Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 15 - Evidence - June 5, 2007


OTTAWA, Tuesday, June 5, 2007

The Standing Senate Committee on Transport and Communications met this day at 9:35 a.m. to examine and report upon 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: Honourable senators, this morning we will continue our examination on containerized freight. We are pleased to have Mr. John Best, Executive Director, Southern Ontario Gateway Council as our witness. Thank you for accepting our invitation, Mr. Best. We are pleased to have you with us this morning. We will hear from you first and then senators will have questions.

John Best, Executive Director, Southern Ontario Gateway Council: Thank you. It is a pleasure to be here today to talk to you about transportation policy in Canada.

I thought I would provide you with a brief overview of the Southern Ontario Gateway Council and then provide a quick overview of the current transportation climate from our perspective in Ontario. I would then be pleased to take any questions you may have.

The Southern Ontario Gateway Council is patterned after the Greater Vancouver Gateway Council. We all know it has been a tremendous success. It has been in operation for 10 years or more now. We think that the Vancouver Gateway Council played a major role in developing and advising on what ultimately became the Asia-Pacific strategy. We are impressed with their success. There is another Gateway Council, as you know, in Halifax, which precedes us by a year. We launched in December of 2006, so we are new.

We are not solely interested in the government's investments. We know there will be a major role with private sector investment as well, but it is worth noting that there is nearly $1 billion allocated now for Asia-Pacific in the most recent budget and something in the area of $500 million allocated for the Windsor border crossing, whatever form that ultimately takes. There is also $2 billion allocated in a less specified way covering Ontario and Atlantic Canada.

I think our big pitch today is that we really want to be part of that process. As the provincial and federal governments work on picking the appropriate projects and investments, the Southern Ontario Gateway Council would very much like to be part of that process.

To give you a sense of who we are, our voting members cover most of the major transportation providers in Canada, especially around freight. We have both of the class I railways, as well as the railway association as members. We have the airport authorities of both Toronto and Hamilton. We also have the ports of Toronto and Hamilton as members. The Ontario Trucking Association, Purolator, the Railway Association of Canada, and the St. Lawrence Seaway Management Corporation are also voting members, as well as a couple of private trucking firms. You get a sense that our membership is well-rooted in all modes of transportation.

We then have resource members who represent industry associations like the Automotive Parts Manufacturers' Association and the Canadian Urban Transit Association, as well as the municipal governments in our region. Every municipality in our coverage area is a member, as well as boards of trade and economic development departments within those organizations.

Our mission statement is to achieve excellence in an integrated transportation system for the prosperity of Southern Ontario. We are focused on dealing with the tremendous growth and the increase in economic activity that will take place in the next 20 years in Southern Ontario. We must ensure that the transportation system keeps pace because if it does not keep pace, growth will not occur.

We look forward to working closely with senior governments as well as the private sector, hopefully as a catalyst, if that is possible. We have in mind two kinds of investment and infrastructure. There is the obvious hard infrastructure, which we have neglected in many areas over the years. There is also a policy infrastructure that we think needs to be in place. We are pleased that the government is focused on that at this time.

I just attended an international gateway conference in Vancouver where there were 21 papers presented from people all around the world. One might wonder why ``gateway'' is suddenly the flavour of the day and everybody is focused on gateways and corridors.

They are major employment nodes; hence our interest. They are capital intensive. The good thing about the gateway concept or notion is that it promotes intermodality. That is a big issue as we try to get more efficiency out of the system.

We will never be able to build enough roads in the next 50 years to accommodate all the growth. Clearly there must be a modal shift and I think everyone understands that.

A good thing about a gateway council is that it helps to a certain degree to break down that silo mentality towards transportation. With respect to Southern Ontario, we start thinking about it as a system as opposed to a collection of municipalities squabbling over infrastructure dollars. Those days are gone.

The key is to promote the efficiency of the transportation network as a whole. That forces — and this is not so much a federal issue but it is an important issue — long-term land planning. Intermodal yards and major freight facilities are big. They require a lot of land. They can be noisy and ugly, but they are absolutely essential if we are to expand the transportation system so that it can meet the potential growth.

I will give you some facts and figures in Ontario. The Southern Ontario region, which we take as the Greater Toronto Area easterly as far as Peterborough and westerly into Waterloo, Brant and Niagara, is the twelfth largest region in North America. It is Canada's major economic hub. Sixty-eight per cent of Ontario's GDP is generated in our area and about 27 per cent of the Canadian GDP. It is a significant area.

One other fact I found interesting that you may well have in front of you is that when you look at the reliance on trade of various countries around the world, you see that Canada is number two in its reliance on international trade. Only Germany is ahead of Canada, slightly. Almost 38 per cent of our GDP is dependent on international trade.

If you look at the United States, only 10.2 per cent of its GDP is reliant on international trade. You get a sense of our relative vulnerability, if you will, relative to other countries. Japan is seen as a major world shipper, but only 12.5 per cent of its GDP is reliant on international trade. Japan has huge population centres that can drive much of its own market.

