment of $50 million, which we've done in our 38 kilometres here in British Columbia, the ability to receive regulatory approval to be able to act on those is important.
That's one place where I confess that I don't know if Canada has the same if you look at the long-haul carriers, but that's a place where, when the U.S. regulators are being co-operative, things can work very well for approval to work on our tracks.
Mr. Vance Badawey: No, not in Niagara, but up here in this area.
Mr. Roger Nober: Obviously, we believe strongly that the public-private partnership model that the Canadian federal government has followed for development of trade corridors has been of benefit to the communities. It's been of benefit to the carriers. It's been of benefit to increasing trade.
With respect to a specific bridge or a specific project, I'd have to think about that a little bit, but in terms of the general model, though, when you provide public-private partnerships to help fund necessary infrastructure, as member Hardie was just speaking of a minute ago, to help handle community impacts, that is a model that we strongly advocate the United States follow Canada on because that has really worked to help increase trade, and we know that would ultimately have an impact.
Once our line gets south of the metro area and toward the border and into the United States, we've improved its infrastructure by notching the tunnel in Bellingham to be able to handle double-stacked containers. But as folks on the last panel and this one have said, congestion in downtown and in near-town Vancouver is a concern, particularly with added traffic. That's a place where we think the federal government could show real leadership.
The main reason why we're down here is to solidify, establish, a more formalized trade corridor strategy. With that, that strategy would attach itself to the region obviously here in B.C., but equally, if not more importantly, to the domestic market, to the national market and to the international market. With that said, what we count on as a take-away from this session is to establish a dialogue and communication with all the partners.
My question to all three of you is this. Do you have that dialogue now happening regionally? Secondly, is it advantageous for you and is it doable for you to actually carry on that dialogue with your partners at the federal and hopefully the provincial—if they would be willing to participate—levels of government, to then, therefore, more formalize a domestic, national, as well as international trade corridor strategy?
Following that, quite frankly, what it gives us a better ability to recognize is where ultimately the trade corridor funding would go for a long-term plan, and therefore, better returns.
I'm calling the meeting back to order.
Thank you all very much.
Now with us from the BC Marine Terminal Operators Association—Marko has decided to stay, he liked it so much—we have Brad Eshleman, who is the Chair. We also have, from the Canadian Ferry Association, Serge Buy, the Chief Executive Officer, and from the Port Alberni Port Authority, we have Zoran Knezevic, President and Chief Executive Officer.
Welcome. We're happy to have all of you here.
Mr. Buy, would you like to start? You have five minutes, please, and when I raise my hand, they'll cut you off.
We would love to hear your comments.
That sounds good. Thank you, Madam Chair. The clerk must have mentioned it a number of times to us, so I'm cognizant of the time.
We are the national voice of the passenger vessels sector in Canada, and our members include ferry operators from across the country: provincial governments, municipalities, indigenous organizations, and private corporations. We range from small operators bringing trucks and cars to remote communities to BC Ferries, one of the largest ferry operators in the world.
Every day across the country, Canadian ferries bring people to work, tourists to their destinations, and goods to market. They are an integral component of Canada's transportation infrastructure and an essential service for many living in remote communities.
Annually, our sector transports more than 53 million passengers in 21 million vehicles. Often overlooked is the considerable amount of goods that are transported aboard Canada's ferries, worth billions of dollars annually. For example, Marine Atlantic annually transports more than 100,000 commercial units and accounts for more than 50% of all the goods shipped to Newfoundland. In fact, when sailings are delayed due to weather, communities across the province experience food shortages.
Similarly, the BC Ferries service is fundamental for those on Vancouver Island or in remote or indigenous communities throughout the Inside Passage, Gulf Islands, and Haida Gwaii. Put simply, it's how all goods, foods, supplies, and fuel reach those communities.
Given the unique nature of ferry vessels, we believe that our sector is well placed to help the federal government to achieve its goals under the transportation 2030 plan if steps are taken to allow us to reach our full potential.
Currently there are many government programs that support a wide range of activities related to the marine and transportation sectors. However, the criteria for some of those programs are too restrictive and do not account for the realities of marine transportation. As an example, there are support programs that are available for passenger-only transportation and others for goods-only transportation. The reality is that ferry vessels often transport both goods and passengers together, making us ineligible to apply to any of those infrastructure programs. This is an easily corrected problem that is putting certain remote communities at an unfair disadvantage. Changing the criteria for those support programs would allow for more efficient transportation of goods to communities across the country and a more optimized transportation system as a whole.
This government has taken historic steps to support research in many ways and across many sectors. However, we believe that innovation in marine transportation is one area that is lacking. As an example, there are over 1,800 Canada research chairs across a variety of disciplines, but not one related to marine transportation.
Canada, and indeed Vancouver, is home to many world-leading companies that are undertaking research and development projects, ones that are aimed at reducing vessel noise and carbon emissions, making travel more efficient and more. As the transportation 2030 initiative lays out a plan supporting innovative technologies, our sector believes this is an opportunity to support those Canadian innovations and the marine transportation system as a whole.
By offering more support for sector-wide research, including naming a related Canada research chair, the federal government will be giving our sector the tools it needs to make our transportation system more efficient.
Thank you, Madam Chair.
Thank you very much for having us here today.
My name is Brad Eshleman. I'm the Chair of the B.C. Marine Terminal Operators Association. We represent all the major export and import terminals on the west coast of Canada, handling over 120 million tonnes annually and virtually 100% of the trade on and off deep-sea vessels on the west coast of Canada.
We were established in 1963, so we have a long history on the west coast. Our mandate is to improve the economic and environmental viability of B.C. marine terminals and invest in and promote the value of the port industry to local communities, the province and the nation. We're very engaged in our local communities. We're engaged with first nations in all the ports we operate in. Our members are also significant sponsors of local charities and community events and those in need in our community.
Investment in our terminal capacity has been the primary objective of our members over the last number of years. In addition to the jobs that we've created, we've invested over $3 billion in the last eight years. We have $3 billion in invested in terminal capacity, and we have potential future investments of over $5 billion. This has all been enabled through the support of government investments in trade corridor infrastructure and the B.C. Ports Property Tax Act, and it's through private industry.
What this has resulted in is the creation of family-sustaining jobs. The longshore hours of work have increased from approximately six million hours in 2008 to a projected nine million in 2018. That's a 50% increase in hours. These investments have resulted in an increase of over 2,000 family-sustaining jobs throughout the marine industry alone. These jobs come with good pensions and good health benefits.
I have some comments for the committee. The west coast is Canada's gateway for western Canada's commodities to the world. Terminals play a central role in driving innovations and capacity, given their position as a convergent point in the supply chain. We have demonstrated significant success in working together. Governments, with private industry, have joined to expand Canada's trade capacity to the world with the investments that the federal government has made in the trade corridors and that the private industries have made.
However, there are a number of areas that we need to focus on to continue this success. One is that further investments are needed by governments to address bottlenecks in the trade corridors. This requires a coordinated approach with input from industry stakeholders to ensure that maximum benefit is derived to increase capacity.
