Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 9 - Evidence - March 13, 2007 - Afternoon meeting
VANCOUVER, Tuesday, March 13, 2007
The Standing Senate Committee on Transportation and Communications met this day at 2:01 p.m. to examine and report on current and potential future containerized freight traffic handled at, and major inbound and outbound markets served by, Canada's Pacific Gateway container ports, east coast container ports and central container ports and current and appropriate future policies relating thereto.
Senator Lise Bacon (Chairman) in the chair.
[English]
The Chairman: I will call the meeting to order. We are pleased to welcome our first witnesses this afternoon: from the City of Moose Jaw, His Worship Dale McBain, Mayor; from Saskatchewan AgriVision Corp., C.M. Williams, President; and from Campbell Agri Business Strategists, Doug Campbell. Thank you very much for being here.
Doug Campbell, Campbell Agri Business Strategists: Thank you, Madam Chair. We have had our share of technical glitches through the weekend, and we have downsized a 90-minute presentation to 30 minutes so that you can have 30 minutes for questions. I apologize if we rush. In the interests of streamlining the presentation, I will run you through those 90 pages that you have clipped on the top of your pile, and then Dr. Williams from Saskatchewan AgriVision and Mayor McBain from Moose Jaw will add some brief comments, and then we will entertain your questions.
It is our understanding that your main focus is containers, and we are very appreciative that the committee is looking at containers. However, the system is very large, complex and multi-modal, so we will be bouncing amongst modes and certainly from coast to coast and across the oceans. We will cover four main areas: global trends and vision; Canada's role; why not Saskatchewan; and decision-making needs that industry requires and for which we look to you and to members of the House to provide the appropriate legislative regulatory framework and stability.
Regarding global trends and vision, I am sure you have heard many statistics. Asia Pacific trade is awesome. I have had the good fortune of being in India seven times this decade and in Pakistan once and China three times, and it is amazing to see how fast everything is developing over there. The key for Asia Pacific and for NAFTA transport flows is the supply of capacity, and that is Canada's problem and Canada's opportunity.
On Asia-North America trade, you are aware of Japan and Taiwan and the Tigers and of the fact that together India and China have 80 times Canada's population. China has a $19-billion per month trade surplus and a sustained 10 per cent GDP growth per year, and its sixth largest trading partner is a country called Wal-Mart U.S.A.
Let us look quickly at Asia's share of world GDP: China is at 15.4 per cent, Japan at 6 per cent and India at 6 per cent. In total, Asia is at 33.5 per cent, compared to 20 per cent for the U.S., 15 per cent for the EU, and less than 2 per cent for Canada.
In terms of purchasing power, the U.S. and the EU are each at $12.5 trillion, China is already at $8 trillion, Japan at $4 trillion, India at $4 trillion, and Canada at $1 trillion. We can use vehicle sales as an indicator of China's purchasing power: only 15 years ago, China's vehicle sales were at $300,000 per year; today they are at $4 million per year, which compares to Canada's $1.8 million per year.
Asia has six of the world's top 10 container ports. Singapore, Hong Kong, Shanghai, Shenzhen, Pushan, Kaohsiung are all at 9 million TEUs, or twenty-foot equivalent units, or more; Rotterdam and Hamburg at 8 million to 9 million TEUs; Los Angeles at 7 million TEUs; and B.C. ports are at 2 million TEUs, which includes Prince Rupert, Vancouver and Deltaport. We are very small.
As you can see on the map, China has 18 new intermodal terminals. It is staggering how quickly they have done it. Quite a few are inland ports. Of course, they have three major river systems: from north to south they are the Yellow, the Yangtze, and the Pearl River Delta.
The next slide shows 20 satellites just into Shenzhen and Hong Kong all by water.
The next slide shows the 32-kilometre causeway from Shanghai out into the sea. It is called Yangshan Port, and by itself it will handle 25 million containers, which is 12.5 times British Columbia's current capability.
The point we are making is that we are very small fry, and China is very, very large fry, and Wal-Mart is very aggressive and important here.
Moving about three slides ahead, we have a list of U.S. imports from China, and the questions are why and how. A $700 TV set costs $10 in ocean shipping; a $50 bottle of scotch costs 15 cents ocean shipping; a $15 package of coffee costs 15 cents; and one $1 can of beer has a freight charge of 1 cent. That is what logistics has done in the last 20 years. That is the Wal-Mart/China connection.
China's largest U.S. importers are Wal-Mart at 700 million containers per year; Target and Home Depot at half that level; and Sears, Dole Food, Costco, Phillips Electronics and Chiquita at well over 100 million containers each per year.
Looking at U.S. trade with China in the last 15 years, exports are up 745 per cent, imports are up 1,500 per cent, total merchandise trade is up 1,300 per cent. By 2020, China will be the hub of all Asia-North America trade: China will account for 60 per cent of Asia-North America trade, and foreign companies will account for 60 per cent of China's exports.
You should be getting a consistent theme here: China to Chicago, Wal-Mart is the buyer, China is the producer, and lots of competition.
With respect to Canada's Asia Pacific trade flows, you know about the railways. We had Canadian Pacific Railway in this beautiful city in 1885. Canadian Northern Railway came to Vancouver in 1906 and the Grand Trunk Pacific Railway to Prince Rupert in 1912. The former premier here created the Pacific Great Eastern Railway or BC Rail back in the 1960s.
The bulk commodities involved are grain, coal, potash and sulphur. In the 1960s, grain sales and aid to China, Japan and India led, and we had a tremendous amount of grain elevator construction after that at the terminals. The seaway in contrast was there from the 1870s to the 1970s with 80 per cent control of the flow, and then Vancouver came on in the 1970s, Prince Rupert in the 1980s, Portland in 2000.
Some of you may not be aware that Canpotex, the world's largest potash shipper, now ships half of its product through an American port. I think perhaps in the question period you may wish to probe that, because it is very important. Perhaps you have a witness from Canpotex. There are major lessons to be learned there. If we do not get it right, we are going to lose traffic.
Regarding our trade connectors, we have the traditional East Coast, the Atlantic, the seaway, the Great Lakes. For 30 years now we have developed Vancouver and Prince Rupert with additions every couple years — Deltaport south of Vancouver and Fairview by Prince Rupert.
Another issue for you to consider is environmental studies, which take three-plus years in Canada. They take three or so days in China, not that I am suggesting we adopt the Chinese standards. I just want you to know that they can fast track things when they know where they are focused.
Canadian Pacific Railway, CPR, and Canadian National, CN, are the two best railways in North America. I had the good fortune of being a senior executive for Canadian National. I headed four departments. I was involved in the transition, and it is with great pride that we and all Canadians can look at CPR and CN as providing very efficient service.
Wal-Mart is a $100-million client for CN going from Prince Rupert and Vancouver to Chicago. There is another $50 million for CN on the table if they can do the same thing from Prince Rupert and Vancouver to Memphis, versus Baltimore, Halifax, Los Angeles-Long Beach, and other locations. If we get our act right, we have the potential to do the Prince Rupert to Memphis route all the way across the continent by very efficient means. Canadian railways can get to Chicago faster than any American railway can right now. That is how efficient they have become. They have bought the right connectors in the U.S., they have streamlined their systems, and they can do it in anywhere from two to 40 hours faster from Canadian West Coast ports than from American West Coast ports, let alone going around the Atlantic.
I think that, fog considerations aside, you will be in Prince Rupert in a couple days, and I hope you enjoy it. There are 143 inches of rain every year in Prince Rupert, so you might want to take your fins.
The next map shows CN's scheduled service from Prince Rupert to Chicago in 100 hours and to Memphis in 117 hours.
Our intermediary role is to find ways to Chicago, north, east, south and west, and the feeders to Chicago and to Memphis can be through the ports or through inland ports like Kansas City or maybe Saskatchewan. What about Moose Jaw or Saskatoon? They are both on transcontinental rail corridors. They have cheap land. They have cheap labour. They can do the security work. They can be expanded with traffic demand. It is not like being on the Vancouver waterfront with extremely expensive labour, a multitude of labour unions, labour agreements, rail/truck congestion, automobile/railway congestion, underpasses and overpasses. Vancouver is very difficult.
Why Saskatchewan? It is too bad we do not have our PowerPoint presentation here because I would have shown you some of the ghost towns, but that is not the story we want to dwell on. We want to show you that Saskatchewan has evolved from 1 million people, half of whom left after the 1930s, and 3,200 elevators, now reduced to only 100, most of which are concrete or steel. We have really streamlined our system. Two trains from inland terminals can feed to the port. There is fabulous productivity. Some of the grain terminals are large, some are small; some of them load one producer car at a time, and some can load 100 cars at a time. As a result, the road network is in very bad shape. Commercial trucks have taken over, and there are many policy issues there that you may or may not want to look at. I mentioned to your clerk and researcher about short line railway and railway policy, but in the interests of time we will not dwell on that now.
We have about five slides on Moose Jaw and pictures to show you exactly where Moose Jaw and Regina fit together. They are only 40 miles apart; if you are from Montreal, Toronto or Vancouver, that is like being part of the same city. There is a lot of cheap land between Moose Jaw and Regina. Mayor McBain and I have some land for sale if anybody is interested. It also happens to be on the transcontinental highway and the transcontinental railway, and that is CPR's link into the U.S. CPR's dagger flows from Moose Jaw to Chicago. The first guy to know about that was a chap by the name of Al Capone. Some of you may have heard of him, and others are trying to imitate his logistics skills. I will let Mayor McBain talk about Moose Jaw later.
The next series of slides is on the world trade talks, the Doha round. I have been privileged to represent seven or eight groups in two provinces there with Foreign Affairs and International Trade Canada. This is a major round. Ninety-three per cent of Canadian agriculture would benefit from freer trade. In the grains and oil seed sector alone, there would be $1.6 billion more in farmers' pockets every year if we could get trade liberalization. The Brazilians, the Argentineans, the Indians and the Chinese want it, but the U.S. and Europe do not. Unfortunately, Canada in part does not want it either. Canada speaks with forked tongue.
Our organizations have been promoting freer trade through the agri groups, through Canadian Manufacturers and Exporters, through the Canadian Chamber of Commerce, and through the Prairie provinces, all of whom would benefit greatly — the 93 per cent. In Manitoba, Saskatchewan and Alberta, more like 97 per cent would benefit. It is the supply management sector that is in opposition. It is to be respected, but in our humble opinion that should be negotiated amongst politicians rather than squandering the possibility of major gains for 93 per cent of Canadian agriculture.
We have slides on the global trade demand. The fact is, and this is very difficult, Saskatchewan primary school textbooks have never been changed. In grade 3 in Saskatchewan we still think we are the centre of the universe, we are the centre of the breadbasket. However, India, China, Brazil and Argentina all produce grain at one-half the cost of what we can do. They have better climate. They have irrigation. I am doing work in India, and 95 per cent in the northern area, in Punjab, has irrigation from the Himalayas. Their yields are two to two and a half times ours. Once they get their transportation together, we cannot compete in terms of bulk commodities. We have to switch. The barley has to come out as beer, as beef, as pork. The wheat has to come out as gluten or ethanol. The canola has to come out as margarine or biodiesel. We cannot compete with the raw commodities.
That is where containers become so important. When commodities were king, we could ship them in bulk. Now the customer is king, and they can get stuff globally very cheaply. Therefore we have to package it, and to package it, we have to put it into containers, and it cannot be tampered with seven times. That is the advantage of containers. You load product once, cleaned, weighed, graded, and it gets to the customer undiluted.
We have major trade with India in oil seeds and pulse crops in particular. They complain regularly that our pulse crops have deteriorated from the No. 1 food value that we said we sent to the No. 3 feed that they said they received. Pulse crops are very fragile. If they get handled five times, they will break and they will drop from a No. 1 food to a No. 2 food or from a No. 2 food to a feed grade. Thus containers mean an awful lot to Saskatchewan and Prairie pulse crop producers.
In terms of logistics options, as we mentioned before, Wal-Mart U.S.A. has an obvious bias. It used to be the U.S. Now it is very global. They will source through Mexico. They will source through Canada. They will source West Coast or East Coast — wherever they can make sure that the cost of that bottle of beer does not rise above one cent. That is a major driver. If we want to participate in that wealth creation, we have to have sharp pencils.
I will quickly go over the strengths of Moose Jaw: the transcontinental rail and highway systems; competitive transportation; short line access north, east, south and west; the Sioux line connection to Chicago; the indirect CN access through Melville east and west; competitive land, labour and service costs; and minimal environmental and congestion issues. Instead of through the Prairies to Ontario, the containers should be going heavily loaded in the Prairies back to the ports and across to China, India, Pakistan.
