Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 14 - Evidence - May 15, 2007 (afternoon meeting)
MONTREAL, Tuesday, May 15, 2007
The Standing Senate Committee on Transport and Communications met this day, at 1:35 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.
[Translation]
The Chairman: We are examining and will be reporting on current and potential future containerized freight traffic handled at the container ports in Canada's Pacific Gateway, the East Coast container ports and central container ports and on the main import and export markets served by these ports as well as current and appropriate future policies relating thereto.
With us this afternoon, from Termont Terminal Inc., are Mr. Roger Carré, General Manager and Mr. Robert Desrochers, Comptroller.
From the Montreal Terminals Partnership, we have Mr. Kevin M. Doherty, Chief Executive Officer, as well as Mr. Michael Fratianni, Chief Financial Officer.
Welcome to our committee, gentlemen. We will hear from you first, and then honourable senators will have questions to ask you.
[English]
Kevin M. Doherty, Chief Executive Officer, Montreal Gateway Terminals Partnership: I wish to thank the committee for inviting us to participate. We sincerely hope we will benefit the Port of Montreal and its users, especially our clients.
With me today is Mr. Michael Fratianni, our Chief Financial Officer.
First, let me give you a little bit of background about our company. On March 9, 2007, we were bought by Morgan Stanley's infrastructure investment group. The Morgan Stanley investment group acquired an 80 per cent ownership in the Montreal Gateway Terminals, MGT, from Hapag-Lloyd; Hapag-Lloyd retains a 20 per cent ownership in MGT following this sale.
Container terminals provide the critical interface between sea and land-based container transport. The terminals benefit from robust sector dynamics and high levels of contractual revenues. Container handling has experienced a growth rate averaging 3.7 times world GDP growth from 1999 to 2005, and world container volumes have grown consistently at a 10.6 per cent CAGR — compound annual growth rate — from 1990 to 2005. From 2005 to 2011, world volume growth is expected to remain robust at 9.1 per cent.
Montreal Gateway Terminals' container volumes have grown consistently over the past 10 years. MGT has progressively increased its share of the container traffic handled by the Port of Montreal, achieving 89 per cent of the containers handled in the port in 2005. The company consists of two leasehold container terminals situated on the west bank of the St. Lawrence River in the Port of Montreal.
Montreal is one of the busiest inland ports in the world and a key transfer point for transatlantic cargo linked to more than 100 countries around the world by several reputable shipping lines. The Port of Montreal offers the shortest route between major European and Mediterranean ports and North American markets. Situated 1,600 kilometres inland from the Atlantic, Montreal is the international port closest to North America's industrial heartland and offers the fastest, most direct and most economical access to major markets in Central Canada, the U.S. Midwest and the U.S. Northeast. It also has 11.3 metres of depth and, I repeat again, is 1,600 kilometres from the ocean.
MGT's two terminals, Cast and Racine, were established in 1968 and 1978 respectively. Each consists of a container terminal facility within a port where containers are either loaded onto ships from trucks or trains or unloaded from ships for further transport by either truck or rail to their destinations. Together, Cast and Racine comprised in 2006 approximately 82 per cent of the capacity of the Port of Montreal, the third largest port on the east coast of North America and the second largest in Canada.
The company operates year round and serves not only the Canadian cities of Montreal and Toronto, but also, by virtue of geographical location and rail connections, the Midwest of the United States. Cast and Racine are 63 and 66 acres, respectively, and each has three berths under long-term lease with the Port of Montreal. The berths at Cast span 1,020 feet and those at Racine 1,083 feet. Both terminals offer 24-hour non-stop operations and are, therefore, able to provide the exceptionally rapid turnaround of client vessels.
The terminals benefit from state-off-the-art container handling equipment, including high-speed ship-to-shore gantry cranes with a capacity of 40-60 metric tonnes, four at Cast and five at Racine, diesel-electric powered rubber-tired gantry cranes, RTGs, with a capacity of 40 metric tonnes, eight at each of Cast and Racine, and diesel-powered front end loaders that have a capacity of 40 tonnes and are able to stack 20 to 25 40-foot full containers five high. The fleet combination of yard gantry cranes and front-end loaders provides the efficient performance expected of a first-rate marine container terminal.
Each terminal also has 42 yard tractors and container chassis as well as a fully equipped maintenance facility for terminal equipment, including welding, electronics and hydraulics. In addition, MGT has complete reefer facilities for up to 500 containers. MGT's terminals can easily transfer shipments from ship to truck, as Cast is able to accommodate 700 trucks per day while Racine can accommodate 800 trucks per day. Let me add that this is from six o'clock in the morning to eleven o'clock at night.
Even more important is the company's dockside access to rail transport. The Montreal Port Authority operates its own highly efficient rail network on port territory. This network offers direct access to almost every berth in the Port of Montreal, with over 100 kilometres, 60 miles, of track and six locomotives. Four on-site rail tracks at Cast and four at Racine can accommodate 120 container cars each in single or double-stacked profiles. The port's railway network is directly linked to the yards of both transcontinental railways, Canadian National and Canadian Pacific, both of which have dockside rail access. This advantage allows for rapid loading of standard as well as double-stack and spine cars, and with connections reaching far into the U.S., the intermediate transshipment that is unavoidable at many other ports is eliminated.
An additional key feature of MGT's terminals is their security. Cast and Racine comprise one of the most secure container complexes in North America. The terminals are completely fenced and illuminated and have a high-resolution video surveillance system. The covered truck entrances provide controlled access; as well, MGT's security force of 40 guards patrols the facility 24 hours daily, seven days a week. In the next six to eight months, MGT will be installing high-security gates designed to further improve the unrestricted access to the terminal by authorized vehicles and individuals.
In addition, Cast and Racine were the first ports to implement radiation screening to detect explosives. The system in place was designed to limit the risks to the U.S. and Canadian mainlands by detecting such devices prior to cargo leaving the port by truck or rail. Canada Border Services Agency, CBSA, works with the company to ensure the safety of the terminals and the markets they serve by maintaining responsibility for and managing the screening processes. Some of the major lines that benefit from these safety procedures are Hapag-Lloyd, OOCL, Maersk, MSC, Senator Lines, NYK, APL, CMA CGM, and MOL.
The lines calling at MGT serve the trades between Northern Europe, the Mediterranean and North America. The company benefits from long-term relationships with its customer base and from a high degree of contracted revenues. Approximately 90 per cent of our revenues are contracted.
A trend of increasing containerization continues to be seen. Container transport has developed due to its ability to carry goods at low cost and with quick transit times and low damage compared to alternative transportation forms. Container shipping has had such a cost advantage over competing forms of sea transportation that alternatives no longer exist, except in very low-value-per-tonne commodities such as coal or metallic ores. Container shipping competes to a small extent with air freight, but only for very high-value cargo. Time-sensitive cargos and air freight cost approximately 10 times the cost of container shipping.