Another one is preserving and creating new terminal capacity. Terminal land with deep water, road access, and rail access is in short supply on the west coast. Continued investments by terminal operators to create capacity is required to meet our trade demands. Canada's current regulatory environment seems to be creating more obstacles to investment rather than a clearer path. This is obviously a concern to the terminals that are investing to help handle those goods for Canada's trade to the world.
I know there is a current review going on with respect to environmental reviews and how we're going to handle those in the future, and I would ask that the federal government be mindful of that, as bringing terminal investment forward in a timely basis is critical for that investment to happen.
You will note that there is a grain terminal being built in Vancouver right now called G3. It will be the most efficient grain terminal on the west coast of North America, handling over eight to 10 million tonnes annually. This investment, if it had been delayed in environmental regulatory processes for a lengthy time, likely would not have occurred. The panel needs to be aware of that.
Another item is addressing competitiveness and productivity issues. It's important we work with labour to improve the efficiency of our transportation systems or risk being non-competitive with other ports in the world market. We must recognize that people are the central consideration to the marine sector's ability to support the economy and the reliability of our country's supply chains. It is important that we be viewed as an efficient and reliable port of call for shipping companies to compare and call and pick up or drop off goods.
We're currently reviewing labour availability. It has been an issue with respect to our industry. Right now we have increased capacity, so it creates strains on our system.
Labour practice is under review. We're currently negotiating a collective agreement with our labour partners, which is going well right now. However, we do not want to see a slowdown or labour disruption in the future, as that goes to the credibility of our trade and our ports in the world's eyes.
We are located in the heart of Vancouver Island, at the end of the long inlet—or deep, natural fjord—open to the Pacific Ocean. We do have a lot of answers to the concerns and problems that we are facing today, especially with the project that we are proposing to develop, a large container terminal in the Port Alberni Inlet to be used as a transshipment hub to help alleviate congestion in the Lower Mainland.
To elaborate more, each cargo ship passes in front of the Alberni Inlet when it's on its way out of the Salish Sea area. Then each cargo ship goes to Seattle to offload and load cargo and then goes to Vancouver to do the same thing, and a week or so later passes by on its way back to Asia. Once the cargo is offloaded on the Lower Mainland, it gets put on a truck that goes up and down the city streets and creates congestion and problems with traffic and commuters.
Furthermore, we are moving a lot of cargo by rail as well. Alberta is a bit of a culprit in that too. It moves a lot of cargo to distribution centres in Calgary and Edmonton to be offloaded, and then the empty containers are brought back, congesting our railway to a degree. Those distribution centres have been moved to Calgary and Edmonton because of the lack of space and the cost of a warehouse, which is quite high in the Lower Mainland.
Essentially, we are proposing to create a large hub and then sort out the cargo and deliver that cargo by barge to the closest point to the end-user, at the same time alleviating congestion on the road and bringing that cargo up the Fraser River to Port Kells, to Annacis Island, right next to the warehouse. This would minimize the truck traffic and impact on the community. It would also deliver a full trainload to Deltaport and Vanterm terminals that was destined for eastern Canada, and essentially unload the full train directly from the barge, increasing optimization and efficiency.
At the same time, we will be able to open up Vancouver Island, which my colleague this morning mentioned, is growing in population. Right now, the population of Vancouver Island is about 800,000 people. We are expecting to grow, as the CEO of the Port of Nanaimo mentioned, to 1.5 million. It's a large population base on its own. Just to compare, that is one-third of the Lower Mainland. It's larger than three eastern Canadian provinces. If we grow to 1.5 million, we'll probably surpass Saskatchewan and Nova Scotia in population. All our goods and everything we produce or consume has to go via the Lower Mainland, which creates congestion in the Lower Mainland on road and rail, and doesn't allow direct access to the international market for the businesses and companies we have on Vancouver Island.
The PATH project, or the Port Alberni trans-shipment hub will essentially help alleviate a lot of those problems both environmentally and economically. It will help alleviate road and rail congestion as well.
Yes, of course. I am also putting on my cellphone, so I'll be looking at that even though in my brief, too, we have tried to cap this.
My name is Gagan Singh. I am spokesperson for the United Truckers Association. The short term is UTA. We help a total of almost 1,100 people. A few of those are owner-operators and a few of them are company drivers. The total impact is approximately 10,200 direct jobs and over $2.75 billion in economic impact. I am here today because of the Catch-22 that our organization has faced over the last four years. We don't understand where we stand—where we are starting from and to where we are reaching. We have the same terms and we don't understand where we stand.
In March 2014 there was a big strike, which was ended by a 14-point joint action plan signed by the Government of Canada, the B.C. Government, the port of Vancouver, UTA, and Unifor, who were partners in that. Today, more than four years later, several commitments in the agreement have still not been lived up to, even four years after that date. For example, the wait time fee, which was supposed to be paid out to our truckers at the designated points, is not being paid out. As of today, the points specified in the agreement have never come into effect.
Our organization is concerned with the lack of accountability that exists for any issues regarding the port of Vancouver. The Office of the BC Container Trucking Commissioner, which is an entity run totally by the Government of British Columbia, is doing a tremendous job.
When we speak to our local members of Parliament—and I know that the honourable Mr. Ken Hardie is also sitting here—I do believe that probably their hands are tied because the port is run in the federal jurisdiction but it does its work independently.
Finally, our communications with the port of Vancouver are for the most part unsatisfactory with regard to the policy changes. We are a major part of the joint action plan for 2014, but most of the policy changes are not communicated to us.
We have reported incidents of harassment, and no action has been taken. Most recently the UTA was threatened in a letter for alleged actions that our members are not responsible for. Sometimes our company owners are threatened with losing their licence if they raise their voice, which is clearly to bring down our voice, even though we are in the 21st century in a country like Canada.
Last, UTA stakeholder organizations rely on the facilities operated under the jurisdiction of the port of metro Vancouver, but we are facing a black hole when it comes to accountability.
If you have any questions, I am happy to answer them. In my brief, on the second page, there are some bullet points.
That's a fairly large subject, so I'll probably keep my comments somewhat brief and to specific areas.
On the rail side, there are some rail efficiencies that need to be driven into the system with respect to the movement of cargo. A lot of that has to do right now with crewing sizes, boxcar availability, and some of those things.
Some of the products coming to our terminal will be coming by truck from Prince George or Celgar or different areas in Alberta, rather than by rail. That is very inefficient movement of, principally, pulp products or forestry products, which normally come by rail but are coming by truck now because of boxcar capacity or crew capacity issues. That's just one example.
At the local level, road congestion obviously is a factor that affects Mr. Singh's drivers also. How to open up cargo movement corridors is probably something that could be looked at.
Those are just two examples on the efficiency side.
The way the volumes or the container traffic moves through the port of Vancouver, or at least to my knowledge.... Let's use the example of 10 containers coming in.