In terms of the next steps for success, there is much more to do than wishing. We are focusing on three main areas. The first is corralling industry decision-makers, which we are glad you are doing, whether they are shippers, carriers or ports, whether they are seaboard or inland. The second is corralling the appropriate government decision-makers. Inside the federal system, Transport Canada, Western Economic Diversification, Finance Canada, Agriculture and Agri-Food Canada, and Industry Canada all play a role, and from close observation I would say they are all trying their best to make the Asia Pacific strategy work. There are also provincial departments of finance, transport, industry and agriculture that are all relevant. On the ground floor are the municipalities, such as Moose Jaw Regional Economic Development Authority, the Saskatchewan Trade and Export Partnership, Saskatchewan AgriVision Corp, Prince Albert Regional Economic Development Authority, Saskatoon Regional Economic Development Authority and Regina Regional Economic Development Authority. Our third focus is round tables and facilitation, which we think are important. Dr. Williams has led a lot of those in the last few years, and we have done similar presentations. I believe Senator Tkachuk was with us only a month or so ago in Vancouver. We have held workshops in Regina and in Winnipeg, and next week we will be in Calgary. It is all coming together May 2 to 4 back here in Vancouver, and I would encourage you or your researchers to be here and participate in that.
I will stop regarding decision-making needs and the legislative and regulatory regime, other than to say the situation is very complex. Within Canada we have tri-level governance, and it works reasonably well. In the U.S., in contrast — and I was privileged to speak with all the major U.S. players in Winnipeg last week — they are struggling because there is no active state role. They have a federal role and a local role. As a result, they often end up with local fiefdoms, pork- barrelling, and there is not an interstate or international focus, which the Americans very much need and want. We obviously need to make sure that our three levels of government work together closely in order to ensure that for example we are not upgrading a road and a railway side by side, which we have done too much of in the Prairies.
There are other hurdles on short sea shipping. I think you will probably hear about that from other people, so I will not dwell on it here, except to give you one example. Many of you are from Ontario or Quebec. You know about the choke of the system, Fort Erie-Buffalo, Windsor-Detroit, Sarnia-Port Huron. What if you put product onto vessels in the Port of Oshawa and you drop it off in the Port of Cleveland? Think multimodal, cheaper, less congestive.
Those are just some of the many examples of things that would happen if the logistics system, the investment environment and the legislators were all in harmony. I will stop there.
His Worship Dale McBain, Mayor, City of Moose Jaw: I appreciate the opportunity to be here. I want to talk a bit about Moose Jaw and the Moose Jaw Regional Economic Development Authority position. Mr. Campbell mentioned Moose Jaw and our unique position, and I believe that our rich history, which developed as a result of our being a divisional point in the Canadian Pacific Railway, has led us to be a transportation hub in the Prairies. We are centrally located approximately 700 kilometres from Vancouver and 2,000 kilometres from Chicago. We are the intersection of three major highways: Highway 1, the Trans-Canada Highway, comes through Moose Jaw; Highway 39 is Saskatchewan's link to North Portal, the busiest port crossing; and Highway 2 links us to Highway 11, which takes us to Saskatoon and then Prince Albert. All of these highways are part of the designated national highway system, and they are all primary weight highways.
The CPR main line runs through Moose Jaw linking us east to Winnipeg, Toronto and Montreal and west to Vancouver and Calgary. We are the Canadian terminus of the Sioux line to Minneapolis and Chicago. As Mr. Campbell mentioned, Moose Jaw has made a bit of history out of Al Capone and his visits up the Sioux line. As well, the Saskatchewan headquarters for CPR are in Moose Jaw. Their high-speed fuelling facility is in Moose Jaw. It is the largest main line fuelling facility on their North American network and the only major refuelling centre between Vancouver and Chapleau, Ontario, and Glenwood, Minnesota. Moose Jaw is the point at which train crews change and at which trains are made and broken and go from the east-west route to the north-south route on the Sioux line. There is a repair depot in the Moose Jaw yard.
As well, CN has a presence in Moose Jaw, with a branch line that links us to Melville and gives us access to the CN main line.
We are also serviced by a number of short line railroads, including Southern Rails Co-operative Ltd. from Avonlea and the Red Coat Road and Rail, which joins the CPR branch line at Assiniboia and then joins the main line in Moose Jaw.
The CPR branch line in Assiniboia and the Red Coat Road and Rail will become more important as the Whitemud kaolin and related clay resources down at Wood Mountain are being developed. Whitemud is one of the largest sources of kaolin, perhaps one of three or four places in the world that has it. Kaolin is used in a number of things such as cement and whitening paper. This company has raised a significant amount of money on the TSX Venture Exchange and has begun work on their plant right out of Wood Mountain. One of the short lines is putting in a spur at Scout Lake, and they are planning to ship all of this by rail through Assiniboia to the CPR main line in Moose Jaw.
Moose Jaw is a major staging area for agricultural products. As Mr. Campbell indicated, Saskatchewan produces approximately 95 per cent of Canada's pulse crops. About 90 per cent of that total is produced within 100 miles of Moose Jaw. A family-owned pulse producer in Moose Jaw, Simpson Seeds Inc, is the largest pulse crop processor in the province, and they are undergoing a major expansion to add a red lentil splitting line to their operations. As well, the short lines feed a number of small pulse cleaning facilities located near Moose Jaw. Doepker Industries in Moose Jaw is a manufacturer of traffic trailers for the trucking industry. They have a number of applications for grain, for mining and for the forestry industry, and I think the interesting thing for us today is that they have developed a prototype container hauler that can go out into a farmer's field and be loaded right in the field. Potash is Saskatchewan's leading export and there is a major potash mine located near Moose Jaw at Belle Plaine.
There is other information in my brief, but I know you want to get to questions so I will conclude with this. Moose Jaw has ample greenfield space. Location is important, as in real estate. We believe that we are in the right location. We are the most efficient and cost-effective site in the system to accommodate increased Asian traffic to the U.S. market through the Port of Vancouver. Strategically located at the junction of three railways and the junction of three major highways, Moose Jaw has an advantage with its unique position as a transportation hub. Moose Jaw is poised to play an expanded role in the transportation of goods and import and export in the country.
C.M. (Red) Williams, President, Saskatchewan AgriVision Corp.: I will go back to a point that Mr. Campbell made earlier: Why Saskatchewan? Saskatchewan AgriVision Corp. has been working on this issue for about four years. We tried initially to get a system that would get a container supply in position in Saskatchewan sufficient to handle the pulse industry. That was our first objective. We brought the stakeholders together and developed a system we thought would work. In fact we failed, but we learned a lot about what could and could not be done with container traffic. The basic issue with Saskatchewan is that we do not have enough boxes coming in to meet our demand for boxes going out. That is, we simply do not get enough product into the province, and therefore we have to depend on capturing boxes off the transport from Eastern Canada or from the United States moving back to the West Coast. As you have probably been told, the shippers are not keen to stop those boxes unless they can have an absolute guarantee. Those boxes will probably sit about 48 hours or three days possibly and then they will be routed again into the system. It is a matter of in and out inefficiency, so that started us thinking about how to get more boxes moving into the province.
We are looking at a land bridge between Halifax, Canso or Montreal — wherever you want to pick in the East — and Prince Rupert and Vancouver on the West Coast. As Mr. Campbell said, we have the two best railways in North America transiting that area, so let us use them. The idea is to hold the traffic up out of the States as long as you can and drop it down wherever it will best fit the trade. That is our total objective. Senator Mercer has probably already told you ad nauseam that Halifax is becoming or will become a major port because of the plug-up on the West Coast of North America and the containers' having to come via the Suez Canal. We are talking about a land bridge across Canada. I hope I have convinced you that we are dealing with something bigger than just Saskatchewan, but I want to come back to Saskatchewan because that is where my interest lies.
Mayor McBain gave you an idea of Moose Jaw with the intersecting highways and railways. Now, take a broader look at Saskatchewan with Saskatoon, Regina and Moose Jaw, a core of three cites not very many miles apart, in terms of prairie travel at least. You have the flow coming in from Prince Rupert and the flow coming through the Kicking Horse Pass, and there is the major Highway 1 in the south. All of these come together with the Yellowhead Highway and they all meet at that particular junction, so that is the logical place. They can put one of these anywhere at the nodes all the way from Halifax to Vancouver. You could put a port if you wanted to do a lot of this work on these trains, to build them up and to get an efficient system flowing into Vancouver or Halifax, but you do this because all these things come together in the middle of Saskatchewan. That is what we are promoting.
Currently we have a problem in Vancouver. I am sure you have had heard about that in other presentations. Unfortunately, if I lived in B.C. I would think that too. It is hard for them to think about beyond the mountains. However, think about this: for an 8,000 TEU container ship coming into Vancouver, it takes 20 trains, 100 cars double-stacked, to get the cargo out of here and over the mountains. That is 20 trains for just one ship, and, of course, we have had them backed up six and seven deep to get out of here. The problem has to be resolved. If we go to the 14,000 TEU container ships, that takes 70 trains per ship — 70 trains going out and 70 trains coming back. We just have to get this traffic out of Vancouver for the sake of Vancouver so that it can increase its throughput, and the logical solution is to take it over the mountains and do it in the Prairies. We have all sorts of reasons why it should be in the middle of Saskatchewan. I have given you some of them.
We have a plan, and you have in your hands the first phase of that plan. We call it CISCOR, Canadian Intelligent Super Corridor; it is a big name, but it matches the names of the corridors in the U.S. with which we would be linking. CISCOR would stretch from Halifax to Canso all the way through to Vancouver and Prince Rupert. We will also have a smart port.
A smart port is different from a container port. We have container ports all over the country where you take boxes in, you disgorge them, you load them onto trucks, or you stuff them and transport them, set them in the transportation system again. We are not talking about another container port. We are talking about a smart port, which, in its initial stage, is a bunch of computer nerds who manage the boxes from where they start out in Asia to where they end up. They have them all sorted out: where they are going and how and how they will fit onto the trains when they hit the land and how they will transport into the intermodal system on the trucks and so forth. They manage the system.
This is not a new concept. Kansas City has a smart port that handles the trains coming up from the South, the Mexican trade coming up into the U.S. Northeast. We are going to visit them in April. We have that model all ready to go.
The key, which is often dismissed because we think only of containers and trains running up and down the country, is the free-trade zones that you put around Saskatoon, Regina, and Moose Jaw. The smart port will start putting the people who are bringing products in, the Wal-Marts of the world, at these points for disgorging the product, putting it on trucks or other trains and so forth. Also, there are the disassemblers or the reassemblers from Asia, because big pieces of equipment are not put into a container. Rather, they are broken down into smaller pieces so that they can be packed in tighter, and then you have to have someplace to reassemble them. This is big money and big activity around the three cities we are talking about. I will stop at that point and take questions.
The Chairman: Thank you. I will give the floor to Senator Tkachuk who is our representative from Saskatchewan.
Senator Tkachuk: Thank you, gentlemen, for your enthusiastic presentation, and I know from the meeting that we had here in Vancouver in January how enthusiastic the people from Saskatoon and from Moose Jaw are in promoting a facility like this in our province.
We have heard a lot of testimony about the problem of moving exports out of the Port of Vancouver successfully; we have heard that it is a bottleneck. Mr. Campbell alluded to the fact that 50 per cent of our potash is now moved through Portland, and this is obviously one of the reasons. How does the idea of a smart port in Saskatchewan solve that problem, or does it?
Also, you talked about loading and unloading and getting facilities like Wal-Mart or others to locate in our province, if that is where the smart port is. Wal-Mart has just finished building a large facility in Chicago. How do we compete against Chicago for this kind of facility?
Mr. Williams: Chicago is the bottleneck of North America. How many trains and how many lines go into Chicago? Ten railways go into Chicago and have to be changed; containers have to be changed from one rail line to another. That is the whole problem. Keep the traffic up out of Chicago as long as you can. We have a direct line in there, but they are saying try to avoid Chicago.
Mr. Campbell: Chicago was the centre of the American Midwest just as Winnipeg was in Canada 40 years ago. That is why all the railways come there, and it is geographically the best distribution centre for the U.S., but there were a lot of railway bankruptcies until 1980, when legislation address that. Since then there have been amalgamations and streamlining. CN and CPR got very aggressive in there. They did deals with other railways. They bought some railways so that they could get around the black hole problem of Chicago. For all the obvious reasons it will still be a major receiving area, but for distribution, the Wal-Marts would very gladly bypass Chicago, pretend it does not exist, and go instead to Memphis. Therefore CN is looking at Rupert to Memphis, as an example. CPR has its certain strengths. CN can get into Kansas City. Los Angeles is trying to get to Kansas City. Kansas City is doing a lot of things, but Kansas City again is very well positioned geographically.
What we are saying in a smaller way, because we do not have the consumer demand in Saskatchewan, is that we are one of the very best staging areas, and the smart port aspect of it is to do the security clearance, the stuffing, de- stuffing, the grading, the packaging, and so on there rather than on the Vancouver waterfront. Some of it is physical infrastructure. Some of it is brain power.
Regarding your other question about Vancouver's being a bottleneck, I think it is important, particularly given that your hearings are in the public record, that I at least state that Vancouver is a superb port, one of the very best in the world. It has growing pains. The Canadian government and the Canadian Wheat Board made major sales of 5 million, 6 million and 7 million tons per year to China in the early 1960s. Vancouver could not handle that, but they have built new facilities. On the North Shore, the Saskatchewan Wheat Pool came in 1968 and Pioneer Grain in 1973. Then there was the expansion of the Alberta Wheat Pool, which became first Agricore United and then Cascadia.
