Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 5 - Evidence - February 8, 2008 (afternoon meeting)
HALIFAX, Friday, February 8, 2008
The Standing Senate Committee on Transport and Communications met this day at 1:30 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 (Chair) in the chair.
[English]
The Chair: Honourable senators, our first witness this afternoon is David Chaundy, Senior Economist with the Atlantic Provinces Economic Council.
We welcome you to our committee, Mr. Chaundy.
David Chaundy, Senior Economist, Atlantic Provinces Economic Council (APEC): Thank you very much, and I appreciate the invitation to appear before you on behalf of the Atlantic Provinces Economic Council.
As you probably know, we have an independent research institute based in our office in Halifax that focuses on improving the economic performance and a development of the four Atlantic Provinces. That is something that we have been doing since 1954, so we have a well established reputation for research and engagement with stakeholders across the region.
Trade investment and transportation has been a key focus of our recent activities, and I have been playing the lead role in many of the research reports we have done on international trade investment and transportation in recent years. I believe you all received a copy of the most recent report we did on The Changing Global Economy: The Implications and Opportunities for Transportation in Atlantic Canada that had a specific focus to look at the Atlantic Gateway, which I will speak to in a moment, but also in the context of the broader role of transportation in the Atlantic Region. The key finding of that report, and it is no surprise, of course, is that transportation is a very key part of the economic structure and performance of this region. It is a very diverse transportation system in which marine transportation plays a key role, particularly in terms of international exports to non-U.S. countries. In addition, on the energy side, 80 per cent of our marine tonnage is actually accounted for by movement of crude and refined petroleum, and that is an industry that has grown very rapidly in recent years and the transportation system has grown and developed with that.
The marine is broader than just the energy products, there is a large mount of bulk cargo important for forest products and containerized cargo is still an important part of that and sort of the key component, as we would see it, of the Atlantic Gateway. I believe we note in that report, the Port of Halifax already acts as an international gateway. Eighty per cent of the tonnage moving to and through the port and originating from this region comes from outside of Atlantic Canada, particularly, in terms of Central Canada and the U.S. Midwest. Therefore, we already have that gateway function operating in Atlantic Canada.
Looking forward, as we did in this report in terms of where the opportunities are, we do see an opportunity for increased container traffic through this region coming from Asia, where we are seeing much growth in trade between Asia and North America, and then destined for the larger markets in Central Canada and the U.S. Midwest. While we have documented clearly in that report some of the key drivers, I know you will hear from other presentations this morning and in your deliberations this afternoon and tomorrow in terms of specific ports and other operators and the drivers that are driving that, so I do not want to review too many of those key points. However, we want to emphasize that there is no guarantee that this region will gain a large share of that traffic. There are many key drivers that are certainly, we feel, quite positive on that, but there is no guarantee. Most of the projections assume a continued growth in Asia-North American trade, congestion constraints at other ports and that that, therefore, creates an opportunity for this region to take advantage of that. The world is a complex place and people, operators respond to economic drivers and no one wants to lose a share of this business. Therefore, we do see other ports developing, such as Prince Rupert, which I know you have had a chance to visit. We are seeing expansions at U.S. ports, and the current U.S. slowdown is also a key factor. Container traffic from the import side slowed quite considerably last year, with the current U.S. slowdown likely to be fairly weak this year and into next year. The reason that this is important is it slows one of the key pressures driving the development of an East Coast gateway. The key driver, initially, was congestion on the West Coast and, therefore, shippers looking to diversify to East Coast ports in Canada and in the United States. As we see some slowdown in that demand and those pressures, it eliminates some of the short term pressures to move to an East Coast routing and especially through the Suez Canal.
Therefore, there is a short-term opportunity that we would see for the region to develop, which, again, is not guaranteed for those reasons I just outlined. There is also a longer-term opportunity. When we look at what is happening in Asia, there are shifts within Asia in terms of developing increasing costs in China, companies looking to move increasingly into countries such as Malaysia and Thailand. As we see those geographic shifts and India continue to develop, that favours increased traffic coming from that part of Asia, which favours more of a Suez-East Coast routing compared to traditional routes from China through to the West Coast and ports such as Vancouver. However, we do see that as a longer-term opportunity, and I believe one of our concerns is that if we do not make progress in the next few years and actually establish this region as a key gateway in North America on the East Coast, that it may be harder for us to sell this region as a gateway for some of these longer-term developments.
We do see Halifax as being a fairly small port relative to what we have seen down the East Coast, and those other large ports such as Norfolk, Virginia and New York have been growing very rapidly. We are concerned that maybe this region could be marginalized and lose out on some of those future opportunities if we cannot move ahead in the short term. Again, that is one of our concerns because size does seem to matter; we do see this consolidation happening. Therefore, it is important that we are able to be a player in that; and, if we cannot be a player, how does that affect our strategies in terms of becoming more of an Asian market player?
There are some challenges that I feel we have to address. On the competitive side, we need to improve the competitive position of this region and ensure that we can market the business case that this region does have. I know you have met with Canadian Tire. You have probably heard that the Canadian Retail Shippers' Association is now using Halifax. Thus, the businesses do see a business case for using Halifax, and it is important to continue to build on that and develop the business through this region.