Eighty-four per cent of Ontario's imports from the United States pass through Southern Ontario, most of that at Windsor and Sarnia and then, to a lesser degree, at Niagara. Ninety-four per cent of what we ship to the United States goes the other way on those bridges and tunnels.

Our organization was founded in response to the fact that our transportation system in Southern Ontario is facing serious pressures, partly due to some underinvestment over the last 20 years. We do not have to dwell on that; it was a fact of life at all levels of government. Now the demands on the system will start increasing fairly quickly and now is the time for proactive management and action to ensure we get the foundation right so that we can experience the projected growth.

Speaking of the growth, in our particular area we see a population increase of 3 million by 2020. We have to find a place to put 3 million more people. We are looking at increases in economic activity in the area of 40 per cent to 60 per cent. Somehow we have to find the assets to move all those goods and people around. It will be a challenge.

I know your focus is on containers and I have a couple of thoughts on that subject. If you look at the major North American ports, the biggest, of course, is Los Angeles-Long Beach and the next biggest is New York-New Jersey, although New York-New Jersey is dwarfed. Los Angeles-Long Beach is handling 13 million TEUs of cargo at this point. That will quadruple by 2020.

New York is handling a little over 4 million TEUs right now. That will triple by 2020. You see similar increases up and down both U.S. coasts. We can anticipate there will be similar increases and demands on the Canadian system, especially in the Pacific area.

The congestion in the Pacific is so great now that it has become economical for some shippers to move cargo through the Panama Canal and the Suez Canal. We are starting to see Asian cargo reaching eastern ports. I am sure you have had that explained to you by others. All projections suggest that trend will continue. They have giant Panamax ships, but the problem with them is that they can only call at a very small numbers of ports.

All of this points to tremendous congestion at these coastal ports and a need to find a new way of moving, sorting and shipping the containers.

The concept of inland ports is being explored in the United States, where containers are simply moved off the dock in the quickest way possible at the congested port level and taken inland where there is more time and room to sort them out and move them on to their final destinations. There is talk of inland ports in places such as Kansas where there is no water. The items will be brought in by train and truck, mainly train.

The American transportation authority is also looking at inland waterways to see if more container activity can take place on inland waterways. It is that move that may provide an opportunity in Southern Ontario. Halifax is clearly poised to handle a significant increase in containers. At some point, Halifax too will have the need to move that cargo off the somewhat limited oceanside handling facilities. That is where you will start to see more containers on the St. Lawrence Seaway. It has heretofore not made sense.

They are also putting different goods in containers. Containers used to contain finished manufactured goods. Now, all kinds of ore and different bulk goods are going into containers.

We think there will be an opportunity for some kind of a major logistics and sorting facility in Southern Ontario. We are not sure of the exact location; however, I believe that is the future and that type of facility will be built in North America. This is a North American phenomenon. The issue is how much of that happens in Canada and how much happens below the border.

I talked to an economic development consultant based in California, right on the Mexican border. He recently discovered Canada and the St. Lawrence Seaway and is now advertising to economic development departments around North America about the tremendous potential of this 1,200-mile waterway. Of course, we also have tremendous rail assets connecting us to the East Coast as well.

There is a lot going on. Everybody is focused on containers. At some point when the business case hits, there will be investment in logistics. The Southern Ontario manufacturing economy is still focused on the automotive industry, but we are seeing shifts away from Detroit as the manufacturing centre and more of a shift to the Southern United States. We are unsure how that will affect our manufacturing auto assembly plants at this point, but the general thought is that there will be some decrease, although there is more optimism about the automobile parts industry in Southern Ontario, which actually employs many more people than the assembly plants. There is a sense we are still competitive in that area and will continue to be competitive.

All of that is a very rambling discussion of some of the things coming in on the eastern part of North America around containers. We think there will be a big opportunity there. The issue will be, both from the private sector and from the policy sector, whether we take advantage of what we think is a pretty significant opportunity.

The Chairman: We already know that the Ontario Gateway Council model has improved transportation planning in Canada. It provides a forum where key stakeholders can work in a collaborative fashion to identify the challenges and solutions.

The Vancouver Gateway Council has been successful in consensus building with stakeholders from the Vancouver area over the past 10 years. In Halifax, the substantive efforts are directed at the Atlantic Gateway project and a strong local consensus is present in Nova Scotia.

I would like to hear your comments with respect to the relationship between the Southern Ontario Gateway Council and the federal government, especially between the gateway and Transport Canada. What kind of input do you have in the current development of national policy framework?

Given the emphasis in the recent years on the Asia-Pacific Gateway, do you think the federal government as well as other governments are receptive to the needs of Central Canada?