We have double the capacity. We have improved to the point that we could put 24 million tons of raw grains through the Port of Vancouver. Bulk grain is not an issue. In addition, we have added Columbia Containers and Coastal Containers. Vancouver Wharves lost the potash business, as did Neptune. I was hired by Vancouver Wharves to put together an agri-products facility. We did, and it included gentle handling systems and rubber belts instead of screw conveyors so that product would not break from a No. 1 food to a No. 3 feed. On the container side, obviously you are aware of Deltaport, Centerm, Vanterm and Fairview.
We have done a tremendous amount, but if as a researcher — I am an agriculture economist and I spent 30 years on this file — you analyze how we do compared to the U.S. and others, we are slower. Sometimes that is because the public sector is a problem. Sometimes it is because American ports can raise money faster through municipal bonds. There are many complex issues, but there are also many stakeholders in Vancouver very committed to make things work. However, with respect, some of them are quite myopic and they are trying to correct it here in Vancouver by having an underpass and an overpass every five miles when they could do all that in Saskatchewan on the cheap. For Eastern Canadian traffic and for American traffic, you could move all of this intensive work from the Vancouver waterfront to a lower-cost, lower-congestion area.
Mr. Williams: Perhaps you have the opportunity to read the book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. There is a point in there that stuck in my head: in the container business it has been proven over and over around the world that you cannot simply say, ``Well, we will handle our little 1 per cent or 2 per cent or 3 per cent of the trade.'' That does not work. You either take the traffic that is offered to you and handle it efficiently and effectively, or you die. That is what happens. If you cannot handle those shippers coming in, then they go someplace else. Vancouver either gets to the point where it can handle the traffic that comes to it, or it dies. I thought that was a very telling point he made in that book.
Mr. Campbell: Los Angeles-Long Beach did dominate this area for a long time. Now they are so congested that they cannot do it. They are making highways underground. They are doing a ton of stuff, but they are just too choked. Wal- Mart could not care less about municipal problems, environmental problems or other problems here. If Vancouver, Prince Rupert or Halifax stands up to the plate, they will get the business. Right now Wal-Mart is very impatient with all West Coast ports. They are looking seriously at going the other way — Indian Ocean and the Suez Canal.
The Suez Canal is wide open. It is not limited like the Panama Canal. It will take us another ten years maybe to get the Panama Canal widened, and still it will not be wide enough for these ships. These new ocean vessels have gone from 4,000 TEUs to 14,000 TEUs. They are floating battleships. They cannot get through the Panama Canal, so there is potential there for Halifax, for Canso, for Quebec and Montreal. However, Los Angeles has blown it. They will not get the business back, and the challenge in front of us right now is whether Vancouver and Prince Rupert can respond, and quickly enough.
Senator Zimmer: Potash is a huge crop. They say we have potential there for 1,000 years. Mr. Campbell, you commented on expanding the potash plant in Vancouver. I understand that the original quote was $10 million, and when it came in at $42 million they decided not to do it, and potash went to Portland. An opportunity was missed here in a lack of vision and planning. What are your comments on that, and what is the lesson we can learn?
Mr. Campbell: I think there are many players there. CN and CPR did not respond fast enough to Canpotex's concerns. They certainly had many warnings. As you know, there is always creative tension between the shippers and the carriers, but from Canpotex's point of view, the competition was not CN versus CPR. The competition was Russia, Israel, Florida, so whether you are a Canadian company or not, you either get your act together or we go elsewhere. Canpotex not only built a facility in Portland, they bought more cars. They bought everything but locomotives to have better control of their system, and it is working beautifully. Canpotex is a tremendous success story. They had the regulatory and legal environment under the National Transportation Act of 1987 and the Canada Transportation Act of 1996 where they had more clout. They had entrepreneurial freedom. They had a vision, and they executed that vision by investing 90 per cent of it themselves. Of course, as a by-product, they made Neptune, Vancouver Wharves, CN, and CPR a lot sharper than they were before that.
Senator Zimmer: Dr. Williams, you talked about the free-trade zone, CISCOR. In cooperation, we are already looking at the same thing in Manitoba. We have a port there, as you know. We always talk with Saskatchewan about the fact that we are Prairie provinces. Realistically, the longitude of this country is within 20 miles of Winnipeg, so Winnipeg is the centre of the country. There has been talk about the addition of a Churchill port. The problem with Churchill of course is the ice. The Russians say they will get an ice breaker and break it up. The Americans say you cannot go there. The Russians laugh and say they have been there for 50 years under the water. It is not an issue; they can bust that open.
In conjunction with your plans in Saskatchewan, do you envision working with Manitoba to do the portal route and deal with some of the countries around the world coming that way with transportation? As they always say, go north, young man, go north.
Mr. Williams: Your question is really two questions, or at least requires two answers. The first thing is Winnipeg itself, and you might have said Edmonton or Calgary because they have substantial container ports and much larger activities than Saskatchewan has in total, but in fact because you are in the middle of Saskatchewan, you serve those three major centres there. That is, you can do it better in Saskatchewan to serve the three than in Winnipeg trying to serve the four. That is the one answer. The other is that the direct connection to Churchill is out of Saskatchewan, not out of Winnipeg. It goes from Saskatchewan to Churchill. We are viewing that.
To go back a bit in history, because Mr. Campbell has done so well at recalling where we came from, I was on a commission back when Mr. Trudeau was Prime Minister, and he had this grand idea of a band of activity across the North. They took a whole bunch of us up to Churchill, and the one thing I brought away from that was that Churchill was 100 miles too far south. The Hudson Bay freezes from the south to the north, and if they had put Churchill 100 miles north of where it is now, they probably would have had open water all winter.
Mr. Campbell: If I might, for good or for bad, I was in charge of Churchill for Canadian National in the 1980s, and I have to tell you that it is 380 miles from The Pas to Churchill traversing a tremendous amount of discontinuous permafrost. The railway roadbed is not stable and it never will be, by definition. It is extremely difficult to deal with. I grant that with global warming and with technology, whether subservient through the Russians or others, there might be a potential there, but I can tell you right now that the break-even point of the port is a million tons. The only product going there right now is grain. The reason is political. I think you are all aware of that. Thunder Bay on two good long weekends can do more than the Port of Churchill can in an entire season. That is not a shot on Churchill. That is just the reality. The 50-day season extended perhaps to an 80-day season cannot match any facilities that have a nine-month to 12-month season.
Senator Zimmer: A little competition going on here, Madam Chairman?
Senator Mercer: Speaking of competition, I am here from Halifax. Thank you very much for your positive comments about Halifax, and my colleagues have heard me preach this. I have one comment or two comments. You fellows lack some enthusiasm. You will have to get a little more enthusiastic about this project.
One concern I have is security. Let us assume you get everything you want. A ship pulls in here with 10,000 boxes on it, you offload the boxes right onto railcars, and take them off to Moose Jaw. How long would that take to travel? One day for the ship to land and offload and two more days to get to Moose Jaw. Those containers are on Canadian soil or perhaps port side for three days. We talked about security when we visited the port yesterday. Would you have the containers pass through security here in Vancouver prior to going to Moose Jaw, or would you have security done in Moose Jaw?
Mr. Campbell: The American perspective is that the security should happen in Europe or in Asia, and they are pushing very hard for that. In other words, the containers would not be loaded onto those ocean vessels without having been security cleared. If that were the case, then the port officials in Halifax or Vancouver or Prince Rupert would simply check to make sure that the containers coming through are still the same ones that were cleared.
Senator Mercer: You are talking about what we have in many airports in Canada: pre-clearance.
Mr. Campbell: In terms of management philosophy, it is always best to do all that you can at source. Every time you do it in the middle of the chain, you add to the handling.
Senator Mercer: We would assume then that the container would be pre-cleared in Hong Kong and that between Hong Kong and here it would not be touched. There would be seals on it, et cetera, that would guarantee that.
Mr. Campbell: Certainly. That is relatively straightforward to control. Then the shipper and the port officials will double-check to make sure the same containers that were loaded are offloaded. It is not an overwhelming task from a management point of view, and you would have the bar codes and the X-ray machines or whatever to do random checks. You have to make sure that there was no tampering through bribery for instance at a certain port in China that has a reputation for corruption. You need double-checks and triple-checks.
Senator Mercer: Would that happen in Moose Jaw as opposed to in Vancouver?
Mr. Campbell: Canadian and American officials are actively working on new security technology in concert with European officials. I do not know where the Asians are on this, but they will adopt what they have to. However, if we are talking about vessels carrying 14,000 containers, from a management point of view would it not be smarter to do the security at the loading end rather than in 14,000 locations in North America where they are offloaded? Moose Jaw certainly would be built to have security capability, but the extent of its sophistication I think really depends on the much bigger players.
Senator Tkachuk: For the record, for our benefit, what has to happen for you to be successful? What are the steps? What role would the federal government have to play?
Mr. Williams: This is our plan at the moment. We have just completed the preliminary study you have in hand, which is really just a concept. We will spend the next six months approximately preparing the process for tendering for a business plan. It is such a complex issue that it will take us that long to put together the tendering. Hopefully Mr. Campbell will lead that project. We will be looking for money for that, and it may be government money that comes or it may be private sector money. It is my job to get the money. That takes us into mid-summer or early fall, and from that point on we will do a full-blown business plan, which will be a very complex matter. I think what has to happen is that governments have to indicate their willingness to address this issue and be receptive. I expect the private sector will do most of the driving, because that is what is happening now — it is building and structuring and so forth — but governments have to say yes, they are interested, because free port or free-trade zones are obviously a government issue. I think government has to come along step by step to make sure this thing happens. We do not have much time, senator. We cannot say it would be nice to have this in 20 years. That is too long. We need to do this in half a decade. We are not building huge buildings or digging huge canals. It is putting a system together.
Mr. Campbell: Thank you for the question, senator. That is obviously what should be and hopefully is driving your committee, and it is a very large topic. I will just mention again that we have had three policy think tanks in Regina, Winnipeg and next week Calgary, and they are all coming together in Vancouver on May 2, 3 and 4, and that is the stuff we will focus on. We will look at one mode versus another, one jurisdiction versus another, how to get the economics and the environment on the same page. All of those are critical. At the Winnipeg conference we created the North American Transport Competitiveness Research Council, which will have all the key universities from Canada, the U.S. and Mexico bringing their best people together to try to identify many of these issues and do priority research on them. Those are some of the areas, but it is a very large topic. We could talk about it for a long time.
Senator Eyton: As Senator Mercer has at least implied, you are an excellent missionary team, and from your polish and your complete presentation I assume you have been at it for some time. You have tested the waters. You have talked to a lot of people. What kind of traction are you developing? What kind of support are you getting and from what sectors?
Mr. Williams: Well, yes, we have had it quite good. Senator Tkachuk can verify that. He was at a meeting here in Vancouver about three weeks ago where we brought in many of the stakeholders, that is the shippers and the shipping companies and the railways. At the end of the meeting, because I had to have something to go home with, I asked who is with us and who is against us, and eight of the private sector people said they are with us, including CNR, which was critical, of course. We do have that kind of traction.
I am working now with Moose Jaw, Saskatoon and Regina, because they are separate entities and in a sense they compete with each other, to pull those three cities together to recognize that it is a virtual port around those three cities. We are in the process of signing a memorandum of understanding between them specifying that we will work together and how we work together. Your question led me into saying that there are local issues and there are major issues.
Halifax was at the meeting in Vancouver here. They are very interested, and we have continued in conversation, as has Hamilton, believe it or not. Part of what we have to do this summer, in this six months of getting ready to do the tendering, is to go face to face with every one of the players, all the cities on the Prairies that have container ports, as well as the Port of Montreal and the Port of Halifax; we have to sit down with them so that everybody understands where we are coming from and where we are going so that there is some congeniality.
Senator Eyton: In that process, I assume parties will recognize that some will win and some will lose. That is the way it is.
Mr. McBain: I am here to talk about what I consider to be the Moose Jaw advantage, but I recognize that at the end of the day we all believe that it is the Saskatchewan advantage, whether it is Moose Jaw, Regina or Saskatoon or some combination, we well recognize that it is a Saskatchewan advantage.
Senator Eyton: Picking up on the tri-city effort, one of you referred to a free-trade zone somehow encompassing all three cities. I am not aware of any similar free-trade zone. That is quite a lot of geography and with it I think quite a lot of complexity. Can you comment on where you think that will go?
Mr. Williams: I will know better in April when I go to Kansas City. I do not know whether our regulations would allow us to do it the same way, but Kansas City has multiple free-trade zones in the area, each maybe no bigger than a great big warehouse.
Senator Eyton: It was the idea of the three cities that caught my attention, because there is some separation between them. I am well aware of bonded warehouses and the like. Were you suggesting multiple bonded warehouses?
Mr. Williams: Yes.
Senator Eyton: Anybody can do that. You can do that in Winnipeg or anywhere.
Mr. Campbell: Senator, we have maybe de-emphasized here the fact that we have a massive flow from China to Chicago in one direction. Right now the drivers are the ocean shipping lines who own the marine containers, and their instructions to CN and CPR are to get back as soon as you can and reload. Saskatchewan, Manitoba and Alberta see all these empty containers returning, and Saskatchewan's whole history and its blood is export. We produce 1,000 times more than we can consume; we are a small population with a great productivity base. How can we capture those empty boxcars, hopper cars, container cars, and catch not the free ride but maybe some day be the front-haul and not just the back-haul? That is the other side, if you will, of the slingshot, and that is in part what drove AgriVision and others. We want to capture that. The railways, because of their instructions from the ocean shipping lines, cannot tolerate a lot of delays. Each of those players have opportunity costs. We think that properly managed Canadian shippers, Prairie shippers, can be at the right place at the right time, load the right product and the right equipment and take advantage of the return ship to Asia.