The port of Vancouver has a fairly balanced trade, in and out. They move about 3 million TEUs annually. Ten containers come in, and approximately seven of those depart by rail to Toronto, Montreal, the eastern provinces, Calgary, or Edmonton, and three stay locally. The three that stay locally essentially go to the warehouses and distribution centres in the Lower Mainland, get emptied, and then are loaded back.
Out of those seven that go to eastern Canada, four of them come back empty. They are to be loaded back onto the ship, because ships do need to have a balance. Four of them come back empty and three are loaded. Three essentially come back loaded to the terminal. The four of them that come back empty may stop at Ashcroft, which has a good potential, but the volume Ashcroft can produce is fairly small, so the majority come back to the Lower Mainland empty—I'd say three of those. Then they get trucked out from the container terminal into the community to pick up a cargo, because what the shippers want to do is ship cargo from Port Alberni that comes on a flatbed truck to a warehouse in Surrey. They want to put lumber in that container and ship it back to Asia, because they need those containers back in Asia to be loaded with TVs and goods that we need here for North America, in order to keep a balanced trade.
We don't have a trade balance with Asia; essentially we import more, so now we find a cargo convenient to ship back. Nanaimo's CEO mentioned this morning that it costs more to ship from Vancouver Island to the Lower Mainland than from Vancouver to Asia. It is actually cheaper to ship from Vancouver to Asia than from Nanaimo to the Lower Mainland. It's $900 for a 40-foot container to be shipped from Vancouver Island, and it's $600 for that same container of lumber for ocean freight going back.
Thank you, Madam Chair.
I have to say that I've had the pleasure of working with some of you in the past, especially Zoran, with the port authorities, and stretching out from Halifax all the way down here to the west and everything in between.
My question is going to be relative to that, because I've been harping all day on the need for national collaboration—regionally, of course, but nationally and to some extent even internationally.
With that, I'm going to give you the opportunity, Zoran, to speak about some of the initiatives that the port authorities are collaborating toward right now, especially related to integrating the logistics and distribution system across Canada and, of course, into the international markets.
I only have three minutes, so I'm going to try to get some comments from anyone who wants to comment, but I want to start with Mr. Eshleman.
We see the environmental extremists lighting their hair on fire relative to the exportation of bitumen or oil out of the west coast. I see Kinder Morgan is one of your members. We had testimony when we were in the St. Lawrence Seaway area that if these extremists were really concerned about what is being shipped today, they would be astounded with the kinds of stuff that goes on boats. That isn't on a double-hull boat, for starters, so if anything every happened, it would be catastrophic, and yet it ships safely.
Could you make some comments on that?
The other thing, if you could make a comment on it, is it's my understanding that even though we as Canada have decided we don't want to burn coal anymore, coal shipments, especially from Alberta, going through your port here in Vancouver are increasing dramatically and going to Asia, where they're burning the same coal that we could be burning here. I would just like a couple of comments on how we could be shooting ourselves in the foot.
I call the meeting to order.
We have with us the Canada Border Services Agency. Roslyn MacVicar is Regional Director General of the Pacific region.
Welcome. We're pleased to see you.
From the Chamber of Shipping, we have Robert Lewis-Manning, President, and Bonnie Gee, Vice-President.
From British Columbia Coast Pilots Ltd., we have Captain Roy Haakonson, President, and Captain Robin Stewart, Vice-President.
Welcome to all of you. Again, our apologies for keeping you waiting. Thank you very much.
Who would like to start?
Go ahead, Ms. MacVicar, please.
Good afternoon, Madam Chair and members of the committee. My name is Roslyn MacVicar, and I am the regional director general for the Canada Border Services Agency in the Pacific region. I'd like to thank you for giving me this opportunity to provide an overview of our operations here in the Pacific region.
As you heard from colleagues in Ontario, the CBSA's mission is to ensure the security and prosperity of Canada by managing the access of people and goods to and from Canada. Here within the Pacific region, which is inclusive of British Columbia and the Yukon, approximately 1,900 employees ensure that this mission is achieved in all modes. That includes air, rail, highway, postal, and marine.
In 2017 our staff were responsible for processing 23 million travellers, eight million vehicles, 2.2 million commercial releases, 44 million courier shipments, and almost 37 million pieces of international mail.
Tomorrow you will tour the Metro Vancouver marine operations, an area that encompasses the largest marine port in Canada. It is responsible for the clearance of commercial vessels and goods, cruise ships, and personal vessels. Marine operations will conduct examinations of marine vessels, travellers and crew, inbound and outbound marine containers, and non-containerized commodities. Operations focus primarily on enforcement, analysis, inspection and monitoring of activities in the third-largest port, by tonnage, in the Americas.
More than three million containers pass through the port of Vancouver every year, and more than 142 million metric tons of goods are risk-assessed and controlled by the CBSA in the Vancouver area. Total volumes through the Pacific region account for 57% of marine container freight in Canada.
The second stop on your tour will be at the Pacific Highway District. This district is located in the Lower Mainland of southwest British Columbia across the 49th parallel from the state of Washington, and it's on the direct path between the two major cities of Seattle and Vancouver. The district, which includes five border crossings, stretches from the Pacific Ocean to the central Fraser Valley, and is a key North American portal for travellers and goods entering Canada through the Cascade gateway region. With an average of more than 11 million travellers and over one million commercial releases per year, the district is the primary corridor for western Canada land border trade and travel.
This vital trade corridor alone is estimated to facilitate over $68 million every day in cross-border trade. In all modes, the CBSA's risk assessment, targeting, and examination phases play an important role in the overall commercial facilitation and enforcement process.
While the Customs Act authorizes the CBSA to conduct examinations of commercial shipments, our staff consider commerce and trade requirements and the need to comply with regulations while ensuring safety and security of Canadians.
The CBSA's marine and highway commercial examination programs are necessary to support national security and public safety priorities. Examinations control the movement of goods suspected of national security threats, contraband smuggling, other government department controls, commercial compliance, and revenue collection. Nationally, that equated to over $30 billion in duties and taxes in fiscal year 2017-18, which was approximately 11% of Government of Canada revenue for that same period.
The CBSA is cognizant of the economic impact that examinations may have on importers and exporters. We strive to maintain that delicate balance between ensuring security while all the time facilitating the free flow of goods.
A variety of tools are employed to identify any potential contraband and dangerous goods. That includes X-ray imaging, gamma ray imaging, radiation detection, laboratory services, cameras, scopes, and measuring devices. For example, the use of non-intrusive examination tools such as radiation portals, which 100% of all containers pass through, expedites the examination and release processes of shipments selected for examination.
The CBSA is continually looking at modernizing border management, including the examination process. We've been working very closely with the port of Vancouver and industry to ensure trade chain transparency and supply chain security.
As a result, two new marine container examination facilities are being built closer in proximity to the marine terminals: one in Tsawwassen and one at the Burrard Inlet.
The CBSA's overarching objectives with these investments are to reduce costs, increase examination capacity in Vancouver, and reduce overall processing times for clients.