In terms of the policy side around the Atlantic Gateway, I just want to make a couple of points on that. Obviously, much discussion is happening in this region around the Atlantic Gateway; about what exactly it means, and one of our concerns is that, at least within this region, there is still quite a broad and fairly ill-defined concept around what constitutes the Atlantic Gateway. In our report, we clearly identify the container activity through the ports as being the key economic opportunity for the region. However, in the discussion around the Atlantic Gateway, we do see references to cruise productivity, air passenger and air cargo. We are not saying that any of those are unimportant or do not have their own opportunities, but we would see the timelines and the potential as being somewhat different for each of those. We would rather see a regional transportation policy focus and the container and Atlantic Gateway strategy as one key component of that. There is a danger in having a broader focus that we try to make this work for everybody in different ways and lose some of the strategic vision and some of the urgency that we need to make that successful. That is certainly one of our concerns in the way we see some of the discussions taking place.
With respect to federal action on this, again, one of our concerns about the existing National Policy Framework that the government has released is that there is a clear criterion in the framework, in terms of the lenses, about having volumes of national significance. We made it quite clear in our report on transportation that we would see the East Coast as fitting as part of a strategic port and gateway policy. We have Vancouver and now Prince Rupert on the West Coast, the Port of Montreal with strong links with Europe, and we have Halifax currently as the key container port on the East Coast.
Having those three strategic ports provides many advantages for Canadian importers and exporters in that they can then diversify which ports they want to use given increased importance of the supply chain, concerns about security and concerns about reliability. Having those options to diversify, and as Canadian Tire finds, there is actually a business case and an economic case to route certain traffic through the Port of Halifax that is an important part of a strategic federal government approach to ports irrespective of the actual volumes coming through the port. Again, we have some reservations about how that might be applied.
In taking that point further, when we look at what is happening, Halifax is still very small relative to the traffic in Vancouver and Montreal. However, there is this strong argument that it should be a key part of that policy, and the concern around the volumes is that we can have some of this traffic coming through Canadian ports, or we can see some of that traffic coming through U.S. ports. From a Canadian government point of view, it would seem to make much more sense for as much of that traffic to be coming through Canadian ports rather than New York or other East Coast ports.
Although this goes beyond your focus currently on the containers, another aspect of that regional focus is that essentially the government is defining three gateways in Canada: the Pacific Gateway, the Atlantic Gateway and the Quebec-Ontario border crossing. However, when we look at this region, the border in New Brunswick is vital for this region's transportation and existing traffic. The U.S. is a big partner in our trade patterns. We see much traffic going across the U.S. border crossings, which affects all four Atlantic provinces. That will not get captured under these criteria of national volumes of significance, but that border and the capacity at that border, the processes and the reliability of that border crossing is a key part of the international competitiveness of this region. Again, we have concerns about the way some of this national focus might play out given that that border is so critical for this region even though the volumes may not be as significant as those on the Quebec-Ontario border.
We do see positive moves in terms of Canada being more focused around its transportation policy and increasingly on the trade agenda, but we do have some concerns about how some of that regional focus might play out in this region.
The Chair: Thank you very much.
On page 4 of the report that you gave us, it states that ``the development of the Atlantic Gateway depends upon several key global developments that are largely outside of its control,'' but some of the key factors are controllable by ensuring strong services. As an example, the president and CEO of CN said that the Port of Halifax and CN are ``strategically aligned,'' and we could see that this morning. Are the transportation infrastructures, the railroad, suitable to receive a potential increase of volume from the Port of Halifax?
Mr. Chaundy: Certainly, our understanding is that the Port of Halifax has sufficient capacity at present. It is currently operating at close to 500,000 TEUs, or twenty-foot equivalent units. They estimate that — and you would have the full briefing from them this morning — they can deal with at least 1.2 million to 1.4 million TEUs and can easily expand up to 2 million TEUs without a major investment. Therefore, there is capacity at the existing port.
I know you will hear from the Melford International Terminal Inc. They are looking at putting in some additional container capacity. CN, as well, is currently up for anything and is well under capacity. On the infrastructure side, there is a large amount of spare capacity in this region that is under-utilized, and, if we can drive larger volumes on that, we will improve the actual cost competitiveness and the unit costs of using those existing infrastructure.
The Chair: Discussing the paper, The Changing Global Economy: The Implications and Opportunities for Transportation in Atlantic Canada, experts refer to removing regulatory barriers, U.S. borders, funding mechanism and regulatory convergence. Which federal policies have the most profound impact on efficiency competitiveness in the container transport network?
Mr. Chaundy: We touched on several in every port, and, again, this goes beyond some of my specific expertise, which is why we collaborated with Dr. Mary Brooks from Dalhousie University on this. She is a recognized expert.
The Chair: Yes, I have met with her.
Mr. Chaundy: I know she has appeared before you, and she is much more able to articulate some specifics about where the key challenges are. We did identify the Canada Marine Act and the port financing restrictions as one potential barrier that did have some restrictions and removing that would help ensure that ports are able to access any financing they need for expansion. We do not see a current need for major expansion here at the Port of Halifax currently. However, in terms of a regulatory environment, the current bill to amend seems to respond to many of those concerns that have been announced.