Mr. Williams: I might add that it is interesting that the meat trade is the opposite: they go out of Saskatchewan full and come back empty. It is the reverse, and we are having trouble getting that system to work effectively for our packers.
Senator Eyton: We have heard from a number of voices that the railways that you said nice things about have in fact been part of the problem. I was going to leave that alone, except to note that there has been some criticism of the cooperation and the availability of railcars to service the terminals in a timely way.
I would like you to comment on something we heard this morning, that, particularly in Asia and perhaps in other places as well, Canada has a bad reputation, a terrible reputation, as an exporter, and more than any other factor it relates to reliability and shipment from Canada into those markets.
Mr. Campbell: That is a very good question, senator. In 1973-74 I was involved in representing the wheat growers of the Prairies. During that time, there were 170 days of labour management disruption in the Port of Vancouver, half a year. There were about 15 to 20 bargaining units, grading, inspection, railways, longshoremen, the Grain Workers Union, part of the United Food and Commercial Workers Union and the brewers. There were major issues, and it hurt us a lot. Fast forward to the 1980s and you see that the Port of Vancouver pulled together unions, shippers, railways and municipal leaders, and they became part of the trade team. They went to Hong Kong, to Shanghai, to Singapore. They did a enormous amount of work showing that Canada could be a united team. That helped tremendously. Then less than two years ago we had what some call the wildcat of independent truckers here in Vancouver that caused another major disruption. In the view of the Chinese, the Japanese and others, Canada did not respond in a timely, meaningful way, so our reputation was hurt again. It is an ongoing issue. We need to be always vigilant on that. We need better systems.
The Asia-Pacific Gateway and Corridor Initiative has a consultative process between those truckers and the BC Maritime Employers Association. We have WESTAC, the Western Transportation Advisory Council, which brings groups together. We have the Greater Vancouver Regional District round table on transportation bringing people together. We do have a lot of mechanisms in place, but our reputation could always be better.
The Chairman: Thank you very much again for your presentations today, and we wish you the best of luck.
Our next witnesses are from the Greater Vancouver Gateway Council, Mr. Bob Wilds, and from the Asia Pacific Foundation of Canada, Mr. Paul Evans. We welcome you to our committee.
Bob Wilds, Managing Director, Greater Vancouver Gateway Council: Thank you very much for the opportunity to appear before you today to present our views on Canada's intermodal transportation system, which is so critical to the success of our gateway. Our council represents the interests of the major transportation service providers in this region, including the Vancouver, Fraser River and North Fraser River port authorities; Vancouver International Airport; Canadian National, Canadian Pacific Railway, Burlington Northern Santa Fe Railway, and Southern Railway of British Columbia; the Greater Vancouver Transportation Authority; BC Wharf Operators' Association; the BC Maritime Employers Association; BC Ferries; the Railway Association of Canada; the BC Trucking Association; and the Centre for Transportation Studies at the Sauder School of Business at the University of British Columbia. We have all modes represented in our group. We also have a large associate membership that includes the four western provinces; Transport Canada; a number of business organizations, including the Asia Pacific Foundation; the Western Transportation Advisory Council, WESTAC; and the regional government, the Greater Vancouver Regional District or GVRD.
We published a vision document in 1999, and I have provided copies for you, in which we established a vision of becoming the gateway of choice for North America. We were hoping to do that by ensuring that we provide cost- effective and efficient multimodal transshipment of cargo and movement of passengers within and through this region. In order for this gateway to accomplish that vision, we designed a major commercial transportation system for this region that was intended to address the major traffic congestion that had developed as a result of the lack of infrastructure investments by all levels of government. Our proposed system was intended to make the maximized use of the existing system by 24-hour-a-day, seven-day-a-week operations. It called for rail improvements for rail movements that were free of road constraints, expanding the use of our waterways, increasing rail capacity, major road investments, and increasing passenger rail capacity in the region. We are pleased to see that what we had proposed has for the most part become the infrastructure program included in the Regional Transportation Authority, the Province of B.C. and the federal government's Asia-Pacific Gateway and Corridor Initiative.
We also identified a number of policy and regulatory issues that had to be addressed if we were to meet our full potential as a gateway. We advocated for new Open Skies agreements between Canada and other countries, the establishment of foreign trade zones, and improved services for passengers and cargo at our airport and sea ports that would generate new economic growth, jobs and tax revenues. We also proposed tax exempt bond financing for transportation infrastructure, reinvestment of a portion of transportation taxes in transportation infrastructure, and a long-term national transportation infrastructure investment program.
Based on our published 2003 economic impact study, this gateway generated wealth and jobs for the region, the province and Canada. We had annual payrolls of some $3.6 billion, paid some $3 billion in taxes every year to the three levels of government, and the total economic output was $10 billion. We generated some 75,000 direct jobs; and total direct and indirect and induced employment amounted to 139,000 jobs, generating $8.4 billion in GDP and $19 billion in economic output in British Columbia. Other Western provinces also benefited, with 4,400 direct and 2,000 indirect jobs, generating an additional $252 million in GDP and $377 billion in economic output as a result of the gateway.
Canada is a trading nation, and we must seize upon the opportunity that has been presented to us by the growth of trade with the Asia Pacific region. Transportation service providers in our gateway have been investing hundreds of millions of dollars in new and expanded infrastructure and equipment to participate in this growth. Our regional transportation authority, provincial government, and federal government have, as I mentioned earlier, announced infrastructure projects consistent with what we have been proposing. However, we are very concerned with the speed with which they are being implemented. We seem to lack a sense of urgency that does exist in other jurisdictions, such as China. For example, it has taken three years to obtain environmental approval for a single new berth at our Deltaport, while Shanghai built an entirely new terminal equivalent to the entire capacity of Canada's container terminals, including a 32-kilometre, six-lane road, in a three-year period. We are very concerned about the length of time it will take to achieve environmental approval for the second terminal at Deltaport if past experience is any indication, and that terminal is essential to our ability to meet projected container growth. We are not advocating for adopting the approval process used in China, but we do believe that significant improvements in our process could be achieved with a truly harmonized process with the provincial government and with specified timelines.
Other areas that we believe must be addressed include the following: We think there is a need for a national transportation policy that recognizes the importance of transportation to the Canadian economy and that focuses on the health and performance of our national system and monitors and measures performance to ensure that the transportation system is operating efficiently.
We need long-term funding from the federal government that will address the needs for infrastructure and transit in metropolitan areas, especially those that are major gateways. Growing gridlock must be addressed if we are to remain competitive.
We need amendments to the capital cost allowance rules for railways and the trucking industry. An incentive-style system would allow transportation service providers to depreciate equipment more rapidly. This would address the current imbalance with the United States, which has a more aggressive capital cost allowance regime. A more competitive capital cost allowance system would encourage transportation companies to purchase new equipment, such as rail rolling stock and more emission-friendly trucks.
We also need labour stability that will allow for reliable transportation services without concern for disruptions. The current situation would only be further eroded with the passage of Bill C-236, which would preclude the use of replacement workers during a labour dispute.
We need leadership in breaking down the silo approach to resolving transportation issues where the various service providers only address issues from their own perspective.
We also need to ensure that security measures implemented are consistent with requirements established by the United States, our largest trading partner.
We need federal government investment in all modes of transportation. We are pleased with the recent announcement of $50 million for addressing level crossings along our Roberts Bank Railway Corridor, which will assist in addressing traffic delays associated with increased rail traffic along this corridor. We believe this is an excellent example of multi-party involvement and investment in solutions and that this mode should be used for other transportation issues.
There is also a need for regulatory stability. Recommendations for amendments to the Canada Transportation Act and the Canada Marine Act have been outstanding for extended periods of time, and the industry remains uncertain as to what, if any, amendments will be implemented. This uncertainty negatively impacts decisions about capital investments.
We support the integration of the three ports in this region. We believe integration will provide improvements such as more effective competition for Asia Pacific trade, simplify promotion of the region to foreign audiences, and allow for improved land development.
While we are mindful of your focus on the container sector, the need to service bulk and break bulk cargoes that represent the majority of tonnage moving through our port systems must not be overlooked. In addressing the growth in container traffic, particularly with respect to rail, we must remember that the bulk and break bulk commodities are almost entirely dependent upon rail, and they, too, are projected to grow in volume over the next ten to 15 years.
We hope that we have provided you with some examples of areas that require attention if Canada's intermodal transportation system is to be competitive. We would be happy to try and answer any questions that you might have.
Paul Evans, Co-CEO, Asia Pacific Foundation of Canada: I very much appreciate the opportunity to appear before the committee this afternoon, and it is a double pleasure to be able to do so in my own time zone without jet lag.
The Asia Pacific Foundation of Canada was created by an act of Parliament in 1984. Funded by the federal and provincial governments and the private sector, it aims to improve Canadian public understanding of Asia and to serve as a resource for Canadians in making policy choices about how to respond to and influence the enormous changes that are happening across the Pacific. The foundation does not specialize in transportation studies per se, but it has had a special interest over the past two years in the Pacific Gateway concept. From our perspective, gateway and corridor initiatives are largely about expanding our integration into global supply changes and logistic systems that more deeply connect North America to Asia, and, in particular, Canada to Asia. We are about Canada-Asia relations, and we think that a gateway is fundamentally about Canada-Asia relations in addition to being a global issue.
Our activities at the foundation with reference to the gateway have taken four forms. First, we have commissioned about a dozen studies on different gateway subjects that are at various stages of completion. Last week we released an analysis of the Atlantic Gateway, our analysis of the strategy that is unfolding in Atlantic Canada and how that connects into what we see as a national program that needs to be developed. I will circulate copies of the report we released last week in Halifax to all members of the committee. Some of our other studies are looking at a green gateway and issues around sustainability and environment as they affect a gateway strategy. We are doing other studies on cultural industries as part of a gateway initiative. We are doing work on transnational migration and business linkages related to gateway, including tourism. We are doing a new study on building an e-platform for stakeholder collaboration among private sector players in transportation gateways.
Second, the foundation has commissioned several surveys, including one focusing on the Chinese strategies of about 1,000 members of the Canadian Manufacturers & Exporters and a national poll on attitudes towards the competitive challenge posed by Asia and how to respond to it.
Third, we have convened a series of meetings with experts, government officials, business leaders, and community representatives in seven Canadian cities over the last year stretching from Vancouver to Halifax to get a sense of what both the enthusiasts and some of the critics are saying about gateways and the transportation systems that lay beyond them.
Finally, we have been trying to communicate some of our findings about gateway from our studies and from our conversations across the country through the media and through several speeches. We have given 20 different speeches in Canada, the U.S., Mexico, Japan, India, China and Hong Kong about gateway and we have been getting some preliminary reactions not only across our country but in some of the countries that will be partners in deeper gateway activities.
As part of our communication on gateway we wanted to hear what the younger generation is thinking about gateway. We commissioned a poster competition for high school students in British Columbia and asked them give us their visions of what a Pacific Gateway looked like. We had 280 applications. You will see some of their submissions in the materials you have and I have brought one in particular about containers to show you. We think gateway is attracting enormous attention, generally positive attention, including from some of our next-generation thinkers.
Based on these activities, I come with two ideas today for the committee. The first is embodied in the slogan that we are now using at the foundation to describe gateway: Think big and quickly, think nationally in an intercontinental context, and think comprehensively. You have been hearing about thinking big for some time at this committee, and what we add is that thinking big is not only about a response to the immediate capacity crunch facing our ports and our rail and road corridors, as Mr. Wilds noted, but also about thinking about gateway in the context of the huge shift in global markets and production systems. Many of these shifts focused on Asia and a global China that is not just entering the world economy but transforming the world economy. Thinking about the size of ports in China and the competitive challenge posed by China and an integrated Asia is the background to gateway discussions and the urgency in them.
Thinking nationally refers to a strategy that extends beyond the West Coast, beyond Vancouver and Prince Rupert into Western Canada, but our conception of an efficient gateway and corridor strategy is that it must include other parts of Western Canada, it must include Ontario and Quebec, and it must include Atlantic Canada. Our publications and our meetings have tried to speak about gateway on a national basis, not just for political reasons but because an efficient system and attracting the resources we need will require a full, national engagement.
Finally, we are thinking comprehensively about gateway. Our work has been a little different than some of the other presentations you have heard in that we feel that an integrated transportation system is essential to a gateway, but it is not the full conception of a gateway. The human resources that will be necessary to make the system work have to be examined, and we feel that on labour and human resource issues, for example, it is not just a matter of dealing with labour shortages, labour union issues, and the labour skill shortage that we have to address. We feel gateway is also about high-end capacity, the logistics managers who will be needed, the university-based research on transportation, and integration with Asia. These need to be part of a comprehensive approach to gateway. The human dimension is just as important as the physical dimension of the infrastructure and will include next-generation educational exchanges with Asian institutions, tourism and migration.