Mr. Best: Yes, I think so. As far as how receptive our government is, our sense is there has been a renewed focus on transportation infrastructure. Transport Canada sits as an advisor to our organization. They attend our meetings and are active in them. They have been with us since our formation and are tremendously supportive of this concept. They have provided some good guidance around how we should position ourselves so we can more effectively deal with senior governments.

I would describe Transport Canada's role in the gateway council as extremely positive. A former Southern Ontario minister had the idea to form a Southern Ontario Gateway Council. His idea grew out of observing what was going on in Vancouver and, more recently, in Halifax. Being a Southern Ontario minister, he felt there was great value and probably some urgency in establishing a gateway council.

There are differences; both Vancouver and Halifax are port-driven gateways. In other words, the basic unit of business is getting the containers off the boats and into the rest of Canada. In our case, we are a gateway because so much of the commerce with the United States passes through our region. However, we are also a destination in a sense that we provide to a market of 7 million people. It is not all import-export. Many of the things developed in our gateway are consumed within our gateway. The transportation complexities are somewhat greater.

In addition, both Halifax and Vancouver have an east-west focus. Our focus is east, west, north and south. We are in a part of Canada where there is as much north-south commerce with the United States as there is east-west. It is not containers, it is not marine, but trains and highway are the two big ones. We have marine assets in that we are right at the centre of the seaway. We focus on that asset, which is now being used at roughly 50 per cent of its capacity; it can handle twice as many ships as it is handling now.

Is there a way that container traffic, for instance, could be diverted to the seaway? That will be a decision that the shippers make, but is there a way to make that option more attractive? There may be policy implications there through tolling or do we need to modernize the seaway? It is 60 years old and perhaps there are some infrastructure elements that would make the seaway more competitive, efficient and therefore more attractive to shippers.

The Chairman: The committee has heard different versions about the relationship between the railways and terminal operators. In Montreal, the relationship seems to be very positive. However, when in Vancouver we heard that the railways were not providing enough cars to shippers and terminals in a timely manner.

Are shippers and terminal operators satisfied with the level of service provided by the Southern Ontario Gateway in terms of efficiency?

Mr. Best: Again, we are not dealing with as much of a railway driven dynamic, although obviously both railways and a large number of short-line railways serve the area.

I would not think that rail car availability has been a serious issue with us, partly because if a rail car is not available a truck is available. There is a dynamic within the market place that if you are not competitive, there is another way of moving goods. I do not think we have seen that problem.

There is no doubt there is a healthy competition between the rail and the truck sector. They are both concerned about market share, and they are concerned about policy changes that might favour one mode over the other. However, within our organization they have checked those differences at the door so far and we have been able to work together effectively. I would not say rail capacity is the issue that it is certainly in Western Canada.

The Chairman: Short sea shipping would allow major hub container ports to be established in Canada. Short sea shipping services have been introduced on the St. Lawrence River and other Canadian waterways, but not yet for containers. On the St. Lawrence Seaway, short sea shipping would be possible only nine months of the year. Rail service is available 12 months of the year.

Can St. Lawrence River short sea shipping be truly competitive to rail and trucking in the near future, and how can we achieve that? Do you think short sea shipping can play an important role in the traffic of containers? If so, what policy proposal would be necessary to ensure the viability of the short sea shipping option?

Mr. Best: I do not think we have formulated policy requests or positions yet. Our marine members do believe that short sea shipping can play a much bigger role on the St. Lawrence Seaway and into Southern Ontario.

On the issue of winter closings, there is a belief they can be further shortened to perhaps a month. The closure of the seaway is not so much driven by the weather as it is by a need for heavy maintenance that ends up closing the seaway. Ice-breaking is not an insurmountable problem. In order to have the seaway operating 12 months of the year, the Welland Canal would have to be twinned in certain places. That is a huge investment, and a business case would have to be made for that.

We look at the growth in economic and shipping activity that we see in the next 15 years, and clearly the highway system will not be expandable to where it would need to be to handle that kind of increase.

Rail has some capacity, but the general consensus — and certainly from the international gateway council that I attended in Vancouver at the beginning of last month — is that there is a role for moving containers by waterway into the heartland of North America.

There will be certain kinds of products where it will and will not work. When you talk about just-in-time delivery and those concepts; how does something that takes 30 days or two weeks compete with something that can be moved 500 miles in eight hours? If there is a steady stream, as long as the box is dropped off on the loading dock every Tuesday morning at 9:00, no one cares how long it took to get there. There is a case to be made for certain commodities that could be moved more efficiently. Then you have the whole issue of it is cheaper to ship by marine, and obviously from an environmental standpoint it is an attractive option as well.

Senator Tkachuk: You said $2 billion is allocated to Ontario and the Maritimes and that the council wants to be plugged in to the process. What do you mean by that? Does the council have in mind a particular administrative or advisory process that you and the council suggest would be possible?

Mr. Best: There is some process under way now. Transport Canada and the Province of Ontario and the Province of Quebec have formed a committee at the ADM level that is meeting and looking at gateway policy generally. Now that funds have been allocated, obviously they are looking at the best place to put that investment.