The Ports of Montreal, New York, New Jersey and Hampton Roads/Norfolk are the key ports serving container trade in the North Atlantic region of North America. There are also some smaller ports within the region. On a relative basis, Montreal handles far more container traffic than its port call profile would suggest. This reflects the fact that vessels calling at a terminal port in a specialized market tend to discharge and load the whole capacity of the vessel, whereas at the coastal ports they are exchanging only a part of available vessel capacity since these services are virtually all organized around a multi-port itinerary. Montreal's northerly location means that its trade volumes have been derived almost entirely from Northern Europe and the Mediterranean, with virtually none from the strongly growing Far East markets, for which the natural Canadian gateway is Vancouver.
Given a mature trade market into Montreal, with a relatively stable growth in freight rates, the development of carrying capacity is likely to be incremental rather than radical and the trading partner regions will remain almost exclusively Northern Europe and the Mediterranean. However, despite being a bystander in the Asia/China trade boom, Montreal has nevertheless registered annual growth of around 6 per cent over the last four years, as more transatlantic carriers have been attracted by the St. Lawrence route as a gateway to the Canadian and U.S. interior.
Regarding our terminals once more, in the past 10 years we have invested better than $75 million in equipment and we continue to upgrade and replace our equipment in order to assure top-rated services at an annual cost and investment of better than $8 million in equipment. We have 24,000 feet of on-dock rail and we work closely with the railroads, port authority and trucking companies to ensure that pipelines operate efficiently. Our terminal alone employs better than 700 direct and indirect employees, most of whom are trained professional longshorepersons and checkers who contribute their expertise to a well run organization and who ensure that cargo moves efficiently and quickly through our terminals. The port, as a whole, contributes to 18,000 direct and indirect jobs.
We are the first terminal to place into service a biometric identification system to identify all truckers who deliver or take delivery of containers, and this we do through the handprint system. Most of our terminal operations are managed by state-of-the-art computer systems with teams in place continuously planning for the future.
Our concerns moving into the future are as follows: We are concerned that the main access to our terminals for trucks appears continuously to be ignored. The main thoroughfare in our case, which is Notre Dame Street, is extremely congested; after many announcements and studies it still remains to this day an impediment to managing an efficient road system into the port. We still rely on railway track crossings that are above ground, which means that when trains are being pulled or pushed, the truck traffic comes to a complete standstill, thus delaying operations. We are concerned that, though we are informed that funds may be available to complete Highway 30 and Highway 25, we continue to see delays after delays. Said roadways would remove traffic from the island, which, in turn, would assist the island to better handle the traffic it does have.
From an environmental perspective, we are doing our part to ensure that we reduce and control emissions. We have an environmental department that continuously monitors our activities to ensure that our standards are met. We have fitted our machinery with devices that shut down the vehicle after several minutes of idling. In 2008, only state-of-the-art green engines will be installed into any of our equipment when either replacing or buying new pieces. We do not pre-start machines. As well, we ensure that all maintenance is carried out according to manufacturer's instructions in order to assure peak performance. As we know, a peak performing engine reduces exhaust emissions.
We have systems on our terminals for washing vehicles, a system that ensures that runoff water is captured and properly filtered. Waste is disposed according to environmental standards and only through certified environmental companies.
Environmental directives received approximately six years ago no longer allow terminals to push snow into the river. This directive was issued because of tests carried out on snow removed from city streets that allegedly carried various pollutants — pollutants that are not found on terminals. Nonetheless, the terminals were lumped into the study, with the result that now terminals must truck snow approximately 20 kilometres away to an approved dumpsite. This trucking over the past six years has resulted in 14,400 truck trips to carry frozen water. I often wonder if this is better than what we were doing.
Again, we thank you very much for allowing us to appear before this committee. Both Mr. Fratianni and I are ready to answer any questions you may have.
[Translation]
Roger Carré, General Manager, Termont Terminal Inc.: Madam Chairman, my name is Roger Carré, and I am the General Manager of Termont Montreal. I would like to thank the Standing Senate Committee on Transport and Communications for providing us with the opportunity to appear before you to discuss Canada's containerized freight system.
We hope that, in appearing as witnesses here today, we will provide you with a better understanding of the role of a container facility in a port, the business relationships that we have with all of the stakeholders and the competitive nature of our company in the handling of containers in the Port of Montreal, as well as information on our projects and our investments. As Mr. Taddeo said when he appeared before you yesterday, we believe that the Port of Montreal plays a key role in Montreal's competitive position, as the port city in Quebec and Canada, and in terms of strategic infrastructures. That opinion is also shared by the shipping companies that we serve, which is why they have included Montreal in their business models.
Termont Terminal, which was founded in 1987, is a container facility. It is jointly owned by two shareholders, an American company, Cerescorp, and by a Canadian company, Logistec Corporation. Termont Montreal operates Maisonneuve Terminal located in the eastern part of the city. Termont Terminal has signed a long-term lease with the Montreal Port authority that will continue for the next 40 years and longer.
In 2006, Termont Montreal sold 33 per cent of its shares to Cortolina International Corporation, a subsidiary of MSC, the second largest container shipping line in the world. Termont Montreal serves the two largest container shippers in the world, the biggest one being Maersk, and the second, MSC. If our clientele includes such important players on the world industrial scene, it is due to our efficiency and to the agreements that we have signed with the shipping companies.
This committee is seeking to better understand how efficient our industry is and identify measures to improve the competitiveness of our industry in North America. At Termont Montreal, we have instituted a series of operational measures so that we will continue to be as efficient as possible. Some things, however, are beyond our control, and I will deal with those aspects a little later.
There are many reasons why shipping companies decide to come to Montreal. Of course, there is Montreal's strategic location, but there is also the fact that we are an extremely efficient stevedoring company, with our handling methods and our specialized equipment, including gantry cranes that allow us to handle containers from post-Panamax ships.
We have invested over $40 million in equipment since 2005. That includes the purchase of two new 65-ton-capacity gantry cranes, and 17 wide containers that can handle two 20-foot containers at one time. We have also acquired various types of equipment that allows us to stack containers five rows high, thus increasing our container storage capacity.
Madam Chairman, distinguished senators, for Termont Montreal, the Port of Montreal is the leader in North America and a model of efficiency, as demonstrated by its economic importance and its success. Our company is proud to be part of the Montreal port system and it intends to continue in its association with the port which, over the years, has become a hub for the shipping companies that we serve. Because of its long-term commitment to Montreal, Termont Montreal will be in a position to develop its own facilities. In 2005, we ordered two port cranes with a capacity to serve ships up to 42.5 metres in length. One of these cranes was delivered in 2005 and we will be receiving the second one this year, in 2007. These cranes can simultaneously lift two 20-foot containers. This equipment will help us to increase our efficiency, and they were part of a $40-million upgrade.
I would like to thank the committee for allowing us to tell you about our company and its activities. I am now ready to answer your questions.