On the short sea shipping, there is potential as volume is increased through the Port of Halifax, for example, to increase short sea shipping whether to the U.S. Northeast, Newfoundland or other ports of Canada. There are some well-documented restrictions that affect the business case and the efficiency of doing that, and Dr. Brooks has done a specific paper addressing those in the business case. There are still policies that do affect the movement of containers that could be looked at, in terms of a broad approach; whether we have the right overall strategic framework given issues of increasing concern about the environment and whether we are fully integrating environmental concerns into our transportation policy and the relative cost of using different modes from a greenhouse gas emission point of view. Further analysis and work could be done to ensure that those policies are improving the competitiveness of all our ports in the region.
Senator Oliver: Your initials are ``APEC'' and the ``AP'' stands for ``Atlantic Provinces,'' so my first question is about the Atlantic provinces and the memorandum of understanding, MOU, that was signed by Ottawa and the Atlantic provinces. As I understand it, they signed the Atlantic Gateway strategy. The agreement sets out the objectives and a committee of federal and provincial officials as working to assess gateway needs. Can you bring us up-to-date on that MOU? Where does it stand? What has been done?
Mr. Chaundy: We are an independent research institute, so we are not part of the federal government, and we are not part of that committee. I did appear before them at their first meeting and gave a briefing and report on our report. I also attended a stakeholder consultation that they had in the last few weeks with business communities, but I believe you will hear from Debbie Windsor from Atlantic Canada Opportunities Agency, ACOA, this afternoon. She is one of the co-chairs of that committee. She will be able to answer specific questions about that MOU, which I have not seen. I have seen the press release, and she will be able to provide you any details on that.
Senator Oliver: In your paper you talk about the Port of Saint John, St. John's, Canso and Sydney. Is there room for more than one principal port to be the gateway in the Atlantic provinces?
Mr. Chaundy: That is a very good question. In our report, we tried to document that, at the current time, we would see Halifax as being the key port. It is an existing container port. We do not see every port in the region having the same competitive advantage to act as a container gateway. The issue with St. John's in Newfoundland and Labrador, for example, is that it does not have those connections to inland markets. The containers are not coming here to serve the Atlantic population of 2.3 million. They have to go to Central Canada or the U.S. Midwest, and St. John's does not have those connections. The Port of Saint John has similar limitations with regard to title variations that can impact its competitiveness. We do not see all the ports as having the same potential. The Port of Saint John is a very important bulk container port; it is very important in terms of the energy side. We will see increased flows of liquefied natural gas coming through that port and increased volumes of potash in the future years. Therefore, each port has a different role to play.
On the container side, Halifax is currently the only container port that we would see as having potential to grow in that Suez-routing, large-ship potential. We acknowledge the Melford development in our report; they are working very aggressively to make that successful, and we would be happy to see Halifax operating at 2 million TEUs. If the Melford terminal goes ahead and is operating at a similar size, that would be great. It is hard to say, at the moment, how much the demand would be. An amount of uncertainty exists with these projections.
How much traffic could we actually attract to this region? If we can see some near-term successes in attracting shippers, using the Port of Halifax over the next two or three years and further ramping up, then I believe the prospects are quite promising. It really depends on whether we can provide the costs, competitive business cases in terms of the cost, transit time, reliability and security, and convince shippers to use Nova Scotia ports as their North America entry point rather than some other port further down the coast.
Senator Oliver: We are a parliamentary committee that is doing a study and will probably do a report, and in the report, there will be recommendations. I know that in your paper you refer to a few regulatory changes that you would like to see. However, what public policy changes would you recommend that this committee consider putting in their report in relation to containerized ports and how they can become more competitive globally?
Mr. Chaundy: The specifics on the regulatory side go beyond my expertise, so I would refer you to Dr. Brooks, and she will be able to provide some specifics.
We have seen some changes in Canada in terms of federal engagement on the trade side. This is a key part in terms of building linkages with existing trading partners and positioning Canada for the future; there is potential. Canada has signed an investment agreement recently with India. Discussions have taken place about negotiating a free trade agreement with India. However, Canada should look strategically and globally at where the new opportunities are for this region and for Canada, and, given that we do see this potential for increased traffic from Asia, whether further initiatives on the trade side would help cement those trading relationships and help facilitate some of those goods and services coming through this region rather than the U.S. On the trade side, that would be one area where the government could look at taking further actions.
Senator Oliver: Nothing else springs to your mind right now?
Mr. Chaundy: No. To my knowledge, there are no major infrastructure issues. There are some regulatory issues around the short sea shipping that we have identified. Again, if you talk to the individual operators, they will identify some specifics; we have identified at least the ones that came to life. There are others around the border and security that have some role on the container, but may be more important for a border transportation policy.
Senator Mercer: I will follow up with something that Senator Oliver said. He talked about the other ports in Atlantic Canada. Later this afternoon, we will hear from the people proposing the Melford terminal, and I actually saw a briefing from them on Wednesday evening. It was very aggressive, very large. I did not have a chance to ask them then; I will be asking them later. However, I want to ask APEC, how do you think the proposed Melford terminal will affect Halifax? Also, what affect it will have on the Atlantic Gateway? If it comes to fruition, does it change how the gateway looks? Can it actually work having two major ports in a relatively small market and basically sharing the same infrastructure?