Our counterparts at the Ontario government have invited us to be part of that process. We have not formalized whether that involves sitting as part of their group. I do not think we are concerned about the detail of the mechanism, but we do want to be helping with that decision. We see these significant investments coming forward in transportation after 20 years of not much investment. We want to ensure it is done properly and that whatever decisions are made are made in a long-term, effective way.

A friend of mine in Ontario sometimes refers to the Santa Claus school of infrastructure allocation. This is something that must go beyond announcements and must be done carefully. We know that while transportation does have some profile right now and there has been an allocation of resources, that situation could change, as it has in the past. We want to ensure that these resources are used most effectively.

Senator Tkachuk: As a trading nation, do we have a national transportation policy?

Mr. Best: I am not able to answer that question.

Senator Tkachuk: That tells me a great deal.

Mr. Best: I am sure there is policy at various levels, but if we had a policy one of the things we should be looking at as much as possible is harmonizing customs. The way we move goods across the border is critical. Right now, we are looking at a situation where the dollar is almost at par. That was one of the huge advantages we had as a manufacturing country. There are already rumblings that the manufacturing sector will start feeling that loss of advantage. We still have some other advantages not the least of which is our health care system.

Clearly, the advantage is shrinking, and we have to add that we may be getting close to par and the border crossing snarls are a problem as well as the lack of seamlessness. Automobile parts are moving across the border both ways. Cars are manufactured in Toronto and shipped to Michigan for distribution all over North America. Typically the way automobiles are manufactured now, each plant manufactures the world's supply of whatever the model is. If it is minivans, they are all made in one plant somewhere in North America and shipped everywhere else.

It is important there be no border-crossing issues; that it be as seamless as possible. That is not easy given the political and 9/11 climate we are in. There is electronic scanning and other technological methodologies that can still preserve security while allowing goods to move without delay.

Short sea shipping in Central Canada would likely involve cross-lake ferries. We are not talking about the passenger ferry that did not work, but ferries containing either containers or truck trailers. That is a much more viable option that could have a business case around it very quickly. I am not an expert on customs policy, but I do know that certain crossings are grandfathered in terms of cost recovery. If you start a new crossing — say a ferry between Erie, Pennsylvania and Nanticoke, Ontario — typically Canada Customs will require full cost recovery on setting up inspection facilities and manning them, whereas there is not full cost recovery at older crossings. That can be a bit of an impediment to someone, especially in the start-up phase of trying to establish a new trade link. You might want to consider having a look at that.

Senator Tkachuk: You were talking earlier about Los Angeles-Long Beach and the fact that these ports are becoming clogged. You said that shippers are looking at another route and coming back through the Suez Canal and directly to New York and New Jersey. Why are Vancouver and, in the future, Prince Rupert, not alternatives to Los Angeles-Long Beach, and what can we do to ensure that these Canadian ports become alternatives?

Mr. Best: They are alternatives. Vancouver's issue, and I do not want to talk in a lot of technical detail, I think is strictly that they are at capacity. That is why Prince Rupert is being established. I talked to some people at Prince Rupert, and they expect that that port will be busy from day one. Using the Canadian National, it will move goods diagonally from Prince Rupert down towards Chicago and the Mississippi River. They see themselves ramping up to take on the additional business. I think it is capacity. I do not think it is a missed opportunity. The question is how big do you make these ports? At some point, there has to be some forecasting. How long will it last? Will it last forever, or is it a 20-year cycle? Those are major concerns that people have.

We also have a huge issue — I am moving way out of my comfort zone here on technical stuff — with empty containers. The containers come over full, and it is difficult to send them back with anything in them. Those are logistics issues that will need to be addressed probably by the private sector, but there are problems. Unfortunately, an empty container takes up as much room as a full container, and there are issues around keeping the ports clear so they can continue to unload ships. There are many ships waiting to unload, and that is a big problem in the system, so much so that there was a story in the National Post two or three weeks ago saying that we are actually in some cases, with high-end manufacturing, starting to repatriate manufacturing. We had shipped it to Asia because of the cost-benefit, but now the shipping penalty, because of congestion, is resulting in some manufacturing being repatriated to North America.

Senator Phalen: How new is the Southern Ontario Gateway concept for Southern Ontario?

Mr. Best: As I say, after about two years of groundwork, we were launched late last year. It is going very well for a relatively new organization. We have the benefit of seeing how Vancouver operated very successfully, and of course, we are in touch with both the Vancouver and Halifax gateways. We think we are getting traction. Our relationship with senior government has been positive. Our members are eager to find a way to ensure that both the policy decisions and the investments that are made in the next three or four years are as beneficial to the long-term health of the system as possible. I would say it is going well.

Senator Phalen: Roughly what proportion of the total freight passing through Southern Ontario Gateway is containerized?