The new Tsawwassen container examination facility, referred to as TCEF, is double the size of the current outdated facility in Burnaby, with significantly greater capacity for the acceptance and examination of containers. It will conduct examinations of the most high-risk containers arriving mainly from the Deltaport terminal and the Fraser Surrey docks. The TCEF will also house state-of-the-art technology to conduct full off-load examinations of high-risk marine containers.
While you were in the southern Ontario region on Tuesday, you would have heard about the CBSA's secure corridor pilot to expedite commercial processing. Here in the Pacific region we too are modernizing commercial processing by piloting a first for the CBSA, the design and construction of a fixed large-scale imaging system at the Pacific Highway commercial crossing.
Good afternoon, Madam Chair and honourable members. B.C. Coast Pilots are honoured to be before you today and to have you listen to us.
I'll start with pilotage and its work in the principal gateway for Canada's ever-growing trade with Asia. The number of ships transiting the complex coastline of British Columbia and the busy Fraser River increases every year. Pilots play a vital role in ensuring that Canada's dependence on trade and public expectations are protected through this often congested environment.
B.C. coast pilots and Fraser River pilots use their expert knowledge of local waters to safely conduct bulk carriers, tankers, cruise ships and, for that matter, all commercial vessels. Pilots are responsible for the entire B.C. coast, including Vancouver Island, Haida Gwaii and, of course, the Fraser River.
As Captain Burgess indicated at the hearings you held in Niagara, the near-perfect safety record of Canadian pilots is directly connected to the fact that pilots are able to exercise their professional judgment on navigational matters in an independent way, free from commercial pressure.
Although public and environmental safety is always our paramount consideration, pilotage also plays a very important role in supporting our country's international trade. As the saying goes, 90% of everything has, at one point or another, transited on a vessel in a pilotage area.
The increased volume of traffic and size of vessels is of particular significance on the west coast, where there appears to be a heightened sensitivity to anything that may negatively impact the environment. Increasing public confidence in the transportation system, particularly in the marine transportation system, is critical to maximizing the efficiency of Canada's west coast trade corridors.
There are available solutions. Pilots are always available. We would always look forward to working with the government to address society's concerns.
Pilots play a significant role in advancing Canada's competitiveness, and we have provided you with two case studies focused on the dynamics of facilitating safe and efficient passage of ever-larger and ever-deeper-drafted vessels. Given the dynamics of world shipping and the trend toward ever-larger vessels, the challenge to all ports, and in particular major hub ports, is to adapt to this change. If a port fails to invest in critical infrastructure aimed at both increasing capacity and ensuring smooth intermodal lines, shipping lines will divert their cargo to other ports.
The second case study we brought to your attention brings up a good example of this phenomenon, but in a positive way for B.C. and for Canada as a whole. By developing new navigational procedures in collaboration with our partners from industry, pilots have been able in recent years to safely handle larger container ships at berths that were originally designed to accommodate much smaller vessels. This not only resulted in productivity gains and savings of tens of thousands of dollars per ship for shippers and shipowners, but it also allowed Vancouver port and Prince Rupert port to increase their share of containerized imports moving to the U.S. As the case study demonstrates, the positive economic impact of shifted traffic coming through Canadian ports is very important, in the order of $150 million a year.
In closing, there is another dimension to the Pacific trade corridor that highlights the flexibility of Canada's pilotage system and the role it plays in maximizing efficiency. Pilotage practices for vessels moving between Canadian and American waters on the west coast are an example of refreshingly pragmatic border crossings.
As you know, the international boundary was established in such a way that travelling to and from a Canadian destination requires transit through American waters, and vice versa for the Americans. For example, 70% of Canada's Pacific shipping travels through Haro-Boundary Pass, which connects the Juan de Fuca Strait and the Salish Sea along the international boundary. Through these waters, inbound vessels from sea to a Canadian port are piloted by B.C. coast pilots, even though the transit through Boundary-Haro is in U.S. waters.
Madam Chair and members of the committee, thank you for having us today.
Just before I kick this off, perhaps I can give a reminder that tomorrow is World Maritime Day. It's also the 70th anniversary of the International Maritime Organization, of which Canada was a founding member. So there's lots to celebrate and there are some positive things happening.
Our organization represents the interest of shipowners, their agents, and service providers responsible for moving people and commodities globally to and from western Canada. Our members' ability and capacity to move products and people safely, in a timely manner, and competitively is good for Canadians, good for our economy and also good for our environment. Commercial marine carriers compete in a global marketplace. They generally view the Canadian market positively, but they have certain reservations associated with the supply chain's efficiency and productivity, regulatory agility, and data and infrastructure.
The Government of Canada has made the largest-ever one-time investment in coastal protection, and we fully support the programs under the oceans protection plan. Now that this plan is implementing specific programs, this effort should include a greater focus on ways to improve our supply chain's competitiveness, as this will be beneficial to protecting both our marine ecosystems and the Canadian economy. There are already strong indicators that efforts to increase coastal protection will also require the marine sector to innovate in the way it operates and the technologies it employs. For this to be effective, the national transportation strategy must strive to drive innovation that makes our marine transportation framework nimble and adaptable so that it can fully support the coastal protection initiatives and also remain competitive.
As stated in the review of the Canada Transportation Act that was chaired by David Emerson, there needs to be a whole-of-government approach to a national transportation strategy, with an oversight body that requires all affected government departments and agencies to work collaboratively toward common goals. Currently, there is some lack of coordination in policies and priorities and an absence of data-sharing that results in an increase in administrative burdens and inefficiencies.
While the Transportation Modernization Act has initiatives under way to improve supply chain visibility, it is equally important for the government partners to come together in a common strategy to clearly articulate the vision for safety and environmental protection to marine users and stakeholders, as they are intrinsically linked.
Understanding our supply chain holistically is essential to Canada's economic competitiveness. I think you heard that in droves this morning. The continuous growth in volumes of cargo and passengers, together with the limited availability of industrial land for marina operations, requires terminals and berth capacity to be utilized very efficiently. We are witnessing some traditional and also some new constraints to our supply chain that are resulting in negative impacts to the economy and even some of our local coastal communities.
For example, break-bulk cargo is nearly impossible to import into western Canadian ports right now. It's causing delays and increased costs to projects in British Columbia and Alberta, as cargo is diverted through ports in the United States. This should have been within our collective ability to predict, based on the supply chain data relating to efficiency and productivity. Efforts like the Vancouver Fraser Port Authority's supply chain visibility project are positive. We are optimistic that the port's modernization review will also benchmark the performance of our ports and supply chain with competing jurisdictions such that priorities for policy development and future funding are focused appropriately.
There have been successive tranches of infrastructure investment by the public and private sector that have supported an expanding international trading market. We are encouraged by the Government of Canada's intentions to facilitate this in the future through the national transportation corridors fund.