The Chairman: Thank you for your presentations, Messrs. Doherty and Carré. Could you briefly explain what considerations are important to a shipping company when choosing a terminal? What are the pros and cons that must be taken into account in choosing a shipping terminal?
Mr. Doherty: Our clients are most concerned about the speedy unloading of their containers; they do not want them to remain in port for too long. In other words, if we unload a ship today, there could be up to 36 hours in turnaround time; the containers must be loaded onto trucks or rail cars for transportation to the terminal in Chicago or Toronto.
The Port of Montreal has the advantage of being able to unload a ship and deliver the cargo to Toronto within 8 to 12 hours: that includes loading the cars, delivering the goods by train, and unloading the train. If the cargo travels as far as Chicago, the loading and transportation would represent between 33 and 36 hours. A ship can leave Montreal and travel 1,600 kilometres inland, in 33 hours, which is not that long a journey. It only takes five days for a ship to travel from Antwerp, Belgium, to Canada's coast. That is not a long time. It takes another two or two and a half days to travel up the St. Lawrence Seaway.
That is why Montreal represents such a terrific advantage. Most of the ships that ply the St. Lawrence have been designed specifically for travel along the seaway, they are reinforced to withstand ice, particularly the Class 1 ships. I do not mean to offend Transport Canada, but the ships are stronger than their own icebreakers. Sometimes, the icebreakers follow along behind them.
The Chairman: They follow along behind.
Mr. Doherty: I just had to say it.
The Chairman: I know. There is no need to be embarrassed about it. When you say that it takes 33 to 36 hours, is that the period that you would like to shorten to 24 hours? We were told that it could possibly be shortened to 24 hours from 33 hours.
Mr. Doherty: I said that if we could reduce the transit time. . .
The Chairman: Then you might be able to do it?
Mr. Doherty: It would really be something if we could travel from Montreal to Chicago in 24 hours.
The Chairman: Can it be done?
Mr. Doherty: It might be possible if the tracks were upgraded so that trains could travel at 150 to 175 kilometres per hour. It is done in Europe, so I do not see why it could not be done here.
The Chairman: It takes time.
Mr. Doherty: We do have winter to contend with, but it still takes time.
The Chairman: Yes. We know that 55 per cent of the containers that come into the Port of Montreal are shipped out by rail. Are you satisfied with the quality of the rail services provided at the terminal, and have you any suggestions on improvements that could be made to the rail service from the terminals at the Port of Montreal? I will go a little further and ask you about your relationship with the trucking companies. We met with the trucking firms yesterday. Are you happy with their services? Should we improve the trucking services to better integrate shipping by truck from the Montreal terminals? There was some discussion about making reservations, and the time spent waiting. The truckers have complaints about the amount of time that they spend waiting. They arrive early, but they still spend a lot of time in line. Is that why you need a reservation system?
Mr. Doherty: If I may, I would first like to answer the question about the trucking industry, then I will deal with the railroads.
The Chairman: Yes, those are two different issues.
Mr. Doherty: If I may, I will speak for my own terminal. Mr. Carré can then speak for his.
About two years ago, we opened our terminals, at our own expense, at 6 a.m., in order to accommodate more trucks and reduce their waiting time. That was the first stage. We were quite successful. Then, we surveyed the truckers and asked them: if we stay open until midnight, will there be any traffic coming to our terminal? At the time, according to the survey, at least 25 per cent of the respondents said that they would come to the terminal at night. We made a decision, based on those figures, to remain open, even though it cost us $1 million more every year. That allows the truckers to come in at night, when there is less traffic. Today, 12 per cent of our trucking business is between 5 p.m. and 11 p.m. That does not represent a huge number, but we continue to provide the service. If we experience that type of problem, it is not the fault of the truckers. They are ready to deliver to the warehouses, but the warehouses are not always open.
The Chairman: They are closed.
Mr. Doherty: I am sure you have heard this story before.
The Chairman: Yes.
Mr. Doherty: The entire system has to change. Mr. Carré and I can deliver containers, and unload 3,000 to 4,000 containers from ships every day. But if the stores and warehouses are not open, then we cannot deliver them. The same goes for the truckers: these places are only open during the day. So the truckers are funnelled in from 8 a.m. until 5 p.m. And despite the fact that there is evidence to show that volumes are increasing, the warehouses will not extend their hours of operation.
The Chairman: No.
Mr. Doherty: That is the problem. You heard the same story in Vancouver, and you will hear the same thing in Halifax. We have to convince the warehouses to open at night in order to accommodate the trucks at night. The terminals are prepared to remain open around the clock, but not to move only two or three containers. We need to have enough volume to justify the costs, but we are prepared to do so. As I said, the truckers are not the ones who are holding everything up; the trucker will do whatever it takes to serve his customer. But the customer has to be open. Unfortunately, that is one of the problems. Just one more thing about the trucks, our turnaround time for trucks averages 25 minutes.
Mr. Carré: At the most.
Mr. Doherty: We have to be careful. If all of the trucks decide to come in at 8 a.m., then there will be 200 of them, and that will cause some delays. The truckers know when the terminal is likely to be busy, so they need only avoid coming at those times and we will get them in and out again in 25 minutes. That is what we do, and Mr. Carré can confirm that. We have to take care when we speak about long waiting lines.
The Chairman: Is it possible to make a reservation?
Mr. Doherty: No, we have no reservation system. Personally, I do not think we need one. There are places where it might be necessary, such as Los Angeles, for instance. But we do not need to have one yet.
Mr. Carré: The same goes for Termont, we have no reservation system, and the average in and out time for a trucker who is delivering a container and picking up another one is between 20 and 25 minutes. We currently open at 6 a.m. and we close at 4 p.m. If we had enough volume to justify working from 4 p.m. until midnight, we would do so, but it is not necessary at this time. We process, on average, between 550 and 600 trucks, between 6 a.m. and 4 p.m.
The Chairman: Four o'clock in the afternoon.
Mr. Carré: That can give you an idea of the average time that the truckers spend in our terminals.
Mr. Doherty: Exactly.
The Chairman: And for rail, Mr. Doherty?
Mr. Doherty: We are spoiled, when it comes to rail service; 70 per cent of our containers are handled by Canadian Pacific, and, in my opinion, they are second to none when it comes to managing a railroad. They are never short of rail cars, and they are always on time. Our operations people meet with their Canadian Pacific counterparts twice a day, to ensure that the pipeline will continue to flow. We have operations people who meet with them four or five times a year to deal with the bigger problems. Canadian Pacific is very open to that type of thing.
With respect to Canadian Pacific, they are always ready to listen to our suggestions for improvement. The rest of our cargo, 30 per cent, is handled by Canadian National. Our customers tell us that they are a little slower than Canadian Pacific, because their system is different. With Canadian Pacific, we can move containers out within 36 hours, but it takes us a little longer with Canadian National.