The second message I bring today is that getting and retaining public support for gateway activities will be a challenge. Many of our transportation experts and our business people are excited by the prospect of gateway, containerization, and much bigger and more efficient transportation systems. Our governments at multiple levels are becoming more active. For many of our generation, gateway — a Pacific Gateway and an Atlantic Gateway to Asia — is what the St. Lawrence Seaway project was to an earlier generation: a chance to use a big infrastructure project to restructure the Canadian economy and to change the mental map of Canadians about who we are, how we produce, and with whom we trade.
That is on the positive side, but I think that we also need to be aware that there are some concerns about gateway, about the kind of image of business and our future that lies behind it. The containers that are the symbol of gateways and of the new trans-Pacific trade and global supply chains are not seen as positive by some people. There are practical reasons for this. Some cannot get access to those containers. We heard mention of that a few minutes ago. In our meetings across the Prairies the point was raised that a container is great, but how are we going to get on it? There are congestion issues in parts of British Columbia. There are problems of inconvenience to individuals whose communities are divided by rail lines which are hard for them to get across in the middle of the day as our container traffic increases. There are environmental issues. There is resistance to gateway in some places and this bigger vision behind it because of real economic issues. To those of us in Western Canada, Gateway and containers are good news; they mean lower- priced imports from Asia and a higher-priced, better, more effective way of shipping our products to Asia. However, where we have done polling and meetings in Ontario and Quebec, the picture is a little bit more complicated: the containers symbolize lower-cost imports into the region and are loved for that reason, but in other ways people see containers as a threat to jobs, as a way of changing the economic competitiveness of their regions and, at the end of the day, as a symbol of a change in quality of life and lifestyle. Those containers symbolize globalization, and not everyone reacts to that in a positive way.
Let me conclude by saying that we think there are responses to those concerns about gateway, but they will depend, first, on new metrics that show how container traffic benefits the communities through which containers pass, not only that it provides national benefits. How do we measure local benefits? Second, it will depend on how much we will be able to encourage new secondary industries to take advantage of new transportation systems. Third is having a green strategy, not only in some of the things we are already doing in our gateway and corridor initiatives but also how we will brand and create an image for our gateways that Canadians and people of the world see as meeting the highest environmental standards and in fact setting the standards. Finally, we will need national leadership from the Senate, the House of Commons and our leaders across the country telling Canadians how we can use a gateway to advance their material standard of living and how we can compete in an increasingly difficult and challenging global international environment.
The Chairman: Thank you very much. The consensus built over ten years by the Greater Vancouver Gateway Council allowed governments to respond to its needs relatively quickly and in a collaborative fashion. Officials from Transport Canada told this committee that the relationship between the federal government and the Greater Vancouver Gateway Council is under development. How would you describe the relationship that the council and the federal government are developing at this moment?
Mr. Wilds: I would say that the relationship between the Greater Vancouver Gateway Council and the federal government has been excellent from the outset. Until recently, Transport Canada had been the honorary chair of the council. We have met with the minister regularly. Currently, at the suggestion of Minister Cannon, our honorary chair is Minister Emerson, who is responsible for the gateway program. We work closely with the regional staff as we do with the transportation departments of all the Western provinces. I think we have an excellent relationship with the federal government as well as with the Western provinces.
The Chairman: In the fall of 2005, major transportation providers, commodities, retail and shipping interests, Western provinces and Transport Canada came together for the first time to talk about forecasts and expectations. Officials from Transport Canada told this committee that they intend to convene a meeting of this sort every couple of years. How helpful do you think such an initiative could be?
Mr. Wilds: It is essential that there is a regular revisiting of the forecasted growth for these various commodities for a number of reasons, and the most important one is that the last thing that anybody wants to do, whether a terminal operator, a railway, a port authority or anyone else, is exceed their requirements for capacity expansion. We have never had a regular forum where we could discuss projected growth; nor have we had an opportunity to review that on a regular basis. I think the meeting you described provides an excellent forum where the people who deal with the exports and imports come together and discuss it so that all of the parties in the logistics chain can have a reasonable understanding of what growth is or whether or not reductions are expected so that we can all make intelligent investment decisions.
Senator Eyton: Mr. Wilds, you began your remarks by referring to the organizations that you represent here today, and it is a long and impressive list, but it does not include Prince Rupert. Why is that? Is there some difficulty?
Mr. Wilds: Our organization goes back in its initial stages to 1987, when we were in the position of trying to recapture significant container volumes from the U.S. which was handling a large volume of Canadian containerized cargo through Seattle-Tacoma in particular. Six organizations got together. I happened to be the president of the BC Maritime Employers Association, and prior to my retirement we were dealing with two port authorities, two railways, and the International Longshore and Warehouse Union. Our focus was specifically on that issue and what we had to do in order to recover cargo. Obviously, Prince Rupert is now becoming a major focus with respect to containerization. We certainly have discussions with them, but our focus has historically been and continues to be and our representation is the service providers who provide service in this region. We are interested in having a closer working relationship with the northern corridor group that represents the interests of Prince Rupert, and we will continue to pursue that as we go forward. We are interested in seeing more than enough cargo available for everybody, and we have to maximize all the assets that we have on the West Coast.
Senator Eyton: Thank you. In your remarks you mentioned areas that should be addressed, and I will just pick a few of them. You called for a national transportation policy. You spoke of the need to address infrastructure and transit in major metropolitan areas. You talked about the need for labour stability. All of those involve the federal government, which of course one reason you are here today, as well as the provincial governments with overlapping jurisdictions. It seems to me that all of those issues, and I suppose many more in my world, would be subject to a coherent business plan where the players, much like the people that you represent, came together and said here is the gateway project and here is how it will be implemented. That plan would design or suggest a national transportation policy, and it would identify the infrastructure and transit that is needed as a part of that. It would talk about labour stability in a meaningful way.
One observation is that general points do not really mean anything. It is lovely to hear that you recognize the importance of transportation to the Canadian economy and of a policy that focuses on the health and performance of our national system. That is nice in terms of the general presentation, but it is not helpful in terms of what are you going to do today, tomorrow and next year, and it does not give you any indication of the financing and the commitment that are required in a coordinated way. It is the private sector and I suppose the municipalities, and certainly the provinces and the feds. Our chairman referred to a meeting to exchange information every couple years. That does not help either. It requires a concerted effort with a coherent business plan that can be implemented in a realistic way and people who have direct responsibility to see that it is implemented. Has any effort like that ever been undertaken? I have heard many speeches along this line, but I have not seen any evidence that the people are going to grab hold of it and in fact make it work.
Mr. Wilds: Well, quite frankly, I think we grabbed a hold of it in Vancouver and made it work. I think the Asia- Pacific Gateway and Corridor Initiative exists primarily because of the effort made by all of the participants, including the four Western provinces. Transport Canada, the services providers and the business organizations came together and designed a plan that we said we needed to have in order to meet the growth that was happening. At that time we were talking about 4 million containers. We are now talking about 6 million, so I think that we have made it work. Also, the organization that was established here on the West Coast is now being patterned in Halifax and in Southwestern Ontario, and I think it is important that these groups come together with competitors in the system.
Senator Eyton: I was more directed at the national effort, because in fact you refer to competitors, and of course there are competitors, but somehow we have to bring them together so that it is consistent and beneficial to the country as a whole. I can see that what you have achieved with the gateway project here in the West is terrific. It should be better known and it should be integrated into a national system that is beneficial to all Canadians, and I am not aware of any effort like that.
Mr. Wilds: I believe that Transport Canada is making some effort; they have been instrumental in getting similar councils established in other parts of the country. I would like to believe that over the longer term the whole intent is to have national system of organizations that deal with these issues. Our issues are not the same as those of Halifax or Southwestern Ontario, so it is not our role to deal with the federal government and how they should do it on a national basis. I think that Transport Canada is taking a leadership role in this, and I think a long-term objective is to be able to address issues that are specific to particular regions while at the same time having the overall interests of Canada in mind. That is really the federal government's role.
Senator Eyton: I can see that. I can see the federal government coordinating, but I would not expect the day-to-day leadership in terms of the implementation to come from Ottawa.
Mr. Wilds: I agree with that. That is why we are involved here and there are other councils involved elsewhere. I would like to think that the provincial governments would have a significant involvement.
Senator Eyton: I am trying to encourage you to be even more ambitious than you have been up to now.
Mr. Wilds: We prefer to take little steps and be successful rather than big ones and fall off the edge of the cliff.
Senator Eyton: You referred to the amendments to the Canada Transportation Act and the Canada Marine Act. Have you been following that process closely?
Mr. Wilds: I understand that there is progress.
Senator Eyton: As it stands today, would you be satisfied with those amendments?
Mr. Wilds: I am not in a position to say I support the shipper side or the railway side under the Canada Transportation Act review. What we really need is certainty. Not everyone will be happy with the final legislation, but what is crucial at the end of the day is that the participants in the industry know what the rules are, can operate by them and can make their decisions accordingly. That is more important than my sitting here saying I think it is too much for the shippers and not enough for the rail or vice versa. It has to be a fair system where both shippers and railways get an opportunity to deal with what they consider to be unfair issues and reasonable, expeditious and affordable means of resolving these differences.
Senator Zimmer: I have a question for each of you, since I understand your ages are within three years. Mr. Wilds, you make strong arguments for more infrastructure and long-term federal funding, but for that you need to have the land, and you mentioned the green space also. My understanding is that a fair amount of land or some of the land around the port is being sold to developers and individuals. Once the condos and their residents get in there, they become very territorial and they start being very responsive to noise pollution and the colour buildings are painted and so on. Do we have a problem as far as land is concerned in that area for long-range planning?
Mr. Wilds: Unless we act fairly quickly, we will have a problem. Our organization is doing some work on the availability of industrial land in this region. We have recommended that we should try to move more goods around here by the water system, which would relieve congestion on our road system, but in order for us to be able to do that we have to have access to significant industrial lands with road, rail, and water access. We are losing those sites on a regular basis. We are dealing with the provincial government on that issue. We are dealing with the Greater Vancouver Transportation Authority and with various business organizations, and there is a sense of urgency to protect the remaining industrial land in this region in order for us to be able to meet the growth. It is a real issue, we are well aware of it, and we are working with a number of parties to address it as quickly as we can.
Senator Zimmer: Judging by your response, you seem to be on top of it. Mr. Evans, you talked about Canada-Asia relations, an extremely important issue. We have heard that there are problems with rail, port and service and that the Vancouver ports have a terrible reputation. First, is this true that you know of? Second, I realize one of the best ways to get a good reputation is to provide good service, but are there other things we can do beyond that to improve our relationship with Asia?
Mr. Evans: We have to do some careful assessments of the responses and the views of our Asian, American, Mexican and European collaborators about how good we are on the West Coast and how good we are in Halifax. As we are going the rounds with initial meetings, there is a list of concerns that are raised regularly about some of the real or imagined deficiencies in our system. I do not even want to try to generalize across all parts of Asia. In Shanghai the concerns about Vancouver are a little different than they are in Hong Kong. In general terms, I think that we have to deal with some old myths that are indeed old myths. You heard from your previous witnesses about attitudes on labour issues. Our labour issues are not perfect in this part of the world, but if we compare them to other parts of North America and to some parts of Asia and Europe, the picture becomes quite a bit more positive. We do have a reputational issue that sometimes is fed by competitive instincts from other players. That besmirching of our record is part of a game, but there are some real concerns. One of them is attitudinal: in Asia and in the United States one of the questions being asked is whether this is a big, sustainable, national strategy. They have many concerns about other issues, but particularly when they look at the amount of resources that are being committed, they wonder. The port complex in Shanghai mentioned earlier is about ten times the investment of our entire gateway strategy. I do not think the federal government needs to put substantially more into gateway, but we have to demonstrate to Asians and to others that private sector buy-in is serious, that the times-ten factor will be private sector investment. Several of our Asian friends are still asking whether this is a national strategy that successive governments will back and that our private sector will back in the right way. Of all of the reputational factors that we must address, this one we can address: to demonstrate that that national commitment is there.
Senator Zimmer: I have one more question. I really like the painting you brought from the high school poster competition. Is it for sale?
Mr. Evans: It is a public good, senator, that is available electronically on our website, which I encourage you to look at. We put about 20 of the posters on our Web site and in the report that I circulated. As I mentioned, there were some negative views about what the container means, but there were more often positive views. Of the 280 posters we received, Mr. Wilds will be very pleased, about 270 of them were positive. The younger generation see these new and deeper linkages across the Pacific as their future, and the future is good. We cannot sell this poster, but we can distribute it far and wide because it is a symbol of a green gateway. We found that the young generation inevitably went to signs of nature, quality of life as well as transportation infrastructure, and putting those together is a challenge even for Mr. Wilds and his associates.
Senator Mercer: Mr. Wilds, I was impressed, as Senator Eyton was, with the membership of your group, except that I did not see any representation from labour, and then I found out why. Since labour is part of the reputational issues that the Port of Vancouver has, I wonder, although you might feel that way, why you would put on the record that you are against Bill C-236, the replacement workers bill. It seems to me that to continue to allow labour replacement workers is a recipe for labour unrest. Bill C-236 may help to do the opposite, but I am curious about why there is no involvement of labour in this process, because you cannot get any of these good things done and could not have done all the good things that have happened in the Port of Vancouver without a solid workforce that is committed to doing the job.