Future funding initiatives should better leverage the expertise of ocean carriers and their awareness of global trading trends. Infrastructure should include marine infrastructure that facilitates safety, environmental protection, and data management and integration. Ocean carriers that operate in the global marketplace know that certain commodities are less competitive in Canada. A focused effort on measuring the throughput of our ports and collaboratively engaging on ways to improve the situation would be positive for many sectors of the Canadian economy and would ultimately support better coastal protection.
Thank you again for the opportunity to speak. We look forward to answering any questions.
It's always a burning question, and to have an opportunity to speak on it is something that we always endeavour to fulfill.
This question was raised numerous times through the pilotage review process. It was frustrating through some of the discussions. In the review, Mr. Grégoire had 13 Transport Canada studies completed, and one of them, done by the AIM Group and released in February 2018, I believe, was on the economic and competitive considerations. I have a copy of the review. I can leave it with you, sir, if you so desire.
I brought a quote from the review. In 2016, when the study was completed, the magnitude of pilotage costs amounted to approximately one tenth of 1% of the value of Canada's maritime trade. Therefore, in the context of the national economy, pilotage costs do not negatively affect Canada's trade competitiveness for importers and exporters.
More specifically, the study also analyzed the question of cost in various other aspects, including the impact of cost on container ships, tankers and bulkers from the point of view of safety, reliability and responsiveness. In every case, it reached the same conclusion: that pilotage costs are not a factor that negatively affects competitiveness. What is of interest to us is that—
Thank you. It's a good question. It's one that is broached with us on a regular basis, quite frankly.
Yes, there have been other jurisdictions globally that have tried it—not within Canada, but some areas like Australia or some parts of Europe. Florida was moving in that direction. They've all moved back. There are one or two areas in western Europe.... I believe Norway has some small pockets where they do have competitive pilotage.
Consistently, though, it's proven that the competitive nature of that process would be similar to instituting a competitive process in the aviation industry, for example, where you have air traffic controllers providing a competing service, or in police departments or fire departments. It has not worked. The result has consistently proven a degradation of safety. Really, it's about establishing the priority. In a country like Canada, where public safety or environmental safety is accepted by the public as a priority, the risk of a degradation of safety is not worth the change.
In that context, though, we do have two pilotage areas on the west coast, both under the federal mandate of the Pilotage Act. One is with the entrepreneur pilots, ourselves, and we cover the entire outside coast. Then there's the employee model, with the Fraser River pilots, obviously within the Fraser River.
We have no problem in sharing a district, from our perspective, as long as we share it in isolation. In the Fraser River, they focus their expertise on the Fraser River; we do ours on the coast. The risk, as we see it, would be providing a process where someone can float in between. If you had a group that was able to provide pilotage on the coast or in the Fraser River, you would have potential for conflict.
We can talk about Kinder Morgan, for example, and the movement of oil. If you have a situation where you have agreed on principle to apply safety mitigations and you allow a negotiation with that process—which is what competition will always lead to—you run the risk of compromising that safety mitigation.
It has been tried. Consistently, it hasn't worked, especially in countries like Canada and the United States.
Thank you for that question. I know it's a really good one because we get it often.
What I would suggest is that we do a really good job in terms of assessing the risks, either known or unknown, that we would be facing at any given time. We rely upon a number of factors that influence our definitions and our determinations of risk, and those relate to the systems we use, whether it be one of our own business rules and applications or whether it be through our national targeting sector, which enables us, as a result of early receipt of information, to determine what may or may not be coming our way.
In addition to that, we work with our law enforcement partners, nationally, federally or locally, in addition to the intelligence professionals who work with us at the CBSA. In that instance, it allows us to notify our front-line operation if there are risks or threats coming our way, and we can plan accordingly.
At the same time, our front-line operations have the opportunity to randomly select and make referrals for more detailed reviews as part of our secondary operations. For the most part, however, we reserve those for the most high-risk situations, so that we cannot and do not impede the free flow of low-risk traffic and goods into the country.
I'm new to this, so I guess I'll go first.
The Chair: We don't bite. We're a friendly group of people.
Mr. Michael O'Shaughnessy: No problem. I'm looking forward to the discussion.
The Chair: When I put my hand up like that, I'm going to cut you off.
Mr. Michael O'Shaughnessy: I just won't look at you, then.
Madam Chair, members of the committee and fellow witnesses, good afternoon, and thank you for inviting Teck to participate.
My name is Mike O'Shaughnessy, and I'm the director of logistics for Teck Resources, headquartered in Vancouver. Teck is here to address concerns over Canadian competitiveness in reaching export markets.
Teck is a Canadian diversified resource company that exports steelmaking coal, copper, zinc and energy. We employ nearly 8,000 people across the country. We are Canada's single-largest rail user, spending over $600 million annually. We're Canadian Pacific Railway's biggest customer, and a leading exporter to key markets, particularly Asia.
Over the last five years, Teck has exported over $20 billion in products from our Canadian operations to China, Japan, South Korea, India and other Pacific markets. With improved transportation and logistics infrastructure, Teck's export potential also improves, and that supports jobs for Canadians and generates economic activity where we operate.
I would now like to highlight additional steps to improve Canada's rail freight competitiveness and ensure the competitiveness of Pacific coast ports.
Our primary rail recommendation relates to shipper remedies and the need for a sufficient rail data regime that would empower the Canadian Transportation Agency to effectively deliver costing determinations under final offer arbitration. With the recent changes to the Canada Transportation Act, we understand that the agency's mandate requires it to request information in order to conduct costing determinations.
We recommend that the agency clearly confirm that it does in fact receive non-aggregated costing information, and that it does so without being impaired by any public body within the Government of Canada, the railways, or any other person.
Also, we have ongoing transparency concerns that the amended Canada Transportation Act does not compel the agency to disclose details around its costing model or information regarding its processes or methodology for regulatory costing. Simply put, there is no transparency on how the agency determines costs. This contrasts sharply with the regulatory system in the United States.
The U.S. Surface Transportation Board publishes details online respecting the uniform rail costing system, its system for determining railroad costs. We recommend that the government consider adopting a similar data transparency mechanism so that the Canadian Transportation Agency is required to make its costing model processes and methodologies publicly available.
Last, on rail issues, we remain concerned about whether railways are fulfilling their service obligations by taking into account the railway company and the shippers' operational requirements and restrictions. The language that became law under Bill does not reflect the reality that in connection with the service that a railway may offer, it is the railway that decides the resources it will provide. Those decisions include the purchasing of assets, the hiring of labour and the building of infrastructure. Any of those decisions could result in one or more restrictions. As those restrictions are determined unilaterally by the railway, it is not appropriate that they be used as a goalpost in an agency determination. As such, we recommend making the restrictions themselves subject to review.
The second area I will highlight relates to Canada's support for infrastructure competitiveness. Similar to rail monopolies in Canada, I have serious concerns about the non-competitive business environment of Canadian ports. On Canada's Pacific coast, there are only two publicly accessible major export points for steelmaking coal: Westshore Terminals, located here, and the federally owned Ridley Terminals, in Prince Rupert.