The Chairman: More than 36 hours. Is your experience the same, Mr. Carré?
Mr. Carré: The experience is the same. In our case, I would say that 90 per cent of our containers are handled by Canadian National; the other 10 per cent by Canadian Pacific. There is a huge difference between the two railway companies, on that I would agree with Mr. Doherty. Canadian National is more interested in their IMX, as they call it, in other words, the number of cars that they handle, regardless of what they are. It is a matter of volume, something like 10,000 feet per day.
The Chairman: Would it be possible to improve the performance of a terminal through better management of the containers, and without increasing the amount of space? We know that there is a problem with space. Do you think that would be a possible solution?
Mr. Doherty: There are systems that allow us to improve the terminal through-put. We can stack the containers higher, as long as the terminal is designed to accommodate it. As you can see, these containers are extremely heavy. If the surface is not 100 per cent compact, then there can be problems with the asphalt. That means that the higher the stack of containers, the more likely each row is to be crooked, and less secure, which is why it is not done. That is the reason why we stop at five rows. If the containers are empty, then we can pile them seven high.
Because of our climate, when frost damages our roads, it also affects the terminals. That means that we have to be extremely careful. However, we have GPS systems to identify the containers, so we know exactly where they are located in the terminal. The human eye can only see so far, particularly at night, when it is raining, because we work in all kinds of weather. As Mr. Carré said, we also have RTG systems, that allow us to do dense taking, which is very effective. That allows us to stack seven containers.
To answer your question about the truckers, if we move to that type of system, then we would have to allow for reservations in order to determine exactly when to retrieve the container at the far end of the terminal. We would schedule the trucks according to the location of the first, second, third or fourth container. That is what we would have to do, and anything is possible.
Mr. Carré: In that case, the containers would have to be moved, they could not remain in the terminals. With rail, for example, we cannot wait two or three days to empty a rail car, it has to be unloaded from the boat and leave immediately. The same applies to containers for local distribution, they cannot stay on the dock for weeks at a time. It has to be like an assembly line, otherwise it would become unwieldy if everything stayed put. If that were the case, our operations would grind to a halt.
The Chairman: You need space. Do you think a terminal has enough autonomy to manage its own affairs, and what is your relationship with the Port of Montreal authorities? I do not want to put you on the spot, Mr. Doherty.
Mr. Doherty: No, you are not putting me on the spot.
The Chairman: Nor Mr. Carré.
Mr. Doherty: I can speak very candidly.
[English]
Mr. Taddeo and I go back quite a few years. He is a real ambassador for the port. You all heard him yesterday; he has the port in his blood. It may surprise you, but all of us do. The port is a special work environment. We work in all kinds of weather and under all kinds of conditions. The Montreal Port Authority runs the port railway; they give us service that is second to none, that is extremely efficient. The port's employees with whom we deal are also efficient and competent.
The port has a system set up, because of CBSA and their radiation detection portals, that Montreal again is first out of the gate, and that is because of the port and its environmental and firefighting capabilities. For accidents, for example, they are first on the job.
I think the port does a remarkable job, in that it also works closely with us and with the railroads in a teamwork manner. It does not go off on its own and we do not go off on our own; we try to work as a whole. I know this sounds like motherhood and apple pie, but we make the port work as a whole, as a partnership, and this is why Montreal is successful. You do not see boxes hanging around. If some member has a problem, the whole gets together and solves the problem — a bit like you folks are trying to do. This is the way it has to work. People look at how things go and they get envious of us, but a lot of effort has gone into this over the years. We build relationships. That is what it is all about, and at the end of the day it works, and we are proof that it works. I know that sounds like motherhood and apple pie, but from what I see, the Montreal Port Authority is one of the best in the planet.
Mr. Carré: Yes, we have very good relations with the port and good communications. It is just like a family. We all have the same goal: we want to make it effective.
The Chairman: It is effective.
Mr. Carré: The relationship is excellent.
Senator Merchant: I am from Regina, Saskatchewan, and we are talking about having an inland intermodal facility in Saskatchewan. We have lots of space and we can expand forever. We are on Highway 1; we have the trains going right through; and we have a connection north-south. How do you think that might work? Do you think there is a possibility of alleviating some of the pressures that others are having, particularly out in Vancouver, by moving things inland and having an inland intermodal port?
Mr. Doherty: It all comes down to cost. We are faced with the fact that 50 per cent of our cargos go into the U.S., and Vancouver is about the same. You would be speaking about the cargo that comes into Canada.
Senator Merchant: As well as south to the U.S., to Chicago.
Mr. Doherty: Yes, and the south.
You want to avoid double handling as much as you can, because that is expensive. If it could be pre-planned to move the cargo directly from the ship onto rail cars and then bring it to an inland terminal, almost in an automated sequence, it could possibly be made to work, but the costs would have to be evaluated. It may become necessary as the ports become congested in the future, because if the growth continues, especially on the West Coast the way China is bounding away, the terminals will not be able to keep up. They will have to move it inland, but do they want to move it as far as Saskatchewan? That is a long way from Vancouver. When you are talking about inland terminals, usually you are talking about 50 miles or maybe 100 miles away. How far is Saskatchewan from Vancouver? It has to 600 or 800 miles.
Senator Merchant: It is many miles, maybe 800 miles.
Mr. Doherty: That is a long way, and it is over the single track that now exists between the West Coast and the East. That is part of the problem — you would almost have to build another track out there.
Senator Merchant: There is somebody in Winnipeg who wants to put in a good word.
Senator Zimmer: I am from Manitoba. Of course, there is the Port of Churchill. I asked the previous delegation question this question. We hear about traffic coming from the east, from Asia, to the West Coast, and possibly from the south, from Panama, but nobody talks about the North. We have the Port of Churchill. Climate change is melting the ice, and we have ice breakers and so on. How realistic is the possibility of that port being more active in the future, especially with the polar route coming right over and getting the northern transportation through Churchill and then distributed to the provinces? What are your thoughts on that? We are talking about when things have changed in the future.
Mr. Doherty: I am not avoiding your question, but I really cannot answer, because I have not looked at that in depth. I guess I have read the same things you have about climate change and the ice melting and the possibilities in the future. It will depend on how fast the climate change happens, what type of cargo would be beneficial to go through Churchill into the hinterland, and what would be advantageous from a cost perspective. I am not privy to that type of information, so I really cannot answer the question properly.
Senator Merchant: In Vancouver we heard that Canada's transportation system has a terrible reputation for being unreliable. Is that just a West Coast problem?
Mr. Doherty: It is not our problem. We have a very efficient transportation system as far as our cargo out of Montreal is concerned. It works very well, and for the reasons I stated. We work in partnership with the major railways and the trucking companies and it seems to work. Maybe somebody should look to see what we are doing.