Mr. Best: Very little. Most of it is on truck or train. I cannot give you an exact percentage, but containerization is really a coastal phenomenon. There is a small amount of container traffic at the Port of Toronto. Ironically, it is trucked in and out. There is no ship-borne container activity at that port, or very little. Hamilton, which carries the most tonnage of any port in Canada on the Great Lakes, is almost entirely bulk commodities mainly related to the steel industry. There is very little container activity. There is some train container moving through, supporting the automotive industry. It is an opportunity. It is not happening in any major way right now.

Senator Phalen: On your website, you say that 84 per cent of Ontario's imports from the United States use the Southern Ontario Gateway. Can you give us any information on overseas imports, where they come from, how they arrive in Ontario, and how they are transported within the province?

Mr. Best: If I am not mistaken, 84 per cent represents our imports from the U.S. It refers to what we are bringing in from the United States, so there is no offshore component there. When you think of all the electronics and Asian consumer goods and clothing, obviously we are the major consumer population centre in Canada, so the dollar value would be significant, but I do not have that figure.

Senator Phalen: On your website, under the border security and safety goals, you state that one of your goals is to ``Monitor and influence government processes for air and surface cargo screening.'' Can you tell this committee where you believe improvements in cargo screening are necessary and what government processes you are involved with in the area of cargo screening?

Mr. Best: I think the major concern in cargo screening is harmonizing the protocols on the two sides of the border, whether that means we persuade the Americans to adopt our system or vice versa, or between us we adopt a hybrid system. Many of our trucking-related members indicate that the biggest source of border delay is not trucks jammed up at a bridge trying to cross; the crossing is not an issue. In fact, Transport Canada is doing some interesting work. Now that all the trucks have these geo-positioning devices, you can track how long it takes to get from A to B. There is the perception that the bridges and tunnels are clogged up and all these problems. They have done some real-time data research and found that the average crossing time is something like 18 minutes, which is acceptable. The issue is the time spent processing paperwork. American truckers are reluctant to bring a shipment into Canada because of their perception of the bottlenecks and the red tape. That means, then, that there has to be some kind of a transfer between an American driver and a Canadian driver, which obviously adds to the time and delay. That is my sense, where I am operating, of the biggest cross-border issue that we are facing right now. It is harmonizing the clearance of goods with the American system.

Senator Phalen: We are beginning to receive mail from environmentally conscious citizens concerning the gateway projects. You also state on your website that congestion and pollution are among the most important local issues. What steps are you advocating to be taken specifically to improve air pollution caused by cargo transportation?

Mr. Best: As I said earlier, we think that there will be a natural sorting out of the process simply because we are reaching the outer limits of highway expansion. That implies a shift to other modes which are less polluting, like trains and marine. Offsetting that is the fact that the total amount of activity will increase by about 40 per cent. Even if there were a significant shift to train and to marine by 2020, given the growth dynamic that is happening at the same time, rather than ``reduction,'' a better word might be ``mitigation'' of what is likely to be a fairly serious problem.

Concerning technology, will trucks pollute less 20 years from now? One would hope so. There will be some of those kinds of improvements, but will all of that, for example, shifting to intermodal less-polluting options and whatever technological changes we get into with the automotive industry offset an increase in activity of 40 per cent in 15 years, I cannot say.

Senator Dawson: Mr. Best, representatives from the Port of Vancouver told the committee that it felt it needed what it called a ``social licence'' from local residents in order to continue to operate and grow. Are communities in Southern Ontario complaining about freight operations through the Southern Ontario Gateway negatively affecting their quality of life? If so, what are their specific complaints?

Mr. Best: We are a little different from Vancouver or Halifax, where they have these large port installations that are thousands of acres of waterfront, which obviously is a huge issue. Yes, we do have similar problems. Our major social complaint is probably around the highway system. More specifically, urban sprawl is becoming a huge issue in the greater GTA. Urban sprawl brings with it new roads, or a demand for new roads. About three years ago, the Ontario government implemented the places to grow strategy and the greenbelt strategy, in an attempt to manage where the growth occurs.

Our members are concerned that if we do not protect transportation corridors — that is, future transportation corridors — then they will become a source of friction when the attempt is made to build on those corridors. It is a serious societal issue in the sense that why do we have urban sprawl? Because young couples wanting to get married want a detached home; they do not want to live in an apartment building. You prevent urban sprawl when you decrease the demand for housing, but housing is a huge issue in Southern Ontario. We have communities springing up everywhere. We have a greenbelt policy that is supposed to protect the Niagara frontier. It will do so, but we are already seeing intensified development leapfrogging on the other side of the greenbelt. Why is that happening? It is happening because there is demand.

The issue may look like it is transportation versus people who are concerned about noise and pollution. It is the same thing with public transit. It is a great thing to say let us get more people on public transit, but the issue is what if you cannot go home at 5:00 p.m. Your train leaves at 5:00 p.m. to go home and you have to stay late. You would have to get into a whole employment dynamic. When someone is riding public transit and they say they have to go home at 5:00, they cannot stay for meetings.