Mr. Chaundy: I had a briefing from Melford about their developments: their focus on using technology and trying to be innovative in addressing security issues. I was quite impressed with the way they are trying to position themselves. Again, if that is successful, having two ports in the region provides some competitive pressures and incentives for each port to ensure that they are at least matching what the other port can provide.
Obviously, a green field site has certain advantages being able to start from scratch. They can have different designs, whereas the existing port has to work within the existing parameters, and being a downtown location, might also be a consideration that Halifax has to address as it grows and develops.
It is hard to identify the portrayed volumes that would be coming through the port. This is a private sector development, and $300 million or so is a large amount of money, so obviously they have to be quite convinced that they can see that volume. We have seen some successes in the Port of Halifax. We have also seen some reversal in recent years. Therefore, there is a longer-term potential and a shorter-term potential. Whether we will see both developments take place, it is hard to say.
If we go back a few years ago, we were looking at having three liquefied natural gas, LNG, terminals in this region. Currently, we have one under construction, one has been mothballed and one is still trying to secure a natural gas supply. At the time, there were similar considerations. Is the scope for three here? Again, it would be nice to see both the existing and potential ports operating at full capacity and at much higher than current levels. It remains to be seen whether we can actually achieve that.
Certainly, on the West Coast, we have seen Prince Rupert now develop in addition to Vancouver. They are offering a slightly different business case. On the East Coast, it is a harder case. We can only operate on the Suez routing; we cannot really compete on the Panama routing, so that is a disadvantage we have compared to other ports down the East Coast, such as New York and Savannah.
The risks here are higher, and the only other concern I would have is that the Port Authority is a completely private sector operator that operates on a different governance model, and that might create some complications. I know they have been very clear about the fact that they do not want to see any public money that provides an advantage to one port rather than another. It can create some complications, and whether the Port of Halifax has a governance model that allows it to be as flexible and responsive as a fully private sector operation, I feel could be an issue.
Senator Mercer: That leads to the question I asked the people at the Port of Halifax this morning for which they did not give an answer. I sort of expected they would not, but perhaps you might. Should we not have two or three port authorities in a province of less than a million people? Would it make more sense to have only one port authority that would cover the ports of Halifax, Sydney and Canso? My concern with Melford, and I will continue to ask this question, is, I am not interested in moving jobs from Halifax to the Strait of Canso. I am interested in creating new jobs in Nova Scotia, and whether it is in the Strait of Canso or in Halifax I suppose does not matter. I have a preference, but I am more anxious that more Nova Scotians are working.
Mr. Chaundy: There is already some competition at the Port of Halifax. Two terminals are operating and, again, each one wants business for its own terminal rather than the other. However, that has still allowed them to go on joint missions, as I understand it, with the Halifax Port Authority. Once they have made their pitch, it is up to each individual terminal operator to then vie for that business. We can see the same potential that maybe you have a Nova Scotia trade mission or a similar mission to try to attract business to Nova Scotia through its ports, and then it is up to the individual terminal operators to be able to market their own business.
Certainly, if we have three different container terminals, there is potential that some of that existing cargo could be diverted. Therefore, there is no net gain; it is just going from one port to another. That is certainly a risk. I am not enough of an expert on port authorities and how they operate to know whether having one combined authority would be more efficient and effective. We have seen some amalgamation on the West Coast in Vancouver. Again, I do not know enough about that situation to know whether they are in a much closer vicinity. I am really not in a position to provide as much expertise on that question as you would like, but it is certainly something that could be looked at. Whether it would be effective, I cannot answer at this point in time.
Senator Mercer: We talked about trying to attract business in Asia and on the Asian subcontinent. Do you feel we need more offices there in China, India, Pakistan or Vietnam, or wherever it might be, and where should they be if we do need them?
The second part of the question is one that I was asked last night and did not get an answer. What is the next step in the development of the Atlantic Gateway? What is next on the agenda and where should we go?
Mr. Chaundy: Yes, I believe those questions are connected. In terms of the current situation, to answer the second question first, the true key parameters would be to ensure that what the ports here can offer is a competitive business case in terms of transit times, costs and reliability and security. There may be some scope for improving some of those parameters.
When we did our study, people talked often about these ports having a marine transit time advantage compared to New York or other ports coming through the Suez Canal. However, it is not the marine transit time that is important, it is the total transit time to the port, through the port and then to the market. It is difficult for us to actually get some of that data to be able to analyze how competitive we are in this region compared to other ports. The Port of Halifax, I understand, has done some of their own work on that and identified that they have some strengths but also some challenges.
CN plays a big part of what happens with respect to the total costs of moving goods through this region; other players are involved. That is the first area we need to focus on. Where are there some competitive pressures? What do we need to work on to improve the competitiveness of this port relative to other ports? We need to market those advantages.
As you know, we have already seen some success with what both Canadian Tire and Canadian Retailer Shippers' Association are doing. The marketing has to be almost threefold. It is partly shippers and importers in Central Canada and the U.S. Midwest who need to be aware of what ports in this region can offer. However, it is also about being in touch with markets in Asia to ensure that people in that part of the world know they have different routes, that they can bring their goods into North America and then working with the shipping lines who are actually bringing the goods in.