Michael Fratianni, Chief Financial Officer, Montreal Gateway Terminals Partnership: As Mr. Doherty said, the situation is quite good here in the East, but that does not necessarily mean that there do not have to be significant investments in the future to ensure that we maintain our competitive position. In the U.S., a lot of money is being invested in infrastructure and port activities. If Montreal is to remain competitive and continue to grow into the future, there have to be investments here as well. Although we do not suffer from the congestion that plagues the West Coast, I do not think we should just sit on our laurels and expect things to continue moving along nicely. We need to continue to invest in infrastructure. We probably need to look at partnerships with the government to ensure that we maintain the competitive advantage we have built over the last 20 or 25 years.
Senator Merchant: I still do not understand how you will handle the capacity increases. You cannot expand because of the land situation. Dubai airports have doubled their capacity through productivity. How do you plan to handle this if the problem arises?
Mr. Doherty: First, there is still a bit of space for the Port of Montreal to expand. Second, you can increase productivity by going after state-of-the-art equipment, which keeps being developed and is getting better all the time. That is an investment, as Mr. Fratianni just said. It is necessary to keep investing in our product to keep it state-of-the-art. As I explained before, more and more equipment is being developed that allows you to go higher and faster, and to a great extent it is automated, computer controlled, and therefore it makes no mistakes. Those things can increase the port's capacity. That is part of it. Another part is getting the partners, as Mr. Carré said, to get the cargo out faster and in faster. Eventually we will have to look at three-day transits and the like. It is all coming to keep pace with the growth that we will have. However, as Mr. Fratianni said, we should not shy away from the fact that investment will be required from all parties, including the government. We cannot keep doing it alone.
Senator Merchant: Are your two companies competing?
Mr. Doherty: Absolutely.
Mr. Carré: Yes.
Mr. Doherty: We have the same clients.
Senator Merchant: You have the same clients?
Mr. Carré: Yes, we do.
Senator Merchant: Mr. Doherty, you have 700 employees. How many do you have, Mr. Carré?
Mr. Carré: It depends on the day; if everyone is working, some days we get up to 250 or 300 people working.
Senator Merchant: Are you considering merging or anything like that in the future?
Mr. Carré: You never know today what is happening.
Mr. Doherty: Between Mr. Carré and me, we about hire just about everybody on the port.
Mr. Carré: I would say so.
Mr. Doherty: Between the two of us, these days we are the terminals that hire all of the longshoremen and the truckers, and we keep the trains busy.
Senator Zimmer: I want to talk about the Port of Montreal itself. Apparently, the port has been assured by consultants that its infrastructure plans for containerized freight will meet its needs for the future. Correspondingly, are you confident that the rail and trucking industries are prepared to invest in sufficient capacity to meet the demands for container transportation and be able to handle your infrastructure and your system? Are you confident that they are moving along at the same pace as you?
Mr. Carré: I would say that first of all we have to improve on the infrastructure as far as the highway is concerned. We have been fighting for years to have Notre Dame Street improved. Highway 30, the extension to Highway 30 and Highway 25 all have to be completed or improved. That infrastructure has to be developed to be able to move. As I said before, you cannot stack everything in one spot; everything has flow. If somebody stops along the line we will be jammed, so the most important thing is to make sure that everybody works in the same direction. Therefore, we have to include the railways and the trucking companies.
Senator Zimmer: Transport Canada told the committee that the Port of Montreal is expected to receive an increase of more than 2 million TEUs — twenty-foot equivalent units — around 2020. Do you agree with that assessment? If it is an accurate assessment, will your infrastructure be able to handle that volume in 2020?
Mr. Doherty: The latest study I had access to was a private one and it indicated that by 2015 we will be in a position to handle 1.8 million TEUs. That study did not go as far as 2020, but I think that with the right moves and the right investments from all the partners, the Port of Montreal could possibly get up to 2 million TEUs.
Senator Zimmer: Representatives from the Port of Montreal told this committee that the federal government should concentrate its efforts on providing transportation infrastructure. Do you think that federal funds would be better invested in road-related or rail-related infrastructure such as grade-separated crossings? If so, what specific investments would you recommend?
Mr. Fratianni: We think both modes are extremely important. For the trucking mode, as Mr. Carré just mentioned, Notre Dame Street is a major artery that needs to be redesigned. Highway 30, which will create a beltway around Montreal, would certainly reduce the problems with traffic congestion during peak times. It would also do wonderful things for the environment, since there would probably be less idling of these engines. Studies done over the years have demonstrated over and over again that it is absolutely vital to make those investments. We certainly hope that somehow, through partnerships involving the municipal, provincial and federal governments as well as perhaps the private sector, these projects get underway soon and some major announcement will be made on the road side.
I cannot speak on behalf of the railways. Both CP and CN have invested millions of dollars over the last several years to upgrade their networks and buy new equipment.
Every time you pick up a publication that deals with containerization, the big issue is infrastructure. The ships are getting bigger. The ports can probably become a little more efficient and move the cargo a little more expeditiously. The problem is the inland: How do you move the boxes inland to the ports in an efficient manner? I think it is obvious to the four of us sitting here that investments need to be made on the rail side as well, to keep up with this growth which is forecast to continue probably in the double digits over the next several years.
We think investments have to be made on both the road side and the rail side, but we have to keep in mind that the port also has to invest a significant amount of money. Even though it has been extremely effective in generating profits year after year and has been proactive in investing the money back into the facilities, we think there are still some major investments that probably will have to be made over the next little while. You can burden or tax the users only so much, whether the shipping lines or the terminal operators. I think these huge investments have to be shared amongst a broader base if you want to continue to compete with New York and with Norfolk. That is extremely important, whether we are talking about Halifax, Montreal or Vancouver, because we all face the same issues.
[Translation]
Senator Dawson: Mr. Doherty, let us go back to your story about the fact that you have to take the pure white snow that falls from the sky onto the shoreline, and load it into trucks that pollute the air while you drive them 10 to 20 kilometres away and dump the snow into a river where it will eventually flow back into the St. Lawrence. You are forced to do this because you are not allowed to simply push the snow into the river from the 22 kilometres of shoreline that you operate along the port. I am sure your story — this obligation that is placed upon you — would be the hands-down winner for the dumbest move of the week.
I took the liberty of relating that little story, Madam Chairman, although I know that is not the aim of our study.
You were rather generous in what you said, earlier, about the CBSA; it sounds like a match made in heaven. Earlier today, as well as yesterday, and even before then, the committee has heard that their approach, their cooperation, their flexibility towards port authorities and users or those who make use of their equipment is not necessarily as benevolent as you have described it today. Do you think there is room for improvement in your relations with the CBSA?
Mr. Doherty: Thank you, Senator Dawson, particularly for your story about the snow, because both of us hail from the same part of the province, where there is no lack of snow.
Senator Dawson: Where the snow is pure and white, of course.
Mr. Doherty: Senator Dawson and I are from Quebec City, the provincial capital.
Senator Dawson: And so is Senator Eyton.