With the potential divestiture of Ridley Terminals, we are concerned about the possibility that both Pacific coast terminals would be owned or operated by a single entity. If both Pacific coast terminals were to fall into the same hands, our cost competitiveness, service levels and reputation would erode even further. We recommend a sale process that is fair, competitive and transparent, and that results in reasonable rates, service levels and open access.
I would like to thank the committee once again for the opportunity to appear before you today and for undertaking this important study. Given the limited time for my remarks, I invite you to read Teck's written brief, which outlines our position in much greater detail.
Thank you. I look forward to the questions.
Thank you very much, committee, for the opportunity to speak to you today.
Pulse Canada is the national industry association that represents over 35,000 growers and 132 processors and exporters of peas, lentils, beans and chickpeas. Canada is the world's largest producer and exporter of peas and lentils, accounting for over one third of global pulse trade. Approximately 80% of Canadian pulse production is exported to over 100 markets, and the value of the industry's exports exceeded $3.5 billion in 2017.
The Canadian pulse industry has set ambitious growth targets that focus on the incremental use of 25% of production, so about two million tonnes, in new markets or for new uses by 2025. Referred to as “25 by 2025”, this target will seek to capture the significant volume opportunities for pulses that exist in the food industries around the world, particularly North America, western Europe and China. Capturing these markets will be essential if we are to retain our standing as a world-leading producer. The significant economic, employment and processing innovation benefits that the industry brings also rely on capturing these markets.
Improving supply chain efficiency and performance is a key pillar of the sector's long-term strategy, as effective transportation is a significant determinant of export competitiveness in global markets. As noted in the 2015 CTA review report, “In a world of massive and complex webs of interconnectedness, the quality of transportation and logistics systems may be the single greatest contributor to a country’s economic performance.”
The pulse and special crops sector is particularly sensitive to this sentiment, as we are the most multimodal grain crop in western Canada, with product moving in box cars, hopper cars, intermodal vans and marine containers. In fact, 40% of our exports through Vancouver are containerized. When supply chains fail and logistics, reliability and predictability disappear, as we saw this past winter and in 2013-14, transportation costs increase, suboptimal economic decisions become the norm, and stable, long-term growth opportunities with international customers become difficult.
According to the World Bank, Canada ranks 20th on the 2018 global logistics performance index, a tool that was created to help countries identify the challenges and opportunities they face in the performance on trade logistics. Canada has dropped eight spots since 2014. On key indicators such as quality of infrastructure, timeliness of shipments, and the ability to track and trace consignments, Canada falls out of the top 20 countries. There is clearly room for improvement for Canada, which demonstrates that this committee's study on the Canadian transportation and logistics strategy is both timely and essential. Improving transportation and logistics is a tremendous opportunity to improve competitiveness for our sector and the Canadian economy as a whole. If effective, the strategy can set Canada down the path to become a world leader in logistics performance and infrastructure excellence, and our goal should be to become a top performer on the World Bank logistics performance index.
As you've heard from several witnesses today, a data-driven approach for any strategy will be essential. For our sector, the logistics system required to get pulse from the field to international markets, to customers and the store shelves, has a wide array of challenges, not the least of which is how to ensure complete visibility in the performance of these complex supply chains. Within months, the regulatory process required by Bill will begin to identify the service and performance metrics to be collected on the freight rail supply chain.
By establishing the right outcomes for this study, the committee can help guide Transport Canada and all stakeholders to ensure that these new regulations place Canada at the forefront of digital data management and real-time supply chain visibility that supports the competitiveness of Canadian exporters. We have to move beyond reviews of the Canada Transportation Act every eight to 10 years and legislative interventions when the system is in crisis. To do that, we need a data-driven supply chain that improves logistics and guides infrastructure spending continuously. This is by far the best way to do this, as it supports both commercial interaction between supply chain players and legislative efforts from government.
I'll leave it there. Thanks.
Good afternoon, Madam Chair and members of the committee. Thanks very much for having me here on behalf of the members of the Forest Products Association of Canada, or FPAC.
FPAC is the voice of Canadian wood, pulp and paper producers nationally and internationally. The forest products industry generates $69 billion annually and contributes $21 billion to Canada's GDP. The industry is one of Canada's largest employers, operating in over 600 forest-dependent communities from coast to coast, and directly employing 230,000 Canadians across the country.
In 2017, our industry exported over $35 billion worth of goods to 180 countries. We heavily rely on Canada's supply chain to get our goods to market. We are the second-largest user of the rail system, transporting over 31 million tonnes by rail in 2017. We transport over 74.2 million tonnes by truck each year, which makes us one of the largest users of this system. Through ports, we ship approximately 31.2 million tonnes overseas.
The forest products industry is facing several challenges right now. Most importantly, the lack of reliable infrastructure to support our transportation system is estimated to cost our industry over $500 million a year.
's 2030 transportation strategic plan is a step in the right direction, to help ensure that Canada has a long-term vision of what our transportation and infrastructure systems must look like. However, 2030 is fast approaching, and while some of the investments may well help in the future, forest products are still feeling the effects of the 2017-18 freight rail crisis, and we fear the same will happen this year. Months after the crisis, fulfillment levels are still low in our sector. With winter fast approaching, our members are concerned that they will have to shut down mills.
I would like to acknowledge the work that the Canadian railways have done in recent months to add more capacity to the system. Unfortunately, there is still great concern across Canada in our business that it will not be enough.
We need to revitalize the Pacific gateway initiative, and FPAC looks forward to seeing the benefits of the investments made through the trade corridors fund. FPAC also looks forward to the quick implementation of the comprehensive and progressive trans-Pacific partnership.
Canada needs to avoid taking sector-specific approaches to transportation usage. We know that recently met with representatives of the grain and agriculture sector, and FPAC believes these types of meetings should be held with all sectors together.
With the implementation of Bill , Canada has an opportunity to strengthen its legislation and regulations to make rail rates and service more competitive for railway customers.
FPAC hopes that with the new own-motion power granted to the Canadian Transportation Agency, or CTA, through Bill , more investigations into rail issues will be done, with the support of Minister Garneau.
Rail, however, is not the only mode that currently has negative effects on the Canadian transportation system. For the past couple of years, Canada has faced and continues to face a severe truck driver shortage, which has caused the cost of this mode to rise dramatically. With the rail issue already prominent, the need for trucks is higher than ever, yet most times our members cannot get the service they need.
Federal and provincial governments need to do more to ease the truck driver shortage, for example via immigration and training. To help ease the truck driver shortage crisis in Canada and the U.S., FPAC recommends harmonizing weights and dimensions across Canada and eliminating cabotage rules.
In the final point of the supply chain, current congestion and bottlenecks at ports are increasing delivery times and costs for the forest products industry, specifically at places such as the port of Vancouver. Our second-largest market is China; therefore, the industry heavily relies on this port to get our product to Asia. Enhanced performance metrics, expanding B.C. ports and other opportunities along the B.C. coast, including the implementation of short-sea shipping where needed, will help with these challenges.
On dangerous goods, we need to maintain a risk-based approach.