You have to get into the human factor that is driving some of those serious issues. We could all take a bus if we could predict what our day would look like, and I think people would.

Senator Dawson: Both in Vancouver and in Montreal, we heard about the dual monopolies of CN and CP. You talked about competitive nature of trucking versus trains and, to a lesser level, shipping. Is the fact that both can serve the market a competitive advantage for you?

Mr. Best: Yes, it is. In Southern Ontario, the two railways are starting to share lines. They have realized that they can move more trains if they can share lines and say that everything will go eastbound on one track and westbound on the other. There is cooperation. A railway is a fixed asset. If your railway has gone to the Toyota plant in Woodstock, the other railway cannot service that company. They seem to have sorted out the pie a bit in Southern Ontario. I think there is quite a degree of cooperation.

Senator Dawson: Senator Tkachuk talked about the other gateways. To get to the Southern Ontario gateway, you go through both the Atlantic and the Quebec gateways. What kind of structural communications or cooperation exists between gateways?

I can understand that you have representatives at Transport Canada. The people we met in Montreal told us they have representatives. One works for the Atlantic desk; one for the Ontario desk.

Is there national coordination with these three gateways? Also, because of the civil servants, do they get some national perspective or does everyone go back to the regional desk and there is nothing national coming out of it?

Mr. Best: I do not know. Our relationship with our representative is excellent, but I do not know what goes on behind the curtain. I would think there is coordination.

Senator Dawson: Do you communicate with the people at the Atlantic and Quebec gateways?

Mr. Best: I am in touch on a reasonably regular basis with both the Atlantic and the Vancouver Gateway Council, my counterparts. In terms of Transport Canada, however, I do not deal with their officials from those two regions. We deal with our contacts in Central Canada. I do not know what is behind that in terms of their coordination.

Senator Dawson: Do you have structured meetings, for example, with the Atlantic council?

Mr. Best: No. We do not have structured meetings, but we share information regularly. We do not have an association.

Senator Dawson: There is no Eastern Canada gateway?

Mr. Best: No; not yet.

Senator Dawson: Is there talk about it?

Mr. Best: Certainly, the Port of Halifax has made it clear that they see their success being tied to the ability of Central Canada to be the recipient of all of this extra container activity that they are anticipating. They have been to Toronto marketing their port and their concept. It has not gotten more formal than that as far as I know.

Senator Johnson: Mr. Best, the Southern Ontario Gateway Council lists seeking improvements to provincial environmental assessments as one of its strategic objectives toward its infrastructure and goals. What problems have you had with the provincial environmental assessment process?

Mr. Best: The complaint about environmental assessment around transportation projects is simply the time.

There is an opportunity in Southern Ontario for perhaps one last large transportation corridor that has not been built yet, namely the Niagara-to-GTA corridor. It would run diagonally from Fort Erie and come into the GTA to facilitate manufacturing-related shipments. That process has already been under way for approximately six years. It got off to a bit of a false start and they had to regroup. We are talking about six years of environmental assessments, EA. I attended a meeting three weeks ago where they are regrouping and saying, ``Here is the new EA process, the other one did not work.'' They are talking 10 years before seeing a bulldozer fired up. That adds up to 16 years. That may be the worst case ever, but it is our case.

There has been some movement. The provincial government recently announced streamlining of the EA process. On these big projects you always see people looking for accelerated EAs or a class EA so that they do not have to go through the full EA. The reason you get so much resistance to EAs is that something has happened in the last 20 years that has let the EA become a death sentence to a project simply through delays.

Is there a way we can examine these environmental issues? Everyone agrees they must be addressed. How do you mitigate these problems? If you cannot mitigate them, maybe you have to rethink the plan. Does it take 10 or 16 years to get there?

Senator Johnson: That is harsh.

Mr. Best: Yes, it is. The thought is, let us respect the EA process.

Senator Johnson: How does your process in Ontario compare to the federal environment assessment processes?

Mr. Best: I am getting out of my depth on that, frankly. I do not know how the two dovetail. You have a Canadian Environmental Assessment Agency process that we saw applied to a highway project in Hamilton. Through litigation, they were able to get the CEAA process taken away.

That is the problem; people try to avoid EAs. Everybody would agree we should do thorough environmental assessments for any big infrastructure project; however, if it is allowed to become essentially a killer of the project, then the system has become broken. That is certainly the view of our members. Can we speed it up and still do a good job is the question being asked.

Senator Johnson: What should our committee, in your view, recommend to the federal environmental assessment process? What does your council feel would improve it, given the 16 years you talk about?

Mr. Best: Certainly, this is a level of technical detail I am unable to answer. I certainly hope that there would be some harmonization between the two EA processes so that we do not have to do everything twice. I believe there is some harmonization around the two EAs. One would hate to go through a five- or six-year provincial process and then discover one had to do it all over again to satisfy a federal process.