Mr. Wilds: Labour were members of the Greater Vancouver Gateway Council some time ago, and then they opted not to participate for a reason unrelated to the purposes of the council and have opted not to participate since, but we regularly deal with labour. I bargained with labour for 34 years in my career before I retired. We deal with them on any and all issues that are important to the gateway council. They are invited to participate if we have things that impact them. They support us in a number of issues. We do not ask them to participate in issues that do not involve them, but they have been with us to the provincial government a number of times, including on taxation and other things. We have no problem with labour, it is just that they happen not to be members of the council at this time.
Senator Mercer: I recognize also that your having been the president of BC Maritime Employers Association would put you on the labour side. I understand that.
Mr. Evans, the issue of the reputation concerns me. I am from Halifax, so I live in a port city. I understand what reputations can do to areas. How do you tackle this on a global sense? You have a port that is doing extremely well from what we could see and from the testimony we have heard — it is growing, it is modern, it is everything we want it to be — but still there is that nagging question of the reputation that the port is clogged, that there is labour unrest, that a snow storm in the mountains stops the port from working. How do you address that? Do you have a plan that says here are all the negative things people say about the Pacific Gateway and here is how we will fix them? Is there a grand plan that I have not seen?
Mr. Evans: There is no grand plan yet, but I think some of the elements of it are unfolding. Yesterday I had the opportunity to meet with about 40 of our trade commissioners based in Asia and the United States; I was asked to convene a session where they were telling us what they were hearing in each of their jurisdictions, in Shanghai, Beijing, Hong Kong, Nagoya, Buffalo and Washington, D.C. The complaints and concerns fell into two categories. One category I would call the myths of the past, and I think we can respond to those by the careful calculation and selling of realistic statistics. It will take a national effort by the Department of Foreign Affairs and International Trade and our other representatives overseas and in the United States to get this message out. It would help if journalists covered it as well with the kind of sophistication it would take.
Senator Mercer: Good luck.
Mr. Evans: The second category is some of the real challenges. I mentioned earlier the question of whether this will have the sustained support of business and government in Canada to move ahead. We need exploratory studies on the green gateway concept. We are hearing from some of our Asian friends that environment is about tenth or fifteenth on their list of concerns. My own view is that as a snapshot that might be right at this moment, but in discussions in China and in Singapore, if we look at where our ports and our corridors will be in three to five years, Asians are nervous now about environmental issues. The fact that the transportation dimension is now serious is coming up in their day-to-day life and in their consciousness. Anyone in China who sniffs the air knows there are problems.
However, the challenge for us is beyond the myths, dealing with some real concerns, such as where insurance companies are going with rates and where investment in ports is going with companies and with investors who want green strategies or ethical strategies. My sense is that if we look down the road two to three years we can turn what we are doing here with some improvements into a major part of our imaging and branding for the gateways by going green in a deeper and more interesting way.
Senator Mercer: We heard a witness earlier today tell us that Wal-Mart does not care about the pollution in China and probably does not care about the pollution in Vancouver, so long as the product arrives cheap at a price at that they can turn a good profit and arrives on time and in good shape. While I support a green port in Vancouver, I do not see how that would turn me on if I were a manufacturer or a shipper in Shanghai or Hong Kong. I do not see the advantage of it other than to those of us who are fortunate enough to live in Canada.
Mr. Evans: That would be probably the prevailing wisdom with a number of companies, but there are now other big companies that are assessing environmental plans as part of their location strategies. Moreover, as we are seeing in Los Angeles-Long Beach, state pressure on this issue is resonating with the public. If we imagine where we will be in two or three years down this path, that may be Wal-Mart's view, but I think that is a view that investors and their business partners and governments, not only in North American but also in Europe, are readdressing. I believe that, both within the corporate sector and within the jurisdictions that make regulations and put money into operations, we are just on the edge of a green revolution that will affect the business strategies of these companies. I might be wrong. We need careful calculation on this, but I do not think we should be betting against that happening just because of some resistance at this moment.
Senator Mercer: I hope you are right. Thank you.
Senator Dawson: You mentioned popular support and political support for objectives. I have a short comment. For the last 35 years, you had Senator Jack Austin coming to Ottawa talking about the gateway and about the Asia Pacific Foundation of Canada. He retired last week, so I hope you will find a new defender of your cause because he has been one of your great defenders in Ottawa for the last 35 years.
In the same sense of political and popular support, you have to sell your issue. You need those spokespersons; you need those arguments so that people will continue to support you. As far as the amalgamation of the ports goes, you can probably count on our support, but at the same time, if you have 22 or 23 municipal authorities giving land usage a different objective than what you are aiming at or protecting for industrial development, you will run into difficulties. You know they are building personal shipping docks for home owners, and they will not like the fact that those rivers are to be used for shipping. I think you have to count on us for amalgamating the ports, but we cannot help you on amalgamating the cities. I think there is an effort for you locally to be sure that these people understand that there is a long-term cause, because if you want us to support you and you want support from Easterners, you have to prove that you are on the local side, that something is being done to ensure that it will react. As Mr. Williams, who was a witness a few minutes ago, noted, the market is deciding. According to the book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, the reality of the market decision is being taken by a country called Wal-Mart that puts a lot of pressure on people.
You talked about thinking quickly. You know, you have to act quickly. We have had three or four transport ministers in three or four years. We have had legislation that has been tabled and died and tabled and died that would normally help us to modernize that situation, so I think you have to continue your vocation of promotion and talking about it because it will need a lot of political will, which I do not think we have. I just want to make that comment.
We talked about the market making the decisions. What do you think we should be reporting that will make the decision-making process faster so that you can react more quickly? What is the federal government doing badly that you think we should improve?
Mr. Wilds: From my perspective, the speed with which we can get environmental approvals to do expansions is a problem. I agree with Mr. Evans that we have to do a better job and make sure that people understand what we are doing in the transportation sector when it comes to addressing environmental concerns. We all live in this region, we all drink the water, we all breathe the air, and our children and grandchildren live here, so we are not here to see how bad we can make it for everybody. A tremendous amount of effort is being put into that by all modes of transportation, but we do a lousy job as a transportation sector telling people what we do. We have to do a much better job about that. That goes back to your issue on how we deal with the 22 municipalities. We advocated for the establishment of a regional transportation authority and now they have it. It is one of the few in North America, if not the only one. It is not perfect, but it has certainly come a long way from where we were when we had to deal with 22 municipalities individually. There are a many positive things here. We have to build on those and we have to get the message out to all of the communities and through the school systems about why this gateway is good, what is in it for them, and what we are doing to mitigate our impacts on everybody and on the environment with respect to increased rail traffic and level crossing issues. All of those things are happening; we just have to get the message out and make sure that we get more and more people onside. The majority of people support it. The vocal minority are always the ones who get the media coverage.
Mr. Evans: One of the positive aspects of gateway thinking is that it has been genuinely bipartisan or multi-partisan: there were the ideas of the Martin government, and you mentioned Senator Austin who has been a real visionary in thinking about Canada's relations with Asia and where gateway fits in. Much of that vision is shared on the Conservative side and on the New Democratic Party side. I think politicians generally understand that big things are happening across the Pacific and that on balance we need to be more a part of them and that our lives will be better and richer if we connect rather than we protect ourselves from Asia. We have had a multi-partisan consensus on it.
The area where I think the federal government can take special leadership is around the governance mechanism we need that approximates a national transportation strategy. Senator Eyton's question is exactly right. We cannot look to Ottawa as the final leader on gateway strategies. It will have to be the private sector and our publics that push it, but we need Ottawa to design a governance mechanism that brings in a variety of players from the federal government and the provinces, from Western Canada as well as the East, and from the private sector.
Senator Austin had an idea about this related to a gateway council which for a variety of reasons has not been supported by this government. Senator Austin's proposal may not have been perfect, but it did recognize the need for a new council or group that would bring together these three different sets of players for purposes of promoting a national strategy. Thinking quickly and thinking big will need innovations in governance too. If we could call upon you and your committee to produce some ideas on the right balance among these three players — federal, provincial and private sector — that would be a breakthrough and would also help us in our conversations with our Asian counterparts to say this is really moving. This is the St. Lawrence Seaway project for the next generation. It has support and Canadians can innovate.
Senator Tkachuk: I have a series of questions, but before I go on, I should say I like Wal-Mart. To correct my good friend Senator Mercer, I do not think Mr. Campbell said that Wal-Mart does not care about the environment. What he said was that they got the price of a can of beer down to one cent. They do not care what problems we have on the Vancouver port. They want that can of beer to be transported here for one cent and they would find other ways to get it here for one cent just to sell a market in their stores. I thought I would pass that on since that is what he said, and I think that the author himself would agree with me.
We talk a lot about China. In the movies, King Kong was influential and transforming because of his size, not because of technology or because he did good things or improved efficiency or gave workers better salaries. Similarly, is China transforming the world economy because of new efficiencies, new technologies and new universities, or are they just big?
Mr. Evans: I am not sure I would use King Kong as a metaphor for China, but I think your question is important. My sense of why global China is the background to the things we are discussing today is that global China has essentially found a way to link high technology, foreign investment, sometimes cutting-edge technologies to low-wage labour in a manufacturing context. Second, while other countries are also doing it, because of the scale of the domestic Chinese market and because their government and their businesses are able to move quickly, China has become the shop floor of the world in an Asian context.
Global and regional supply chains have transformed Asia into an integrated production zone. The historical parallel that comes to mind is what happened when the United States entered the world economy in a major way just before and after the First World War with the Model Ts and the Ford mode of production. It is that kind of production system that is behind the export surge and is behind China's new connections into its region and globally. We are all now connected into global supply chains, many of which are centred in Asia. Therefore, China is not just King Kong; it is King Kong growing up in a neighbourhood with others that are feeding King Kong and who see him to their benefit. I do not know where Fay Wray is in this situation or who, metaphorically speaking, is being held in the hand, but every business person in the country understands that their business future depends in part on how they react to global China and to King Kong.
Senator Tkachuk: I think I disagree with you about the United States entering it. I mean, the Model T happened because somebody invented a car, someone invented the piston engine, someone invented a way to manufacture it cheaply and faster than anybody else. It was brand new stuff. It seems to me that in China they are making the same car more cheaply because their labour is cheaper and they have so much of it. It is almost disposable labour. There are a billion people there. It is not that they are bringing anything new to the world, they just make it cheaper and faster. What will they need from us? We have spent a lot of time talking about the fact that they manufacture. I think Japan is more equivalent; remember when we used to talk about Japan manufacturing things so cheaply, but they had a free and democratic economy; they had unions; they had stuff happening there that caused labour to participate in the wealth that was received. Therefore, they became more like us rather than us becoming more like them. China has a totalitarian communist government that does not care about human rights or anything else really, and they can continue to exploit their workers for long, long periods of time at the point of a gun rather than bringing up the level of the wealth of their own workers. The distribution of wealth that we take for granted they do not have to do, and yet we are going to trade with them. What do they want from us outside of our natural resources? What can we make that they will buy that is important that we actually manufacture here that creates jobs and wealth and opportunity?
Mr. Evans: China is the good, the bad and the ugly all at the same time. It is the best of times, it is the worst of times. If Charles Dickens were alive now he would set his novel A Tale of Two Cities inside China, which is on the cutting edge of an enormous industrial and social transformation that rivals what happened to England over 150 years and is happening in a single country in the course of a generation. Remember back to 1979 when China was an inward- looking economy. We could not have even imagined then what it would be now. We could not have anticipated the changes, some good and some not so good, that have occurred inside China. I think your fundamental question is one many Canadians are asking: This looks like a powerful, competitive force we are up against, so how do we participate in it? Gateway thinking is essential there. Canadian manufacturers can do things in China. We will need those efficient supply chains, not just to import finished goods from China but to move component parts back and forth. What will the automobile industry look like in five to ten years? I suggest China will be in it in a major way in North America. In that context, considering what we want from China and they want from us, they want to invest in our country. The surveys we have done of outward Chinese investment decisions indicate that they want to invest in the natural resources in Canada. Their number one drive, though, is to invest in manufacturing in Canada, particularly in Ontario and Quebec. They are interested, as Japan was 20 years ago, in outward investment as well. I cannot paint any simple picture of pluses and minuses, but it seems to me that our integration with China as part of globalization is no longer out there. It is a day-to-day economic reality for Canadians.
Senator Tkachuk: Is all our concentration on China? I think India would be at least as great a partner. Their education system produces outstanding engineers whom they have exported to the United States and who have settled in Silicone Valley. Also, India is a democracy. Should we be focusing as much attention of them?
Mr. Evans: I would answer by saying we should focus more attention on India, but not less on China, Japan and Korea. In gateway terms, and Senator Mercer will be especially interested in this, in Halifax they see India as one of their big opportunities for the future. Today, China's manufacturers' exports are about 15 times what India's are, but the Port of Halifax is looking three, five and 10 years down the line. Halifax is closer to the western side of India than is Vancouver. We see a more globalized world as our investment. We have a minister in India now. Our trade relations with India and our exports to India are both jumping very quickly. You have helped us by bringing India into the equation. Our sense of a national gateway strategy is that Halifax and Eastern Canada will be dealing with India as first ports of entry a little bit faster than we think.