FPAC also believes it is important for the federal government to provide a mandate for safety-sensitive workplaces, such as the transportation sector and ours, to be able to test employees in relation to the legalization of cannabis.
Finally, labour stoppages are an issue over which our members have to be extremely vigilant in order to prepare for delays and added costs. FPAC asks the government to include railways and ports as an essential service, ensuring that service will continue even during a strike.
In conclusion, we need to do more and have a better-defined vision of the infrastructure we need going forward, now and for the future.
Recently, the , Navdeep Bains, announced a report called “Resources of the Future”. Within this report, it is recommended that Canada have a 50-year Canadian strategic infrastructure plan.
Thanks so much for the question.
For us, costs and service are both concerns. We actually asked for the same thing that Michael outlined in his presentation to be in , but the amendments we were asking for did not come through.
I'll let you know that right now, in our operations across Canada, northern Alberta is one of the biggest pain points. They're having a lot of trouble moving stuff by rail from places like Edmonton to Winnipeg. It's been that way for a number of months now, and we're not even into the serious winter conditions yet. What's going to happen in January and February? That makes us extremely anxious about how bad it might be again this winter.
Prince Rupert is definitely an option. We have members who ship through Prince Rupert already. Of course, CN is the only one that's there. It would help us if both railways were using the port.
I think it is a bit of a game of who is going to move first. Are terminals going to build up there to bring in more traffic, or are the railways going to invest there first? We need somebody to show some leadership there and make a move so that we can—
I guess at a high level, global demand continues to grow as people move to middle class. The population of the world is getting bigger, and there's increasing demand for Canadian resources in agriculture and forestry. We're blessed that way.
This is the challenge we see. We're not looking to grow our steelmaking, coal, copper, and zinc businesses, but we see increased exports of U.S. thermal coal coming up and placing strain on the existing capacity, and grains increasingly intermodally. I think it's an aggregate effect, the overall growth, and we're going to continue to see that.
Yes, it's like Groundhog Day, but we're persistent, and we'll continue to try to grow to meet new demand, as will rail and port, but it feels sometimes that we're lagging.
Thank you, Madam Chair and Mr. Iacono.
Again, I want to dig a bit deeper. The fact of the matter is, that's why we're here. It's to come up with a “how” to the “what”. We talk about the obvious with transportation, infrastructure, the operating side, the capital side. We have had a lot of discussion about that in the past few days, here as well as in Niagara.
I want to dig a bit deeper into the “other”. The other is what affects the transportation. The key here is transport and the methods by which we transport to strengthen our international economic footprint. Fluidity is critical. Fluidity in terms of trucks, boats, planes, cars, and railcars is an obvious one. Let's take it a step further in terms of those choke areas, those areas that are congested, and why we don't have that fluidity.
You talked about diversification into new markets. The government has made great strides, in the past few months especially, with respect to responding to our friend to the south. I guess that would be a subjective comment, but that said, we do have to respond. In responding, we have to be less reliant on the obvious market—albeit robust—and get into new markets, such as Malaysia, the EU, Asia, India, and areas like that.
My first question to you is this: how do we enhance what we've already announced with respect to diversifying into new markets?
Number two, I want to speak about the elephant in the room. No one seems to want to talk about this publicly, but I'll say it anyway. It's the fact of productivity and the lack thereof. In competing against international markets, I guess one of the albatrosses around our neck is the lack of efficient and fluid productivity at our ports.
With that, I'm going to ask you the question. We know what the problem is. We see that. We've heard it loud and clear, but with your background and your expertise, what are some of the solutions that we, as a partner, a federal level of government, can facilitate in discussion with all levels of government as well as with partners across the country? What do you think the solutions are?
I'll go back to the announcement by Minister on Monday of this week about his work on resources for the future. He called on industry leaders to get the leaders from the transportation providers and the users together and to not let them go away until the problem is solved.
In terms of the idea mentioned in the program about having this 50-year strategic infrastructure plan, I think it would be a great thing to focus on with business leaders, indigenous leaders, and community leaders. Just think of all the communities across Canada that depend on forestry, and the opportunities we're missing by not getting more of our stuff to market.
It happens to be forestry week: Happy National Forest Week.
If I can go into the grains sector a bit, we have a bit of a reputation issue there. I think people in places such as Japan question whether or not we're going to be able to get the stuff there. We need to be reliable providers. I would like to see us focus on solutions.
Until we get there, we shouldn't be walking away from these tables. We need to sort this out. It's too important not to sort out.
If I may, Madam Chair, I'll conclude with this.
When you look at facilitating getting all the folks around the table, again, that in fact is why we're here. That is what we're trying to do. This is the initial stage of that.
Peter Xotta from the Vancouver Fraser Port Authority commented today that establishing a federal trade corridor is “the primary and most useful role” the federal government can take. He talked about leadership, bringing people together, being merit-based, and so on. That feels good, yes, but we're only halfway there—not even halfway there—so the intent, following this, is to continue this dialogue and therefore gather the evidence. We can get focused on those infrastructure investments so that they align with and attach to the ultimate strategies—in this case, trade corridors—that we're trying to establish.
Of course, with that, as Greg said, it's being evidence-based so that we do recognize the performance measures—whether it's productivity, whether it's infrastructure, whether it's operations, and the list goes on—and make those investments accordingly to ensure that we elevate our performance.
My name is Parm Sidhu. I'm the airport general manager from Abbotsford International. I appreciate the opportunity on behalf of the Abbotsford International Airport to present some information to you this afternoon.
Abbotsford is the fifth-largest city in British Columbia. It's actually the largest city by land mass in British Columbia. It's located in the region of the Fraser Valley, about an hour from here, or 60 kilometres.
The region is one of the fastest-growing areas in the country. There's a fair bit of population growth, and a lot of the industrial and commercial lands are available south of the Fraser, from Surrey to Chilliwack.
Within that region is an asset called Abbotsford International Airport. It was formerly run by Transport Canada, but in 1997 it was transferred or sold to the City of Abbotsford. The City of Abbotsford took ownership in 1997. Since 1997, we've reinvested $75 million into the asset. Basically, we're a self-sustaining business unit of the City of Abbotsford. We do what we do at the airport with the revenue stream we generate. We do not cost the taxpayers of Abbotsford any money. We are self-sustaining.
Since 1997, our passenger volumes have changed drastically. We were at 3,000 passengers in 1996 at transfer. We're now well past half a million, and I'll explain further where we're going with that.
We're a major asset for the Fraser Valley. We're three kilometres from Highway 1. We have two land borders within five miles of either side of the airport. Highway 1 is a critical piece of infrastructure. There's a $22-million investment being made right now in partnership with the City of Abbotsford, the federal government, and the province of B.C. to widen the roadway leading to the airport to four lanes. That's going to significantly enhance access to the airport.