Mr. Doherty: Let us return to our relationship with the CBSA. When the people from the CBSA first came to see us with the VACIS, the discussions lasted weeks and weeks before anything was actually implemented and before we could find the appropriate spot to operate the machinery in our terminals. Yes, there is no doubt that they take up a lot of space and the process is expensive for our clients, but we charge for the system. However, I can honestly say that we have always worked well together. I think they would probably say the same thing about us. As I said earlier, in reference to the trucking industry and the railroads, the best way to tackle our problems is by keeping the lines of communication open and by working on them together. It is of no use to be confrontational.
We worked on a gate system with Mr. Steve Létourneau two years ago. He came to see us, we had a chat. Before Steve came, we were told: we are going to put them there, and the rest is your problem, but they have to work. Mr. Létourneau understood what type of problem this could cause. They wanted to put them under our cranes, where they would have been in the way. They finally managed to understand. We also suggested that they do some tests, some "dummy runs" with pieces of concrete, to show where the gates would be. It took a number of months before we could determine the best place to put them. It all worked out well in the end.
Last week, Mr. Stockwell Day and Mr. Fortier came to the official opening. Everything has been working well since Monday. Today they will be estimating the possible delays. So far, any delays have been minimal, because we did the preparatory work together with them.
The one thing that bothers us is the fact that everything must be checked in Ottawa, which is quite a distance from us. At the outset, we always wanted to have someone in the terminal in order to respond immediately. Mr. Carré and I can unload 200 or 300 containers per hour. By the time they realize that a box is non-standard, it will be buried under the pile.
Senator Dawson: Between the time when they identify it and the time when they notify you.
Mr. Doherty: That is what we fear. That is our greatest concern.
Mr. Carré: And we also have to go and retrieve the container.
Mr. Doherty: That is why we wanted people in the terminal. But for financial or other reasons, they decided that everything would be managed from Ottawa. We will see how that works out in the future. I am sure that if there are any small problems, we will work together to solve them.
Senator Dawson: I asked the question because it seems obvious that if we look at the traffic from point A to point B, as they say, the chain is only as strong as its weakest link.
In the fall, we will be deep into our recommendation process, and we may not be seen again. Without putting you on the spot, if you had to identify the weakest link in the process of moving a container from point A to point B, where would it be? As users, gentlemen, for the purposes of our recommendations, would you say that the weakest link in the current process is in the regulations, the legislation or the funding? Some things, like the weather or winter, cannot be changed. Beyond the fact that the snow is pure and white, I imagine it must not be very much fun to be working in the port in the middle of January. But in terms of what can be controlled, where do you see the weakest link?
Mr. Carré: I would say it involves the inland traffic; if that works well, then we are able to load and unload the containers.
Senator Dawson: Once everything is on the train or on the truck, then you have no other problems.
Mr. Carré: Exactly. And the ships must also be on time. If a ship is delayed by bad weather, that can cause us problems.
Mr. Doherty: As I said, we have to make sure that everything is done. It is like a pipeline, and once you turn on the tap, the water needs to flow unobstructed. There is no way around it. We have to make sure that it will work. Something else that we must not forget, particularly when it comes to the environment, is the water level in the St. Lawrence. The water level must remain constant, because that is a requirement for shipping. The ships, when they are loaded in Europe, are so heavy that the water level must be high enough to accommodate them when they sail into Montreal. There is no problem in Quebec City, where there is a 12- or 15-foot tide. But there is no tide in Montreal. So the water level must be constant. That is why the environment is so important, and why the lake water must continue to flow into the river.
Senator Dawson: One final question, Madam Chairman. You said something earlier that I would like you to repeat for the record. How much, on average, would a worker earn, in one of the 300, 500 or 800 jobs? What is the average wage of a worker at the Port of Montreal? How would a weakening of the Port of Montreal affect those jobs?
Mr. Doherty: According to our data, the average is about $80,000 to $85,000 for those working at the port. Those are high wages. These people work hard, and there is no doubt that they earn their wages. And they are all taxpayers.
Senator Dawson: According to my understanding, if part of the port is given over to the construction of condos or a park, and 200 jobs are lost in the process, would you agree that that would not be a good investment?
Mr. Doherty: No, it is not good for the economy.
[English]
Senator Eyton: There has been quite a lot of change in the ownership of ports over the last few years. Ports are a hot item and everybody wants them. I was thinking as I was listening to your happy story and your pleasure with all of your partners and associates. New York and New Jersey have gone, Baltimore is gone, Halifax I think has changed, Vancouver and Prince Rupert changed. On the West Coast I think there was some change in San Diego and in Seattle.
I want to ask about the ownership of the two institutions in front of me, Termont Terminal Inc. and Montreal Terminals Partnership. I take it that for the most part the ownership has stayed quite constant, except for the sale of one third of Termont to Maersk and the Mediterranean Shipping Company, MSC. Who owns the other two thirds of Termont?
Montreal Terminals Partnership would represent a number of owners. How many are there, and who are they?
Mr. Carré: One third of Termont Montreal is owned by the MSC with Cortelina International Corp, and the other two thirds is owned jointly by Cerescorp Company, which is the American company that bought the Japanese company NYK about four or five years ago, and by Logistec Corporation, which is a Canadian company with its head office in Montreal.
Mr. Fratianni: Montreal Terminals Partnership has gone through a number of changes as well over the last several years. In October 2005, Canadian Pacific Ships, which at the time owned both Racine and Cast terminals in Montreal, sold its activities to TUI, which also runs the Hapag-Lloyd shipping line. As you may know, Canadian Pacific Ships was a publicly traded company back then and its activities basically were taken off both the Toronto and the New York stock exchanges and now are integrated into Hapag-Lloyd. Thus, in October 2005 we changed ownership.
As Mr. Doherty mentioned at the beginning of his presentation, on March 9, 2007, Morgan Stanley's infrastructure fund purchased 80 per cent of the two facilities in Montreal — Racine and Cast — from Hapag-Lloyd/TUI, so they now own this 80 per cent holding with the minority participation kept by Hapag-Lloyd. It is part of a major fund, an infrastructure fund, as you may have heard.
Senator Eyton: I missed that one. I think I can remember four major transactions in the last year and a half or so and I am close to one company that bid four times and lost four times.
Mr. Fratianni: Yes, there is a tremendous interest worldwide to acquire these container terminal operations.
Senator Eyton: We are talking about containers now and I recognise that there are bulk and other measures, but in general terms, in your operations at the Port of Montreal, what is the source of most of the containers? Where do they come from and where do they go to? What is their ultimate destination?
Mr. Doherty: In broad terms, the ships that call at our terminals load out of Germany, Belgium, Holland and England and they come to Montreal. Then the cargo is distributed. A large portion goes to the Chicago area, and some to Detroit, Toronto and also into the New England states, very close to New York. Also, believe it or not, a full trainload goes to California once a week. Of course cargo also comes out of Northern and Southern Italy and parts of France, Le Havre and Fosse, and it is distributed that way. If you want to know what is in it, it is everything.