There is scope for further work to ensure that we are aware of the trends that are developing with respect to global supply chains, the different sourcing among Asian countries and ensuring that we take advantage of those shifts and what they are looking for. That might require that we have more permanent Canadian staff working to help businesses. I know this region is going on a trade mission to India this next month. The Port of Halifax, as I am sure you have heard, has already developed a business relationship with their business there to help to buy them. Therefore, further opportunities to have those permanent structures that can help direct traffic to this region would be helpful. It has to be a three-pronged attack in terms of driving further traffic through the region.
Senator Mercer: We talked about infrastructure and if the Melford terminal were to go ahead and the Port of Halifax were to gain a greater amount of business, we will have an interesting little roadblock or trains converging around Truro as they converge to go up through New Brunswick. The practical problem is the railroad between Truro and Sydney. The owner of the railbed is not the same as the owner of the railbed from Halifax to Amherst. It is owned by RailAmerica Inc. and, indeed, they have already created some interesting problems for the adjacent landowners. To your knowledge, is the infrastructure there that can support the traffic that would be generated at the Melford terminal? If it is not, then who is expected to pay for the upgrade? Obviously, RailAmerica Inc., which is a private firm, would need some heavy money to upgrade if it is needed. Again, this is probably a better question for the Melford group.
Mr. Chaundy: As you mentioned, I believe the Melford group is aware of that issue. They are aware that they have to connect through the short line to CN Rail, so I understand that they have been talking to both and seem fairly convinced that they have that worked out. Obviously, every time another party is introduced, they have different interests and different business relationships have to be negotiated, so it does make it more complex than just being able to operate with one railroad.
CN is a critical player here. We only have one mainland railroad that will take those goods to Central Canada and the U.S. Midwest. CN's alignment with the Atlantic Gateway is critical for this region, and that can be a strength. It is a well-respected, well-run rail line, but because it is the only provider, it also creates some risks if, in practice, their preferences and priorities are not fully aligned with this region's ideas of the container development.
Senator Tkachuk: You had talked earlier and the Halifax Port Authority had also talked earlier about the markets, the new Asian markets, and the traffic through the Suez Canal. What do they make that we buy?
Mr. Chaundy: There are many products. Again, one of the difficulties these days is to really identify where a particular good is being manufactured because, even in Asia, you will see goods potentially being manufactured in one country. There is much intra-Asia trade in that the goods may go to China for final assembly and then imported into this country. It is always hard to identify exactly which country is really producing any particular product because many parts are made in different countries and then assembled elsewhere. However, we do see imports from Asia in terms of electronics, consumer electronics.
Senator Tkachuk: Is that with respect to India or China?
Mr. Chaundy: That is more with respect to China.
As I am aware, we do see textiles coming from India. I have looked at the data in the past, but I cannot recollect some of the top imports from India to Canada at this time. Textiles is one area where we have seen growth. There is also some metals and jewellery coming from there. China has been prominent in terms of manufactured goods. India's development has been much more geared around service exports, in terms of the business services. This is where we would see India as being a longer-term potential as it grows and develops a manufacturing sector. We might see further shifts to Malaysia or Thailand as costs grow and develop in China. As China develops, costs will be expected to rise and, therefore, we will see some — and we are already seeing some — businesses moving to Indonesia and other countries. So that is why, as we look at this, it is not a static world. Economies adjust and grow, so shifts occur within locations of where production is taking place. Some of those shifts should favour a Suez-East Coast routing in terms of where we can assume the potential might be. Again, that is why we would see India as being a longer-term play. We do not see quite the same manufacturing base there right now as we do with China.
Senator Tkachuk: Ports, though, can make money on goods going out as well as goods coming in. We seem to be concentrating mainly on goods coming in. The United States is 5 per cent of the population. They manufacture, even though we talk about China and everybody else, 25 per cent of the world's manufactured goods. Where do you see Canada's potential for exports outside of what we know now, which is sort of raw materials, but foodstuffs, manufactured food products? The world will start to buy what we actually make here and process. Have you been doing any studies on that? Are there opportunities that we are missing, or are there opportunities that the Canadian government and communities can promote? That is business the other way, which is important for our ports as well.
Mr. Chaundy: Indeed. Again, that is one of our concerns about developments at the port. That, if we see this region being marginalized in terms of its productivity, whether there is a risk that we might lose some existing services from the port that would be quite devastating for some existing business in the region that rely on the Port of Halifax for exports.
For example, Bowater Inc., further down on the South Shore, exports through Halifax to new markets beyond the United States; now that is a key part for them. Therefore, as we look to diversify some of our existing trade beyond the U.S., having that access to Asian markets is one of the factors that we identified as a key benefit for this region. Yes, we are looking at seeing imports come into the region, but as we get more services, more markets being served, that creates opportunities for exporters to take advantage of that whether in Atlantic Canada or in Central Canada. The key point that we identified is whether we actually have the competitiveness to do that and whether we will be targeting those markets. Obviously, we do not have the same advantage on labour costs as China and India, so we cannot compete in the same way. The appreciation of the Canadian dollar over the last four or five years has really harmed, I believe, the competitor advantage of this region.
We are seeing a major downsizing and restructuring in our forest products industry. That is a significant use of the transportation system in this region, and it has implications for lower demand and, therefore, higher unit costs for using that. Therefore, when we consider our future, we are certainly still at considerable risk on our existing manufacturing sector. Typically, those are exports to the United States.