The Chairman: Thank you very much, gentlemen, for your presence here today. We will certainly include your presentation and answers to our questions in our report.
Senators, the next witness is from the BC Trucking Association, Mr. Paul Landry.
Paul Landry, CEO, BC Trucking Association: I appreciate the opportunity to address the committee this afternoon. The BC Trucking Association, BCTA, represents the commercial motor carrier industry in British Columbia. Our association was formed in 1913. Our purposes today are to advise our members on all matters affecting the commercial motor carrier industry, to promote and protect the rights and interests of owners of motor carrier companies, and to promote just and fair regulations and enforcement of those regulations.
We are a broadly based organization. You will note that I refer to motor carriers and not specifically trucking companies. We represent companies hauling every conceivable type of freight requiring road transportation, including manufactured goods, dry and liquid bulk products, forest products, household products, and general freight on both a for-hire and private transport basis. We also represent a broad base of waste management companies, many charter and scheduled bus companies in British Columbia, the ready-mixed concrete transporters, a number of courier companies, and an organization called the Northern BC Truckers Association, which resides in the northeast corner of the province. Some of our companies are among Canada's largest trucking companies, but most are small- to medium- sized enterprises with many family-owned operations. We also have about 250 supplier members that provide goods and services to the trucking and bus industries. Importantly, with respect to this presentation, BCTA represents hundreds of companies that either serve intermodal facilities or have a business relationship with carriers that do.
BCTA is affiliated with similarly constituted trucking associations in other Canadian provinces and with our national body, the Canadian Trucking Alliance, which is based in Ottawa.
We have a great deal of respect for the Greater Vancouver Gateway Council. As a member of the council's board and the executive committee, I want to endorse enthusiastically the council's submission. I was not here for the entire presentation, but I caught quite a big of the question and answer period at the end.
I will not burden the committee by repeating the important messages that were presented by Mr. Wilds. I would like to use my time today to provide further detail on two issues that were touched on in the council's brief: first, transportation and the environment, specifically in my case trucking and the environment; and second, the stability of trucking services at the ports in the Lower Mainland.
The trucking industry plays a critical role in freight transportation in Canada. We handle about 70 per cent of goods by value that move in Canada over 60 per cent of our trade with the United States. Given the ubiquitous nature of trucking, BCTA believes that the trucking industry has a responsibility and an opportunity to protect the environment and to preserve air quality. For this reason, our association supports the national 14-point action plan that the Canadian Trucking Alliance, CTA, developed in 2006 to contribute to a made-in-Canada clean air solution by the federal government. CTA's action plan looks at the entire truck, from the tires to heating and cooling systems and even how the truck is financed, for ways to reduce emissions. According to CTA, implementing the plan would have the combined equivalent impact in terms of air quality and greenhouse gases of removing more than tens of thousands of heavy trucks from Canadian roads.
CTA's 14 action items, which are designed to meet distinct goals, include the following: The first measure is accelerating the penetration of smog-free trucks through tax incentives. If the Canadian trucking fleet were composed entirely of 2007 engine technologies, the air quality impact would be equal to removing more than 90 per cent of today's trucks from the road, hence the importance of providing incentives for trucking companies to acquire new equipment.
Second, we should encourage auxiliary heating and cooling systems, what we call anti-idling technologies, by reinstating Natural Resources Canada's rebate program, which was in place until the last federal budget in 2006. A truck's cab is a driver's workplace where he or she spends a significant amount of time and therefore it must be kept at a comfortable temperature. However, anti-idling technologies make it possible to be comfortable without idling, thereby saving fuel and reducing emissions. Madam Chair, there are details with respect to these propositions in two appendices which I have provided along with my report.
Third, another important aspect of reducing emissions is reducing and controlling truck speeds. Limiting speed reduces fuel consumption, which in turn reduces emissions. I guess that is just common sense. Part of our plan calls for regulated enforcement of truck speeds across Canada.
Fourth, another element of the plan is reducing emissions from all modes by requiring all modes of freight transportation to meet regulated emissions reductions of the same order of magnitude as trucking.
The other issue I want to talk to you about involves the trucking service's stability in the Lower Mainland, particularly in our ports. As I think most of the committee will recall, on June 27, 2005, approximately 1,000 to 1,200 owner-operators contracted to 40 or 50 trucking companies in the Lower Mainland withdrew their services for Lower Mainland containers. Their case, which I think had merit, was they were receiving less than adequate compensation for their services. The remaining 400-plus trucking companies and approximately 6,000 owner-operators and company drivers transporting containers to and from Lower Mainland ports were not directly involved in the dispute but were intimidated into stopping their services.
BCTA repeatedly urged the provincial and federal governments to deliver a clear public message that intimidation of any kind would not be tolerated and to provide the necessary protection for those who wished to work. In terms of organized labour, we certainly respect the right of any worker to withdraw his or her labour under legal strike conditions and we respect the right of any small business owner to withdraw their services if they feel that they are not being properly compensated. Our concern at the time was simply the intimidation associated with the blockages to access to the port. In any case, provincial policy of the day apparently dictated that a soft approach should be taken for what was largely misunderstood to be a labour dispute. This was not a labour dispute. It was a withdrawal of services by independent contractors. Apparently over the course of the dispute hundreds of millions of dollars were lost and thousands of people and businesses suffered. At the tail end of the discussion with the Greater Vancouver Gateway Council, I had an opportunity to hear about the reputation of the port and the gateway with our overseas customers, and obviously the dispute in 2005 did nothing to enhance our reputation abroad.
In any case, the 2005 dispute was ultimately resolved through the imposition of a memorandum of agreement or MOA on the carriers and owner-operators. The MOA essentially mandated minimum trip rates for owner-operators while indirectly introducing minimum freight charges. This MOA will expire on August 2, 2007, hence the need for some attention to what may transpire at that point.
The 2005 MOA was a product of violence and intimidation, and BCTA's concern is that similar tactics may be used to achieve a renewal of the MOA in 2007, in particular a renewal of the owner-operator compensation schedule it contains. The Vancouver Port Authority has already announced that it does not intend to establish trip rates or other compensation for container truckers, and the Vancouver Port Authority will not continue, extend, or replace this agreement.
As a representative of many trucking companies that service the Port of Vancouver and that are affected by the intermodal operations of the port, it is our view that an early announcement by the federal government of their intentions are would reduce uncertainty amongst the various stakeholders. In BCTA's view, the marketplace should establish compensation rates for owner-operators as it does for other sectors and for other market participants. Moreover, the circumstances that led to the imposition of the memorandum of agreement in 2005 have changed.
I will cite a few examples. The Vancouver Port Authority has modified its truck licensing system for operators to recognize a more stable business model, which is company-owned equipment and employee drivers, where the issue of unpaid time is basically taken out of the equation. Over time, owner-operators will play less of a role in this sector. Only companies with company-owned equipment are able to apply for a licence, although the other companies have been grandfathered. Second, there is a general recognition amongst the various port stakeholders that more must be done to improve operational efficiency for trucking companies, owner-operators and drivers, and some of this has begun to occur. For example, the terminals have increased their hours of operation for truck gates or access to their terminals, new and improved truck reservation software is being introduced, and finally additional equipment is being deployed to handle the containers at the terminals. Third, the establishment of a Lower Mainland container stakeholders forum by the Honourable David Emerson and the Honourable Kevin Falcon has created an opportunity for stakeholders to discuss concerns, identify agreed-upon problems, and develop solutions in a constructive fashion. Fourth, under the auspices of the forum, the provincial government has developed an educational tool that will allow owner-operators and prospective owner-operators to understand their costs and thus develop an understanding about the minimum compensation necessary to provide services. Finally, there has been a degree of penetration by organized labour, which has have organized some of the owner-operators in the sector, thereby creating a more level playing field through the imposition of contracts. To a certain extent, contracts have come in to replace what the MOA was designed to accomplish.
Given these circumstances, the calming effect of the MOA or a like instrument in our view is no longer necessary. Maintaining the MOA would send the inappropriate message that small business owners such as owner-operators need not be responsible for determining their own destinies.
In summary, due to significant economic and other impacts, a recurrence of the 2005 port dispute must be prevented. In addition to the federal government announcing its intent not to support a continuation of the MOA, we believe that it is of the utmost importance that the federal and provincial governments collaborate to exercise swift, certain and severe enforcement of the law in the event of a dispute, to not employ any other form of economic regulatory intervention to mollify law-breakers, and continue to support operational improvements at the Lower Mainland ports.
The Chairman: Thank you very much, Mr. Landry. The Port of Vancouver now uses a Web reservation system at its container terminals, which is helping them to achieve their goal of a 20-minute truck turnaround time. Do you know of any other initiative like that one that could help achieve a more productive truck turnaround time?
Mr. Landry: As I alluded to, I think the acquisition of equipment to service trucks would help. Improvements could be made to the reservation system to allow trucking companies to both drop off and pick up containers or to pick up and drop off containers all in one reservation. That would be very helpful. Continuing extended gate hours would be helpful. Ensuring that there are sufficient workers at the terminals to service the trucks is important as well. I think that all of those issues are recognized by the terminals and they are working hard to ensure that productivity improvements occur.
The Chairman: The majority of shippers like trucks because they offer flexibility and time advantages. Trucking is a door-to-door service and is much faster than rail. However, long-distance trucking has killed employment. At the same time, truck driving is not considered skilled employment with respect to immigration. Individuals promise and some do put together a program to bring in special employee groups. Saskatchewan did this and brought in 150 truckers and their families from Britain. Apparently it has worked out quite well. What are your views regarding immigration and skilled employment issues related to long-distance trucking?
Mr. Landry: Long-distance trucking is certainly the area where we are experiencing the greatest shortfall of professional truck drivers. Our view is that the immigration of skilled truck drivers from other countries can and should play at least a small role in dealing with our potential shortage, but we also believe that the investment needs to be made at home. We need to promote our industry to people who might not be aware of the potential for earning a good income. We believe that we have to improve working conditions as well as compensation for drayage workers in our industry. We need to improve training for workers as well, which our association is working on aggressively in our strategic plan. We see immigration as being supplemental in a very small way. There may be areas in the province experiencing a shortage for which there is no other solution but to bring in workers from abroad, but there may be a surplus of workers in the Lower Mainland. I will be candid: we think surplus is part of the problem in terms of competitive pressures in that market. The Lower Mainland is an attractive place to be — you are home every night and you work Monday to Friday — but there just is not enough work for everybody. We are talking to the federal and provincial governments about the possibility of determining why it is the workers are not looking at other markets and what it would take to incent those workers to go elsewhere. Perhaps we need drivers for cross-border activities, for example. Perhaps there are language or documentation issues. I am not sure, but we need to find out what the problem is so that we can assist workers to transition to markets that are more robust.
Senator Tkachuk: You mentioned work stoppage in 2005 by 1,000 to 1,200 owner-operators contracted to 40 or 50 trucking companies. Were those owner-operators and those 40 or 50 trucking companies part of your association?
Mr. Landry: Some of the trucking companies are. The owner-operators are not, because by and large we represent trucking companies rather than owner-operators or employee drivers.
Senator Tkachuk: What was the issue with those 40 or 50 trucking companies that affected those owner-operators versus the other trucking companies that also had owner-operators?
Mr. Landry: Those 40 to 50 companies were responsible for probably 60 per cent or 70 per cent of the movements. They did very little other than offer drayage services, and by and large the model they used for their operations involved subcontractors, the owner-operators. The issue that was central to the dispute was that the carriers felt that they could not get sufficiently high rates from their customers in order to provide the owner-operators with the kind of revenue stream they wanted. In other words, the rates were too low. There is some legitimacy to that. The other 400 companies were involved in a variety of long-haul carriers that were serving the port irregularly. Maybe once or twice a day they would go in rather than 40 or 50 movements, or they were involved in the de-stuffing operations. The container would come to them by way of a drayage carrier, the container would be de-stuffed, and it would go out in a variety of directions, perhaps some to the U.S., some to Western Canada. All of these were affected by the work stoppage. Many of the carriers that were serving the port that were not involved in this dispute used a different model for compensation. In some cases they had owner-operators, but they paid the owner-operators by the hour, so if the owner-operator got stuck in a lineup somewhere, he or she was still getting paid, so that was not the source of irritation. Many of those companies had company-owned equipment and employee drivers. Again, the employee driver would be compensated if the driver was stuck in a lineup. The central issue was that because of productivity issues at the port, because of delays getting in and out, and because of congestion in the Lower Mainland, it was difficult for the owner-operators to make a good living if they were not compensated for their time, which is not part of that model. That basically is the difference. Many companies were ready, willing and able to provide services but were prevented from doing so.
Senator Tkachuk: You mentioned your concern that because this memorandum of agreement will run out in August of 2007 that kind of action could take place again. Are negotiations going on to between the companies and the owner- operators to prevent that? Will a new memorandum of understanding take place that will be conciliatory and that the two sides will agree to, or will it have to be imposed?