Senator Eyton: Yes, I am sure — even stuff you do not want. For the most part, the containers come intact and leave the port here intact and they are shipped on, forwarded on.
Mr. Doherty: Yes.
Senator Eyton: As a committee out of Ottawa, we are looking at some of the countrywide or national concerns, and one thing we have heard about and thought about a good deal is an integrated, national shipping transportation corridor that really goes from sea to sea. I am not sure about the other sea, but let us say sea to sea. However, that does not seem to be a factor in your presentation and in your remarks, and so I will throw in another question: Is short sea shipping a relevant factor? For example, Halifax can take much larger container ships, but from what you just told me it appears that you do not get short sea shipping from Halifax to Montreal that you can move on.
Mr. Doherty: No, we do not. You are right; it is coastal shipping and we do not get it. Studies have been done of running what they call feeder services into the Great Lakes either from Montreal or from Halifax with a stop in Montreal and on to Halifax. The only problem with that is that the seaway shuts down for three months of the year. You can set up a system for nine months of the year, but that does not pay. The minute you switched in the wintertime you would have to go to the railroads or trucking, and they probably would not be there to handle that additional volume. Of course, the rates would be more expensive too. If we could figure out a way to keep the seaway open —
Senator Eyton: Global warming will do it for you.
Mr. Doherty: Well, I hope you are wrong there, senator.
Senator Eyton: This morning we were told that Halifax can handle ships with 12,000 TEUs. Montreal can handle roughly 4,000 TEUs and the seaway can handle about 1,000 TEUs. There is a progression there, and I would have thought that in either direction there should be transshipping opportunities, but there are none, or it is not practiced.
Mr. Doherty: If I may speak from a purely operational point of view, being an operator, as no doubt you can spot, to offload a full ship of 12,000 TEUs under the current scenario in Halifax right now would demand a larger terminal. Studies are beginning to show that it is alright to build these big ships but the terminal has got to be able to unload them and reload them in a reasonable time. If you are talking about 12,000 TEUs off and 12,000 TEUs on, that is 24,000 TEUs that you have to move in about three or four days. It will take a lot of logistics to make that work. That is the first point.
The second point is that for the feeder service running into Montreal, the feeder vessel would probably have to be a 3,000-TEU or 4,000-TEU vessel, which is the size coming in now, but there are studies currently going on that are looking at larger vessels for Montreal, up to 5,500 TEUs. Now, if you can bring a 5,500 TEU-vessel directly from Europe to Montreal, the economies of scale are right there. Why would you want to do a feeder service? It all comes down to that, but you are right: we have a waterway and in Europe they use the waterways. I was stationed in Europe and I used to manage some of the feeder services going up the Rhine. They make maximum use of their waterways, but then again it is a little bit different because they have the density of population to justify all that. We do not.
Senator Eyton: You are obviously very proud of the Port of Montreal and your activities here; you gave us some numbers and referred to the fact that you were highly competitive. I guess your competition is perhaps to some degree Halifax, but then it is the East Coast U.S. ports. The Port of Montreal gave us some numbers that showed that over the last six years, up to and including 2006, the annual growth rate for the East Coast ports averaged 4.4 per cent growth, while the Port of Montreal over the same period averaged out at 5 per cent growth. According to these numbers, then, you were growing a little bit faster than the East Coast ports. Of course, everybody is growing, but that is a good growth rate. On the other hand, looking at 2005 and 2006, the growth rates for the East Coast were 7.3 per cent and 7.7 per cent; in the same two years the Port of Montreal grew 1.6 per cent and then minus 0.6 per cent. In other words, over the six years you were looking pretty good, but over the last couple of years, in terms of growth rate, you were not doing as well. Is there any reason for that? Why has the growth rate fallen off?
Mr. Doherty: I would be guessing, because I do not know where their numbers come from. The only thing I can say is that on some graphs that I have seen lately the growth on the east coast of the U.S. is due mainly to Chinese cargo. In fact, on one graph, if you remove the Chinese factor, looking at the growth and the volumes being handled, the Ports of Montreal and New York were just about on the same level.
Senator Eyton: Do you see that as a trend? Do you think 2007 will follow suit?
Mr. Doherty: No. Shipping does stuff like that. Sometimes you go up and down. As bad as it may sound, sometimes it is just question of ships getting off schedule and missing a few voyages. If you lose four or five ships, that is 20,000 TEUs or 30,000 TEUs gone. That can happen.
Mr. Carré: Or a shipping line can change a route or something like that.
Mr. Doherty: Yes, they change a route sometimes.
Senator Eyton: Then you think this is just a two-year trend.
Mr. Fratianni: I am not sure where the numbers you just read to us came from, because we do not seem to have a negative growth rate in 2006. We were under the impression that the Port of Montreal has had continuous growth over the last six years and certainly the last two years as well, 2005 and 2006.
Senator Eyton: It was a North European route, and major U.S. East Coast ports competing with the Port of Montreal.
Mr. Fratianni: You are talking about the North Atlantic specifically.
Senator Eyton: That is right. The Northern European is a major part of your business. I am happy to share those numbers with you. It is not a secret.
Mr. Fratianni: Maybe we can take a look at that.
Senator Eyton: You are a delight to have before us, because you are so positive in so many ways. You even spoke nicely about the railways, which we have not been used to, particularly in the West. In general, you have said that CN and CP are wonderful. Also, your wish list, it seemed to me, was pretty modest. You wanted a little bit of paving on Notre Dame Street and maybe a couple of traffic lights and that was it.
Mr. Doherty: It is not quite that simple. We also want some railway crossings with underground traverses.
Senator Eyton: I was being facetious, but I did think it was pretty reassuring, by and large.
What significant new investment would benefit the Port of Montreal and make it better? I will add to that the context where ports clearly require land and you are running out of land. What happens if at some point you go to a million TEUs and then you go beyond that? You will need more land and there is no land available around the port now, as far as I am aware. How do you deal with that? What kind of money do you need to address the most significant infrastructure challenge that you have?
Mr. Doherty: If you look at the Port of Montreal as an economic engine for the city of Montreal, then there should be an interest in expanding the port. There is land around the port, providing that you are willing to make the effort to invest in it. We have land to the north of us; in fact, there are empty parcels today. Yes, part of it has to be decontaminated, of course; what land today does not have to be decontaminated if it is in a port area? We have land close to Racine terminal, the empty Vickers basin that could be filled in. That is another twelve acres.
Senator Fox: When you say north, do you mean the other side of Notre Dame Street?
Mr. Doherty: No, between us and Notre Dame Street. There was were old tank farms there, which is why the land has to be decontaminated. In fact, we use one as a parking lot. There are areas like that all around.
There are also things that could be moved from the port, bulk operations that could be brought down to Contrecœur, which would allow containers into the port, and that land could be used for containers, because it pays more. It is a simple question of economics — you do what will bring more money into the port, what will employ more people.