The main thing is harmonization. If something has been studied and examined at either level that should work for both governments. Our big concern would be to get away from duplication.

Senator Johnson: What do you think is essential that our committee hear in order to develop our policy recommendations for the federal government with respect to containerized freight transportation serving the Southern Ontario gateway?

Mr. Best: I read the list of members of our organization. Our members are largely transportation providers. They are actual railways, couriers or truckers or the operators of ports, airports and facilities.

The one perspective we feel we need, and I suggest that would be helpful to you as well, is the shippers. They are the people who create the demand and decide whether they will ship by truck, boat or rail. They need to be represented in any serious discussion about transportation policy.

Through the Canadian manufacturers and exporters and other approaches, I am trying to get plugged in to shipping and shippers. They understand how the system works and what makes certain transportation and shipping decisions occur. I would definitely reach out to that group, as we intend to do. We do not think we can give our best advice if we do not have their views fully in front of us.

Senator Johnson: In terms of the gateway, what kind of federal funding commitment would be your wish in terms of what you are doing? Six hundred million dollars million went to the Asia-Pacific Gateway and Corridor Initiative.

Mr. Best: I think it is closer to $1 billion now.

Senator Johnson: It will go toward infrastructure improvements. What would be your wish list?

Mr. Best: You may be a little shocked. At this point we do not have an ``ask.'' We know that there is $2 billion set aside in an unallocated manner for Southern Ontario. I think much of it is earmarked toward Atlantic Canada. I think there is an opportunity for some of that money to go to Southern Ontario. The language around the announcement was that it would be ``merit-based,'' which is a good thing. There must be some demonstrated benefit to the national system. However, we all know how funding announcements get made and how projects suddenly find their way on the agenda, especially in times of political volatility. It could be a bit of a jump ball, then you start getting bad decision- making and then you start getting Mirabel.

I do not think the trick is to rush out and spend the money. The trick is to allocate the resources and then develop a measured and sensible way of figuring out what is best for the economy over the next 20 years. What is the best way to spend that money? We would like to be part of that discussion but it needs research.

You can get people who will come here and tell you how to spend $2 billion more creatively than I can. There is a process issue here that is more critical and that is that the people involved in the transportation delivery system in Canada have not had this opportunity for the last 20 years. All of a sudden, it is here; let us get it right.

It takes so long for these projects to come to life that a little bit of reflection and developing a good process that hopefully is as immune as it can be from political cycles would be the desired way to go. I realize that is a tough call.

Senator Johnson: Would you say that in terms of the future of the Southern Ontario Gateway, investments in infrastructure, for example, transportation systems, technology, security or marketing would be the most critical issues for you?

Mr. Best: Yes, if you think about infrastructure, highways are obviously a provincial responsibility. If necessary, there are all kinds of creative funding mechanisms for highways, such as tolls. The Americans envelope the gasoline tax and dedicate it to highways. You do not necessarily have to go to general revenue to get money to build a highway.

Railways are still self-financing; they still use their own money and their shareholders' money. If we need more intermodal facilities, some way of getting products from truck to rail to perhaps marine, there might be an investment opportunity there. Something that connects those nodes might be a good federal role, where there is no clear jurisdiction, and where there is a need to connect but nobody clearly has the full responsibility. Those are areas where I think you may see a good investment opportunity.

The private sector will be there as part of that initiative in any event, because much of this is the underpinning of our economy. It is not like health care, which is 100 per cent driven by public funding. There will always be a significant opportunity for private sector investment in this area.

Senator Munson: You say you do not have an ask, yet earlier in the testimony you talked about new trade links. It seems to me that it would be an obvious to ask for these new private sector and federal government trade links with the ferries you mentioned on Lake Erie. How feasible is that idea? Is that something way down the road, or is it something on the radar screen with you folks and the federal and provincial officials?

Mr. Best: There was pretty serious activity around a ferry crossing on Lake Erie around the time that the Rochester ferry was going through its experiment, which did not work. It is really unfortunate because that exercise probably put ferries under a bit of a cloud in terms of a viable transportation link. In our view, it would have been better if they had started with a cargo ferry because there are definite advantages. For instance, you can go from Port Dover on Lake Erie to Erie, Pennsylvania, in 90 minutes by ferry. That plugs you right into the I-79 network and down to Carolina and all through the U.S. Midwest. That could save driving time. Earlier, when we talked about the use of marine, we talked about accepting the time penalty and trying to find goods where the time penalty would not be an issue. Here is one where you could actually get to the other side more quickly than driving around the lake and connect with a major transportation network.

Senator Munson: Is there a real push on now for this ferry?

Mr. Best: Yes. Both the St. Lawrence Seaway Management Corporation and the two big ports in Ontario have developed what they call the Highway H2O process. I do not know if you have come across that in your research. Essentially they are promoting a marketing initiative that promotes all forms of enhanced use of the seaway, which could include containers and could include cross-lake ferries. They have it as a marketing concept but they are still wrestling with issues.