We just had the Moirs chocolate factory close here in Halifax. We have had the TrentonWorks Inc. manufacturer close in the last couple of years. Some of that is part of the global restructuring of these multinationals, some of them are relocating to Mexico, and we may see further adjustments on the downside as firms look at where their advantage is and perhaps relocate to other jurisdictions. There are many risks on our existing manufacturing base.
We do see other companies expanding. We have seen growth here in our aerospace sector; new investment and output at the Michelin Canada plants in Nova Scotia; growth on the business services side; new investments in terms of financial services, video gaming software; and growth in terms of some bioscience developments. There are quite a number of areas, aside from potential on the energy side, where we do see growth. However, on the manufacturing side, the potential is not quite as strong unless it is more in the high value-added developments. Again, as we move more into service exports, there are different demands on the transportation system. One may not need a container for certain products; one may need more air cargo if it is a high value or a time-sensitive product; one may need more air service to allow these businesses to have the relationship with their key clients. That is why we identified in this report that it is important to first understand how the economy is changing because that then affects the type of transportation services needed.
Therefore, I believe there are other opportunities for Canada to develop, but it could be significantly different from the type of resource-based manufacturing we have seen in this region in the past. We really have to focus more on the higher knowledge and higher skill areas because that is where we might still be able to retain some competitor advantage.
We have done some work with a fairly significant survey of foreign firms in Atlantic Canada asking them to assess the competitive business climate here compared to other jurisdictions. The analysis on that data and the trends we have seen on the exchange really indicate that we have some serious challenges on the manufacturing side. The transportation system here is not regarded as favourably as other jurisdictions in which those companies operate. Overall operating costs are only regarded as being, on average, the same. Therefore, for certain businesses we can make a business case, but in general on the manufacturing side, we have lost some of that competitive advantage. We are economists not entrepreneurs. Challenges exist, but, in response, we have seen new firms being developed and growing in the region.
Senator Tkachuk: We noticed in the West that durum wheat is skyrocketing in price, obviously, for pasta that is servicing probably outside of the North American market. I always say, ``You know, Chinese people like pasta too, not just rice,'' and so do Asians. They also like malting barley. Again, Asians like beer, and that is good for us, but we also produce excellent cheeses. It seems to me that there is a real opportunity for food processing and food products that we could be exporting outside of Canada to other markets that we cannot because of the marketing boards, particularly in Eastern Canada. It is a closed market, and people do not want to bring our goods in and, of course, we do no take their goods in. Is that a problem, or is that an opportunity missed?
Mr. Chaundy: I do not have enough of an understanding about this region to be able to answer where we can go with the marketing boards and the product in that sector. We are exporting large amounts of raw materials, such as iron ore and now nickel, from this region. From Newfoundland and Labrador, we are actually shipping shellfish to China, but that is then being further processed there.
We have many small companies here involved with food processing. With the changes that we have seen on the exchange rate, concerns are on the labour supply, we are necessarily competitive in that. We just fish and collect the shellfish, ship it to China, where they process it and perhaps send it back to North American markets. We do have some large existing operators, such as Clearwater Seafood Limited, and other operators who have shifted to a higher value-added product, such as High Liner Foods Inc. There are opportunities on the food processing side.
Senator Tkachuk: Of course, opportunities in frozen foods.
Mr. Chaundy: McCain Foods Limited has been doing very well, but they are also investing in China in terms of their own plants. We do have advantages here, but we really have to redefine a competitive advantage. That was the key conclusion around the complementary report on potential trade patterns. If we cannot compete on costs, we have to have some other advantage in which we can compete. We have to really define what that is.
Therefore, yes, there are certain opportunities on the food processing side, but we are also seeing a loss of similar existing capacity to China and other jurisdictions.
Senator Cowan: As Senator Mercer mentioned earlier, some of us listened to a very impressive presentation by Melford International Terminal Inc. the other night, and they are very confident that they are able to achieve more than a million TEUs over time and without the need for any public money at all. It was a very impressive presentation, but they were quite reluctant to comment on what effect that might have on Halifax. I wonder whether you can comment on that because Halifax clearly is struggling to maintain and, hopefully, increase its container traffic. Assuming that Melford were to go ahead and to achieve its goals, is there room in this marketplace for two container ports of roughly the same size? If not, what happens if we have two ports, neither of which reaches a critical minimum level of activity in order to be successful? Do we run the risk of having two ports that are struggling?
Mr. Chaundy: As I mentioned, it is hard to produce any reliable focus on the potential demand for containers coming through this region's ports. Essentially, we are not looking at being able to say, ``Project China will grow at this percentage, consumer demand in the United States and North America will grow at this and, therefore, we can assume we will get a certain share.'' It does not work like that. We are really looking at re-alignments. The shippers will say, ``Look, I need an East Coast option for security or diversity reasons.'' They can then reconfigure their shipping alignments and so, instead of getting incremental growth, we get a substantial growth. One of the issues is whether we go after incremental business where a ship comes into the ports, tops off a certain amount and then processes the largest load in New York or elsewhere; or whether we can actually get a shipper to make Halifax or Melford the place where they unload most of their containership and process a large amount. That could change the capacity and the existing capacity constraints in this region quite quickly. Therefore, if Melford were to go ahead, their marketing could have positive implications for the Port of Halifax because it helps increase the visibility of the region. If people see that and switch existing business from Halifax to Melford, it could have a negative competitive pressure for the Port of Halifax.