We transformed our business model in 2015. We saw the airline landscape changing, and we saw the future of ultra-low-cost carriers being a reality in Canada. What we did was align our business model to be cost-controlled, just like an ultra-low-cost carrier. In 2015 we transformed our business model. With that, our passenger volumes in 2015 were 490,000. In 2016, they were 530,000. Last year they hit 677,000. This year we're on target to hit 860,000—it could reach as high as 900,000, but we're budgeting for 860,000. Next year we should break the million mark.
What the ultra-low-cost carriers are doing, primarily with Swoop and Flair, means air travel is becoming more accessible to your everyday Canadian. We're talking regularly to people in the terminal now who say, “I would not be flying if it weren't for the low-cost fare.” The importance of ultra-low-cost carriers is huge for Canadians, because they are making air travel accessible to all.
We have four national carriers that operate at our airport. WestJet, which has been a strong partner since 1997, has committed to that region and has offered around seven to nine daily flights since 1997. We have Air Canada Rouge, which offers seasonal service to Toronto. We now have Swoop, which is offering flights to Edmonton, Calgary, Winnipeg, Hamilton, and soon Las Vegas, starting October 11. We'll have three weekly flights. On top of that, we have Flair Airlines, which had a partnership with NewLeaf Travel, and that has really grown our passenger numbers.
With the changing times that we're facing, we are adapting to a different business model. We are operating the airport in a manner that enables others to grow our region, province, and nation in the best interests of Canada. The brand is Canada. We are enabling others to partner with us, especially airlines and aerospace companies, to do better as airlines and fly more people fly out of Abbotsford, barrier-free. We are a regional airport that wants to service our population base from an O&D perspective, an origin and destination perspective, so you're either starting there or ending there. We want to continue to grow our airport.
We also have a lot of aerospace companies at our airport. Cascade Aerospace is a C-130-certified facility, maintaining Canada's C-130 Lockheed Martin fleet. We also have companies like Conair Aerial Firefighting, fighting forest fires globally. Conair's headquarters are in Abbotsford. We also have the likes of Marshall Aerospace and Defence Group.
Also, we have three flight schools. One in particular is Chinook Helicopters, one of the premier helicopter schools in North America. They started a fixed-wing division about two years ago. They saw the possibility of a gap emerging with the shortage of pilots. We're doing everything we can to make sure more pilots are trained and in the system.
With our region and airport growing at a record rate, the further increase in investment in Highway 1 is of great importance. Highway 1 is the main corridor that connects Vancouver to the Fraser Valley and onwards, right to the east coast of Canada. It turns into a parking lot during some peak hours of the day. Any investment in that will not only help Abbotsford; it will help all of us.
In closing, our economic success in B.C. and Canada depends on being competitive on the world stage. Improving our transportation systems will enable B.C. to continue to get products to market and continue to grow our economy.
For Canada's economy to succeed, southwestern B.C. must be able to get Canadian products, services, and people to key markets. It is critical that we address transportation bottlenecks and congestion along Canada's trade corridors, especially the Trans-Canada Highway in southwestern B.C. We must have access to advanced gateways with logistics and integrated infrastructure, and we must have transportation networks that facilitate the movement of goods to market.
The city of Abbotsford and the Abbotsford airport are open for business and thank you for your time.
We are Canada's second-busiest airport; we are one of North America's fastest-growing international airports, in terms of both passengers and cargo. YVR plays a significant role as a connecting hub to Canada and North America, both from Asia-Pacific and Europe. In 2017, we welcomed a record 24.2 million passengers, which was an 8.4% increase over the previous year. Our terminal capacity is 25 million passengers; we expect to reach about 26 million this year and 29 million by 2020, so we are effectively at capacity.
A total of 56 airlines service YVR, connecting people and businesses to more than 127 non-stop destinations worldwide. We've been recognized as the best airport in North America by Skytrax's survey for nine years in a row, which is an all-time record. Our cargo business grew faster than our passenger count in 2017, and this includes high-demand B.C. perishables, including seafood and fruit. In 2017, we moved over 313,000 metric tonnes of cargo, accounting for over $2.7 billion in cargo exports. A significant share of our cargo is transiting to and from other parts of Canada and the U.S., primarily by truck. Consequently, surface transportation infrastructure and border capacity are critical, particularly for our perishables and just-in-time goods.
YVR is a key economic driver for B.C. and Canada, generating over 24,000 direct jobs at the airport, supporting over 100,000 jobs across B.C. and accounting for $16.5 billion in total economic output.
To address our rapid growth, we recently launched a $9.1-billion expansion plan. This includes 75 projects over the next 20 years. As you know, we receive no federal funding, and as a not-for-profit, the airport authority finances its expansion through debt, which is paid off from key revenue sources such as landing fees, retail and other commercial revenue, and airport improvement fees.
One of our other sources of funding is revenue generated by our innovative travel solutions team, which develops and markets automated border kiosks for both border entry and exit immigration. We sell these to airports, airlines, ports, and government agencies throughout North America and in other parts of the world.
Borders and security have a tremendous impact on our capacity and competitiveness. Because of this, Vancouver airport led the establishment of the binational Beyond Preclearance Coalition, aimed at further improving border and security processes through greater use of technology, which will both enhance security and move people and goods at speed. This coalition involves over 40 organizations engaged in transportation, trade, and tourism. All modes of transport are represented. We have ports, airports, airlines, rail, cruise lines, and trucking. Our coalition has raised about $450,000, has organized a number of forums, round tables and summits and has commissioned a “Beyond Pre-Clearance” white paper, which will be published in the first week of October, basically next week.
The white paper will include recommendations on long-term initiatives and public-private partnerships for technology investments as well as a number of short-term pilot projects. We expect that payoff in terms of improved border and security services and cost savings could be huge. If the recommendations of the white paper are adopted by our government partners, the Vancouver airport alone could save billions of dollars in planned capital investment.
I will be pleased to share the final white paper with the committee. It should assist you in your review of infrastructure funding priorities and strategy.
Thank you, again, for the opportunity to speak to you today. I would be pleased to answer any questions.
Madam Chair and ladies and gentlemen, thank you also for the opportunity to speak to you this afternoon. My name is Geoff Dickson. I am the president and CEO of the Victoria International Airport and I'm also chair of the Canadian Airports Council small airports caucus.
Just so you know, Canadian airports are economic engines and drive some $79 billion in economic output. That's the most recent information we have. A total of 355,000 jobs are generated directly and indirectly through airport activities, and close to $5 billion in federal taxes are generated. Victoria International Airport alone generates close to $1 billion in economic output for the greater Victoria region.
I commend the committee for its forward thinking, and I look back to another time, in the 1990s, when Transport Canada had the foresight to step out of operating airports and focus solely on being a landlord and regulator. If you move forward to today, since that time Canadian airports have grown from 65 million passengers in the 1990s to 147 million passengers in 2017.
Over $25 billion has been invested in airports by the Canadian airport authorities. I contend that without this model, a choke point in a trade corridor would have been created through lack of taxpayer-available funding to support this growth, and the appropriate infrastructure investments wouldn't have been made. The government of the day ran a deficit of $135 million annually, so it was a very good move all around.