When they do the economic analysis, their assumption is that it has to make sense if we buy the boat. Then you get into areas such as whether we can improve the harbours on both sides. When dealing with these huge ferries, we are dealing with significant infrastructure to remove containers and get them onshore. There is an infrastructure component there, and then there is the whole issue of customs. Can we not burden a fledgling route like that with full recovery on customs at the beginning? Is there some way of making that more palatable?

There would be an infrastructure investment component that obviously if the federal government wanted to support something that was new and because it is international in nature, it would more feasibly lend itself to federal involvement. That might be an area to look at.

Senator Munson: Would that be the money that may be in the ask?

Mr. Best: It could very well. I do not want to preclude any asks. At this moment, our position has been to look at the needs. We can identify the needs; roads are too crowded and there is congestion at the border.

We have tried to be as research-based as we can so we do not make mistakes. The prime example is the border crossing issue where the thought was that the infrastructure was inadequate. At the Ambassador Bridge area, the infrastructure is inadequate; the road structure through Windsor is totally inadequate. However, in Niagara it turned out that was not the problem. The bridges are adequate but the customs are inadequate on both sides. We cannot solve that problem on our own. There are administrative and policy issues that sometimes can be as much of a problem as inadequacy of infrastructure.

Senator Munson: Would it be a good idea, to sit down with all of these competing entities and set out a cohesive national plan? Perhaps it is happening. Should the federal government link all of these gateways and the aspirations of these gateway communities?

Mr. Best: That is an interesting idea in terms of if you wanted to tie together the three big strands that make up the transportation puzzle; you have three gateway councils and stakeholder groups. One of the advantages of a gateway council is that if we do come into a place like this with an ask we have already fought it out ourselves between the competing stakeholders. There is already some selection of priorities that has taken place. It might make it easier to deal in a strategic way with transportation if there is a pre-selection process that has taken place just because of our membership. If they all agree this is the best project, if we can get agreement on something like that, then you know that the marine sector, rail sector and truckers have all looked at it, and as we go forward, the manufacturers will have had input as well as the major shippers.

One of the most educational things I have experienced was when I went to a shipping conference and heard people from Canadian Tire talking in terms of how they move goods, how they make decisions and what goes in the box that comes from China. All of that information is fascinating and a vital part of any discussion we have here.

Senator Munson: That is a vital part of our study. Thank you very much.

Senator Fairbairn: I am from the province of Alberta and although we are not on the coast, in fact far from it, this has been an enormous issue for my province in terms of dealing and partnering with the gateway.

How long did it take the Vancouver group, and then extended into Edmonton, to actually squeeze out a positive response and the money to boot?

Mr. Best: It took 10 years; the first time any concept is rolled out there are false starts. I would certainly like to think that we could be actively looking at real projects in the next couple of years.

I do not know if representatives from Vancouver have been here yet to talk to you to describe their process, and I am reluctant to tell their story for fear of getting some of it wrong. The first thing they had to do was sort out what was important in the lower British Columbia mainland. What were the bottlenecks? What is causing this congestion? They got down to some very basic things. They said this bridge needs to be twinned; we need a grade separation here for the railway. There was no rocket science involved. They were clear about what projects needed to be developed.

It is interesting that now that many of those projects are coming to fruition, that the people are sure they were important. They were successful in convincing people — perhaps in Alberta, Saskatchewan and further inland — that those were still the major bottlenecks. It did not matter whether you were shipping from Calgary or Abbotsford, B.C., to get to the coast. The issues were still the bottleneck around a highway and the bridge that needed twinning. All the bottlenecks were around Southern Vancouver and were acting as an impediment to shipping back into Canada, into Winnipeg and the problem simply backed up into the Prairie provinces.

People in that organization put their heads together, which is very much to their credit because there is a tendency to be parochial about these issues. What made it successful was the fact that the three provinces adopted that list. Certainly, there were projects that moved into the other provinces as it got bigger.

The fact that they were able to sit down and figure out the problem, regardless of its location and what is needed to fit it, is the reason for their success. It is their ability to drive consensus.

Senator Fairbairn: I wish you well. I know there is no question that this has an enormous impact in a much broader area than some would think. My friends from Saskatchewan and Manitoba understand that our part of the country has taken many hits in recent years; far beyond anything the farm community, for example, could be responsible for and as time moves forward, this may well become a tremendous advantage to other parts of the country well beyond the coast of British Columbia.

Mr. Best: As I said earlier, they are talking about an inland port in Kansas, and those ports create jobs. There is a lot of logistic work to be done in sorting, shipping, transferring to trucks and trains, as well as many good logistic jobs if this concept of inland ports unfolds the way most people in the transportation community believe it will.

The Chairman: Mr. Best, thank you very much for your appearance here this morning. Feel free to send us any more information you could make available to us. We were very pleased to have you with us today.

The committee adjourned.


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