Starting with a green field site gives them certain advantages. The Port of Halifax obviously will not want to lose any business, so they will try to respond in any way they need to if they feel Melford provides a more competitive proposition.
I have been, as you all have been, quite impressed with what Melford is trying to do, but there are still risks in that. If we had seen strong growth over the last two or three years and over the next two or three years at the Port of Halifax, that would give me confidence if I was an entrepreneur investing in that; that, yes, this will definitely happen, and they have obviously done their own marketing studies and still feel confident that they can grow.
That the fact that we have not seen some of those shifts working in Halifax's favour over the last few years raises questions in my mind about whether this will play out as we would like to see it and whether we think it will continue to play. That is why I pointed to some of those short term risks in my remarks. When we look at the key drivers, one of the key drivers is congestion on the West Coast, capacity constraints on Panama to shift the larger ships, if we do not have some of those same pressures operating, then it will be harder to convince any shipper to relocate to Halifax or Melford.
New York, Savannah and Norfolk can expand for the expansion of the Panama Canal. When the bigger ships are coming through the Panama Canal, they can benefit from that traffic. That is where we are seeing most of the diversification from the West Coast. It is through the Panama Canal to those East Coast ports. We have not yet seen the major shifts through the Suez route, and that is really what Halifax and Melford will have to rely upon. Therefore, if that does not happen, then both ports will not be successful in that regard. However, there are these longer-term shifts that might still work in our favour. If we do see further congestion on the East Coast, I just do not feel we should build a business case on assuming that everyone else will be at capacity and, therefore, cargo has to come here. We have to ensure that we have a competitive business case, and, as I mentioned, there have been some positive developments. We do see a business case with certain businesses, but we do not seem to be able to take that to the next level.
Senator Dawson: You used the expression ``urgency,'' urgency to act and urgency to invest during your presentation this morning. How would you define that urgency?
This morning, I asked the president of the Port about the notion of privatization or at least more private investment in ports versus government subsidies. In your report, you talked about ``adequate funding mechanisms.'' I have to admit that, despite significant improvements to the region's road network in recent years and the ability of the provinces to participate in federal cost-shared programs, we had a bumpy road this morning, so I can imagine you would have some road investments to make. Are you are expecting the federal government to pay for the road structures? I am just wondering why the federal government should be looked upon as being the one that has to invest in what would not normally be their responsibility.
Mr. Chaundy: To deal with the urgency question, as we identified in the report, some of the key arguments for using a Suez-East Coast routing are congestion on the West Coast; shippers, therefore, looking to diversify; and the Panama Canal being at capacity and not able to accommodate either larger ships or significant increases in volume. Therefore, there is this business case for using a Suez routing to provide alternative options.
The urgency occurs in that there are plans, which are currently being implemented, to expand the Panama Canal by 2014, give or take a few years. Once that opens, it opens significantly more scope for further business coming through the Panama Canal and Halifax. Melford would probably not be able to be competitive in that market. Therefore, once the Panama Canal has expanded, it will increase the competitive pressures for Halifax or Melford to be able to attract some of that business because preferred routing to the West Coast and through the Panama Canal already exists. That is where the urgency comes in, I believe.
If we can establish Halifax or other ports in this region and grow during this time where the Panama Canal is constrained, that then puts us in a good position once the Panama Canal is open to retain that business. We need to be able to demonstrate and prove that we have competitive and viable ports that can provide the services that are needed. If we do not have that before then, then it could be harder to actually make the business case beyond that, given the investments we are currently seeing on the East Coast.
If we look at developments from India and other countries, there is a longer-term potential that is not dependent upon the Panama Canal. Again, we still would see that as a longer-term trade potential that has yet to be fully realized. That would not necessarily be affected by that, but that is why we see this sense of urgency. If we are not a big player in the short term, will that impede our ability to compete in the longer term with some of these other shifts?
On your question in regard to a federal government role, we are seeing substantial investment on the private sector, aside from the Melford development. We have seen Macquarie Infrastructure Partners acquire Halterm Limited's terminal; we have seen the Cerescorp Company terminal investing in new machines and equipment and trains there; therefore, we are seeing quite substantial private sector involvement and, as mentioned, do not see significant need for major infrastructure development on CN Rail or existing port infrastructure. We are not arguing that there needs to be significant federal funding on those sides. There may be a scope in terms of marketing. That is where we would see the key need at the moment. Perhaps there is a role there for federal government in terms of existing or future potential trade missions that might benefit that.
The argument we made in the report at the time was that — and, again, this is where we relied heavily on Dr. Brooks' expertise — many U.S. ports do rely on government funding in terms of the roadside developments, and public sector funding goes into those ports. Our understanding was that when we look at historical port funding, we do see government involvement in major ports and, therefore, Canada could be at a disadvantage if it does not support its ports where they need it to develop that competitive advantage.