Senator Eyton: Could you sell that politically, do you think?
Mr. Doherty: I would not mind giving it a shot, to be frank.
Senator Eyton: Everywhere that is tough. It is a tough sell.
Mr. Doherty: It is a tough sell, no doubt, but transportation is growing and space will be required. Populations are growing, and they will demand more. Also, we want the stuff that is coming from elsewhere, so at some point we will have to make it accommodating. This country will have to do it. I go by my favourite saying from the old Kevin Costner baseball film, "If you build it, they will come." I still believe that. The same as if you build a good reputation, people will come. It is simple.
[Translation]
Senator Fox: I was co-president of the Société du Havre along with Lucien Bouchard, and Mr. Taddeo sat on our board. So, we heard a great deal about the port and we all recognized the economic significance and great success of the Port of Montreal; this great success is due to the type of partnership that existed between the private sector which you represent, the Port of Montreal and the Government of Canada. What I am wondering is how can we ensure continued success and further improvements?
And by the way, the success of the Montreal harbour is a well-kept secret in the Greater Montreal Area. It is not your fault, but it would seem the people of Montreal do not realize to what extent the Port of Montreal is an extraordinary source of economic activity. When certain people put forward projects I consider hare-brained like, for instance, Bikerdike, it took someone with the strength and uncompromising nature of Mr. Taddeo to make sure they did not go through. Montrealers need to understand the economic significance of their harbour. It is a genuine success, but how do we ensure continued success and future expansion?
There are some things which fall under both areas of jurisdiction. I do not think that we can settle the problem with respect to Notre-Dame Street here. The Government of Canada is involved in construction on Highway 30, but it is somewhat far away. I understand how important the 30 is, for travel et cetera.
This morning we heard from seaway representatives who were considering three or four regulatory implements. Do you suffer from "regulatory implements"? Are there issues under the Government of Canada's jurisdiction which should be addressed and which in some way hamper the type of development you would like to see happen? I have not heard much about this type of issue this afternoon. Perhaps there is nothing to be said. Perhaps your concerns have to do with expansion toward the north as you said and towards the east and in Contrecœur. Can our committee recommend certain things to government to ensure continued success for the Port of Montreal? This question is for both groups.
Mr. Carré: I would say dredging in the St. Lawrence is important in order to maintain the ability for boats and ships to come into Montreal.
Senator Fox: I would assume most people understand the importance of dredging?
Mr. Doherty: There are some environmental concerns. There is the issue of conservation, small birds and small fish. As Roger just said there can be dredging, but there are also environmental considerations. But I think that with the appropriate studies we may be able to manage that.
There is also the issue of wharves. We need to build some in the Port of Montreal, to accommodate larger ships. Larger ships are what we would be dealing with, so we would have to be able to accommodate them. That is a necessity.
Finding ways to ship throughout the city. . . it is kind of like Highway 30. The 30 gives trucks a way to avoid Montreal and go directly to the wharves. That is a very important element.
Senator Fox: I am not asking you to invent any if none come to mind.
Mr. Doherty: No, I am not inventing any.
Senator Fox: Do any of the ports which you see as competition, do they have equipment or other things that you envy, and would perhaps like the private sector, government or a partnership to develop?
[English]
Senator Fox: What keeps you awake at night?
Mr. Doherty: In some of the state ports in New York or Galveston, Texas, or Houston, Texas, for example, it is the state that invests in the heavy equipment and the gantry cranes, while in comparison we have to do the investing in the heavy equipment for our port. Between the two of us, Termont Terminal Inc. and Montreal Terminals Partnership, we spent maybe $150 million on equipment in the last eight or nine years. That is one heck of a risk for private companies to undertake, so you have to be sure to have the cargos and the ships coming to justify it. Elsewhere, that is supported by the state because, as I said, the state will build the terminals in order to get the cargo because they know that it generates jobs. We seem to have a different approach in Canada. We like to get involved but only to a point. We like to get involved with over regulation, perhaps. I have not really looked at the question carefully.
Senator Fox: How can you compete with a port that has all of its installations paid for by the State of Texas, for example?
Mr. Doherty: First, by being a little more efficient. Second, the state might invest in it, but I think there is a clawback somewhere else, which is entirely possible through either rent or long-term leases that are under different approaches. No state gives anything away, so they have to get it back some place, but those ports do not have to have the cash outlay, which gives them a leg up. That is how I see it. Frankly, being an independent operator, I do not think I would like to see the government investing in my equipment.
Senator Fox: You do get the necessary write-offs, though. Are you saying that you can compete with Galveston and Baltimore in spite of the fact that they work under a very different capital investment regime?
Mr. Doherty: Yes, we can, because of our different efficiencies. I know I sound like the holy grail here again, but with our partnerships with the various railroads we are very efficient. Mr. Fratianni can correct me if I am wrong, but our footprint for putting boxes through is about 9,000 TEUs per acre.
Mr. Fratianni: Yes.
Mr. Doherty: That is almost third or second to none throughout the world. Our throughput is very high because we have the cooperation of the truckers, the railroads and the port. Yes, there is a point where all the cooperation in the world will not do it, but by then we will have come up with the appropriate solution.
Do I sound positive? Yes, I am. I am a positive person. You could not do my job if you were not positive because, as you say, you would not sleep at night, and I sleep very well.
Mr. Fratianni: So that the committee does not walk away with a completely rosy picture of Montreal, I will put a little bit of a cloud over this parade, perhaps — not to rain on the parade, but maybe a cloud.
Senator Fox: One of you is sleepless at night, I can see.
Mr. Fratianni: I think the encroachment of port land is an area of concern. We are hoping that certain people appreciate a bit more the value of the Port of Montreal in terms of what it does for the City of Montreal, for the Province of Quebec and we believe for Canada as well. Our importers and certainly our exporters benefit tremendously from an efficient port operation. We are a little concerned with the slow but consistent encroachment on port land, and a lot of energy is expended trying to keep these groups away. We could probably redirect that energy to more productive things.
We also think that the level of financing from the various levels of government should be considered. As Mr. Doherty said, we are competing with New York and with Norfolk and it seems they have a somewhat bigger basin of revenue from governments than we do, so we are hoping that governments will be able to help us more in terms of providing higher security and better installations, rather than relying strictly on the port profits to continue to modernize our facility. We are hoping to see a bit more funding coming in from the different levels of government, certainly from the federal government.
[Translation]
The Chairman: Thank you very much, gentlemen, for your attendance. If you can think of other information you would like to provide to us, do not hesitate to contact us and we will take that into account in writing our report this fall.
I would like to thank Senate staff and stenographers, the interpreters, technicians and those who have helped us in any way throughout our hearings. I would invite honourable senators to meet again, tomorrow evening at 6:15 p.m. for our next meeting.
The committee adjourned.