Mr. Landry: I am not aware of any formal discussions happening between the company owner group and the owner- operators. We do not get involved in labour. We represent our members on public policy issues. We were not a party to any of that in 2005 and we are not today. I think the marketplace is changing. More and more companies, by virtue of the licensing system as well as to emphasize stability, are changing to the company-owned equipment with company driver model. If I were to speculate, I would say that things are probably running very late in the game in terms of the discussions that should be taking place between those parties.
Senator Mercer: You may not be involved in the negotiations directly, but your members are. It is not that big a community that you would not hear of talks happening. To your knowledge, are there talks happening?
Mr. Landry: To my knowledge, talks are not happening.
Senator Mercer: Well, I think that goes back to our previous witness and the matter of the port's reputation.
I have two quick questions. Is the Web reservation that the chair described in her question alleviating some of the problems that this group of people apparently had back when you had this dispute?
Mr. Landry: Yes, I think it is alleviating some problems. There are still issues with the reservation system, but it is definitely the direction to go in, and I think it is helping quite a bit. I cannot put a number on that. I cannot be precise. There is some resistance to using the reservation system. There are still games being played regarding the reservation system, but I think the terminals are rapidly moving towards getting some of those issues under control.
Senator Mercer: I imagine someone will always look for a way around it.
Mr. Landry: Exactly.
Senator Mercer: With respect to immigration, I know in my province of Nova Scotia there is a quite a shortage of truck drivers, and we have had difficulties with immigration officials because they do not consider driving a truck to be a skill. They obviously have not tried it. Did I hear you say that you think there is an oversupply of drivers in Vancouver servicing the port as opposed to long haul?
Mr. Landry: Yes, although I am afraid my analysis probably is not all that scientific. Our association issues port security passes on behalf of our industry, and you must have a pass in order to access the port. We have issued in excess of 11,000 passes in three years.
Senator Mercer: Are there 11,000 trucks coming in and out of those ports?
Mr. Landry: I can only look at what we have done, but you are absolutely right. Today there are not. At any given time there may be a few thousand. Some of those port passes would be for long-haul carriers. Some of the passes would be issued to people who are servicing refrigerated units and so on. You need a pass regardless of whether or not you are a driver. Our sense is that during the last dispute something like 8,000 or 9,000 port passes had been issued. It was probably about 8,000. Yet there were 1,100 or 1,200 drivers out, so my sense is that there were quite a number who were ready, willing and able to hop in a truck and provide services.
Senator Mercer: Are the passes date sensitive? Do they expire?
Mr. Landry: They are for a five-year term.
Senator Mercer: From a security point of view, to have 11,000 people with passes having access to the port and not have any idea whether the passes are all being used is an issue. Is there an electronic reader of the passes as people enter the facility?
Mr. Landry: There are readers, yes.
Senator Mercer: Is there a visual checking of a driver's picture on his pass and the face on him?
Mr. Landry: Under certain circumstances there are visual checks and there may be spot checks, or depending on the security level there may be checks, but it is primarily a gate system.
Senator Mercer: Do you think that the five-year time period for the pass is too long?
Mr. Landry: We asked for that term simply because of the imposition it would be on truck drivers, particularly long- haul truck drivers, so secure passes because an application has to be made. From a security standpoint, I cannot really comment on that. We view ourselves essentially as an issuer. We do not make the rules. We do not enforce the rules. If someone comes in and applies and they meet all of the criteria, then we issue the pass. As I say, for a driver coming in from Saskatchewan once a month to serve the port, we felt it would be a real imposition to have a driver apply for a pass every year or every two years.
Senator Mercer: Perhaps it should be based on usage. You have regular usage. Even only once a month from Saskatchewan or Manitoba is regular usage. If someone has a pass that has not been used for an extended period of time, one would think that there would be a way of upholding that pass. We have all been concerned about security at the ports, and there is all kinds of bad things that can happen when bad people get in there. Anyway, enough of that.
I started to ask about your third recommendation, controlling truck speeds. While environmentally sound, is it economically sound from the point of view of long-haul trucking? You are a long-haul trucker. You make time when you can. Going across the Prairies you can make good time because there are no hills. Going through the Rockies a different story; it is rather hilly country. Is it economically sound as well as environmentally sound?
Mr. Landry: Yes, absolutely. You can reduce your fuel bill by about 10 per cent by reducing your speed by an equivalent amount. Fuel can represent as much as 40 per cent of a carrier's operating costs. It is not quite a one-to-one relationship, but you can save fuel. Yes, you spend more time on the road, but fuel consumption is reduced, safety improves and emissions are reduced.
Senator Adams: This committee did a study of truck drivers across Canada about ten years ago especially about safety and long driving. In Canada, as a long-haul driver you can drive up to about 12 hours. In the United States, it is only about nine hours. At that time there was also a study about a problem with alcohol and drugs. They said that unions are not allowed to have drug testing because of drunk drivers. After we did that study, they had a policy, and now they had to bring in 150 drivers from New York or somewhere. Have you had problems with hiring people, with finding drivers, because of drug or alcohol problems? Is that where they had to bring immigrants to come here and drive in Canada?
Mr. Landry: Senator, I am sorry, I am not sure I understand the question.
Senator Adams: If you are a truck driver, you are going to be driving for the association or your union. At that time there was a study on safety and maybe driving 12 hours is too long and drivers get tired and maybe get into an accident. In the meantime the union says they take drugs and all, and drivers according to organizations said you cannot touch me and smoke marijuana or something like that. At your organization, do you have a problem kind of policy?
Mr. Landry: Yes, as a matter of fact. As of January 1 this year new hours of service regulations came into place which have changed us from 15 hours on duty after which eight hours must be taken off duty to 14 hours on duty after which 10 hours must be taken off duty. The amount of time that a driver can drive has been constrained. There are other constraining features associated with the new hours of service regulations that will, we think, create more problems in terms of finding qualified drivers. We estimate that it will take upwards of 5 per cent more drivers to accommodate the new rules.
With respect to your question on drugs, drug and alcohol testing is mandated if you cross the border and go into the United States. U.S. rules require that 50 per cent of drivers in the driver pool get tested at least annually for drugs and 10 per cent for alcohol — I think those are the numbers — and those are random tests. Our position is that similar provisions should be required in Canada for safety reasons. The good news is that with the testing of drivers crossing the border, and there are literally tens of thousands of drivers who cross the border, the number of positive tests for drugs or alcohol is miniscule. It is a very small percentage, so there is no evidence, at least in terms of cross-border drivers, that that is an issue.
Senator Eyton: Business is growing rapidly. Are your association members are in the place where they can increase their numbers and become more efficient so that they can readily handle the volume of business as it grows?
Mr. Landry: I think we are going to be challenged in terms of human resources. We will have to work hard in competition with other industries to secure the personnel that we require. In every other respect, equipment and so on, we are in good shape, so there is plenty of opportunity to expand. One issue we also have to deal with is the impact that systemic congestion has on our industry, because it takes away from our productivity. As things slow down, more equipment, more drivers and more fuel are all required.
Senator Eyton: I am curious. What is the footprint range of your members? I am assuming they do all of British Columbia. What else might they or do they do?
Mr. Landry: Our members involve a variety of international, national, provincial and local companies. For example, Yellow Freight is a member of our association. They are I think the largest trucking association in North America with something like 13,000 or 14,000 tractors.
Senator Eyton: I am trying to get an idea of the destinations that were furthest away.
Mr. Landry: We cover pretty much all of Canada. Although Western Canada would be our primary destinations, but some of our members go as far as the Mexican border and as far as the Maritimes.
Senator Eyton: Do you service destinations in the U.S. as well?
Mr. Landry: Many of our members do quite a bit of business on the I-5 up and down the West Coast.
Senator Eyton: Can you do a rough split for me of the business between Canada and the U.S?
Mr. Landry: I am sorry, I cannot. I am not sure what that would be.
Senator Eyton: Are you and your association generally satisfied with the level of the quality of the facilities and of the systems and of the management that is in place in the terminals now? I assume it is an ongoing dialogue.
Mr. Landry: Yes.
Senator Eyton: Are you generally pleased?
Mr. Landry: Yes. We are moving ahead in fits and starts, and I think management at the terminals is committed to improvements in productivity and working with our industry. It has not been easy. We have had discussions here this afternoon about reservation systems. We have had reservation systems for five or six years now, and they have not always worked that well. For example, one problem is that we have to work with three reservation systems today. A trucking company serving Deltaport, Centerm and the inner harbour, and the Fraser Port would have to decide when they turn on their computer in the morning which port or which terminal they will try to make reservations for. If they get reservations at one, they may be blocked out of another. We need to have these reservation systems work together to allow companies to coordinate their activities and make better use of their people and equipment.
Similarly, if you have an export container, you may get a reservation for your export container, but you might have an import container as well that you could pick up, but you have to make another reservation for that, so you drop off one, turn around and get back in the lineup and go back in for another. That does not help anybody, but I would say the terminals are well aware of these problems and are trying to resolve them.
Senator Eyton: Might part of the answer be the amalgamation of the three inner ports?
Mr. Landry: For lack of a better word, the ports are basically property managers. The terminals at the ports are independent businesses that have their own business objectives.
Senator Eyton: I was looking at a trend line. If they are coming together at that level, might there be a better prospect?
Mr. Landry: I think it will help if a single port will be in a better position to coordinate the activities of their tenants, of the businesses that occupy their space, their property.
Senator Eyton: The strongest point in your submission is the need to avoid a recurrence of the 2005 port dispute, and you used fairly strong language in which you request that the federal and provincial governments collaborate to that end. You made three point in particular. Do you have any feel for that now? I assume there are some discussions and representations now. Have you any grounds for optimism that you will get that kind of cooperation and backup?
Mr. Landry: If I have grounds for optimism, they are that things seem fairly quiet these days. There does not seem to be much feedback. The fact that I am not receiving telephone calls about what might happen is probably good news, but that is not very substantial, not especially concrete. Again I am guessing, but I think that there may be a sense that somehow the memorandum of agreement will be continued and that it will form a basis for rates into the future.
Senator Eyton: You were quite critical of that.
Mr. Landry: Yes. I do not have a problem with agreements. Obviously, we want a stable port. My concern was that trucks were being shot up, tires were being slashed, air lines were being cut. To my mind, that does not provide a very bright future for trucking services serving the port. We would like to see negotiated agreements. We would like to see rates worked out with owner-operators. We would like to see everybody make a good living out of serving the port. We think there is an opportunity for all of that to happen. Our only concern with the memorandum of agreement was how it was brought about, and we certainly do not want to see a repeat of that. There are other processes in place, including the forum that was established by the federal government and the provincial government, where conversations or discussions are taking place, and I hope that issues are resolved in that forum. However, to the best of my knowledge, I do not know that the memorandum of agreement is being discussed or what level of negotiations are taking place. I do not know whether that is happening in the forum. I do not know that that is their role. If there is an understanding that the memorandum of agreement will not be continued, that gives several months for everybody to wake up to the fact that they better start talking to each other because that mechanism will not be there. That is really our point.
Senator Eyton: My observation is that you cannot be a spectator. It is an important issue and it requires people making strong representations and not simply waiting around for some result.
Senator Zimmer: Mr. Landry, I have two supplemental questions related to the questions of my colleagues Senator Adams and Senator Mercer. Senator Adams talked about safety of the vehicles and drug violations, but my question is in the area of traffic violations. I presume that a carrier could even lose their licence if there were traffic violations by a driver. It might be tempting for the carrier not to submit that information maybe because of the shortage of drivers. What systems do you have in place to ensure that carriers are reporting drivers who have several violations and are being retrained or who are being honest and truthful and letting you know they have lost their licence? How do you ensure that carriers are not using drivers who have lost their licences?
Mr. Landry: First of all, tying a driver to a trucking company is a fairly simple process. When truck drivers are convicted of offences, those offences are attached to the carrier's national safety code record, which is available to all provinces across the country. That works fairly well. It is hard for a driver to escape the consequences of his or her non-compliance. It is hard for a carrier to escape the consequences of non-compliance as well.
With respect to drivers who may be disqualified, that is a bit of a trickier issue for several reasons, one of which is the delay in putting that information into public records. Carriers are obliged by law to check a driver's record at least annually but many carriers may not or may miss the opportunity to discover that the driver has been disqualified in another jurisdiction. We encourage our members to look more often than once a year, but it can be a problem in terms of the timing of the record.
Senator Zimmer: Senator Mercer raised about the point about reducing the speeds, fuel consumption and emissions. What speeds are we talking about? I am sure we are not up to 80 or 90 miles an hour. You are probably talking in the range of 50 to 60 miles an hour, because if you go below that, you are likely using a lower gear and you will use more fuel and more emissions will occur.
Mr. Landry: Our recommendation to the federal and provincial governments is 105 kilometres an hour. That would be the maximum speed, and that speed would be controlled by way of the onboard computer which can be set.
Senator Zimmer: Right. If you drive the Trans-Canada Highway from Winnipeg to Ottawa and you get behind a truck that is moving slowly, you can be there for days, so that is probably a good speed.
The Chairman: Mr. Landry, thank you very much for your contribution to our study, and we do appreciate your presence here today.
The committee adjourned.