In Prince Rupert, we have seen public and private sector money go into that port to help it develop. Now, we see increased private sector interest in developing ports. They see these as stable, long-term revenue generators; therefore, we may be seeing some shifts in terms of private sector interest in developing these. The key point we were making is that it is still a risky business, that when someone is looking to invest $300 million and we can only guarantee maybe a ship or two to sign a three-year contract, that is quite a risk for the private sector to absorb. Therefore, whether we will see further growth on the private sector side or whether these risks are too much for the private sector to fully absorb, that is an important question. However, that was certainly the way we leaned at the time we did the report, that there is a potential role for government if that infrastructure is needed.
Senator Zimmer: In your report, you state that APEC's ``objective is to promote the economic development of the Atlantic region of Canada . . . through analysing current and emerging economic trends and policies; by communicating the results of its analysis and consulting with a wide audience.'' Has your audience — one of them being Transport Canada — and has your association contributed to the consultation process to consider continuing their transportation system over the years? If so, what input did you provide, and how did they respond?
Mr. Chaundy: We have certainly had discussions with Transport Canada. When they initially did work on the gateway, we had a discussion about potentially doing research for them. This study here was funded through the Atlantic Canada Opportunities Agency. Again, we had a mutual interest at the time in doing work and analysis around this.
We have had further contact with Transport Canada as through their Atlantic Gateway Federal-Provincial Officials Committee. We have had discussions with them through that vehicle. We have also been approached recently with questions on whether we might potentially be involved in further work on conferences that they are organizing in terms of analysis on national transportation projections. We have had some involvement, but it has certainly not been a significant relationship. They have seen our report, and I believe they found it useful from that point of view. However, we have not had any further substantial engagement.
Senator Zimmer: From which countries can Canada learn the most about best practices in container transportation? How important is it that Canada forms part of an integrated North American container transportation system from the perspective of the rest of the world?
Mr. Chaundy: In terms of which countries or terminals might provide examples, again, I am not an expert on other countries to any extent. However, my understanding is that ports in Asia and even in Europe tend to be much more efficient and productive than they are in North America. Canadian ports are actually fairly well-positioned relative to some of the American ports. Therefore, looking to Asia and even Europe, we might find some lessons about current trends and practices that might help improve productivity and efficiency here in this region.
The second part of your question goes back to my earlier comment on the importance of the border. In our research on international trade in Atlantic Canada, companies have concerns or problems with the current way the border process is working in terms of providing certainty and type of services that they need. I understand that some exporters from this region actually use the border crossings in Ontario and Quebec because they have certain services with respect to the U.S. border.
There are concerns about changing U.S. security requirements, the cost of that on companies here and the ability to keep up to date with changing regulations, so the U.S. border is a concern. It can be used inadvertently to provide more protection for the U.S. economy. There are costs both on the Canadian and U.S. side. It would be a better if we could have more of a continental approach where we have the security taking place at the perimeter rather than necessarily having a further border and inspection controls. That has been discussed, and there are issues about sovereign rights and how that might develop and whether that would be feasible or even attractive to the United States.
We need to see a stronger engagement by Canada in ensuring that developing security practices and policies in the U.S. do not impede business between the two countries anymore than is necessary. Therefore, there is a role for Canada. Obviously, being a much smaller country, it does not have the same influence, but it is vitally important for this country and this region. The more steps that could be taken to help strengthen that relationship and manage the border and security issues would be an advantage to all North American companies.
Senator Zimmer: Last, in your opinion, are inland terminals important to the development of the Atlantic Gateway? If so, where should they be established and what role should they play?
Mr. Chaundy: Are you thinking more on the air cargo side or more as inland distribution centres?
Senator Zimmer: I am thinking of inland distribution.
Mr. Chaundy: I am not an expert on specific logistic services. We have seen development, and I believe you are speaking with Consolidated Fastfrate Inc. during your visit here; they can provide you with a perspective. We have seen development of distribution centres, for example, in and around Savannah, which has certainly helped that port to develop.
The issue here is that we do not have the large market in Atlantic Canada. Therefore, even if we have a distribution centre here, the market it is serving has to be geared toward other markets. I am not yet convinced that we can market that as an advantage here as they can in the United States where they are already close to those markets. The goods come into the port and then the distribution centres serve a wide variety of estates and large populations. Whether it works to have that co-located with ports here, given that the prime markets would have to be further afield, I am not yet sure that the economics would work that way. There are other people in the field who could give you that perspective and Consolidated Fastfrate Inc. would be one example.
Certainly, there are advantages. Instead of having goods come to the Port of Halifax, shipped by rail to Montreal or Toronto and then tracked back to this region, they can be transloaded. There is some efficiency to be gained in that way, but whether it would work and whether it would be an advantage from the Atlantic Gateway perspective, I am not yet sure about that.
The Chair: Thank you, Mr. Chaundy, for your presence here today. We do appreciate your helping us preparing our report.
Mr. Chaundy: Thank you.
The Chair: Senators, our next witnesses are officials from Melford International Terminal Incorporated. We are pleased to welcome Paul Martin, President of Melford International Terminal Incorporated; Bob Stevens, Chief Executive Officer; John Vickerman, Principal of TranSystems Corporation; and Richie Mann, Vice-President of Marketing. Welcome to our committee.
Paul Martin, President, Melford International Terminal Inc.: We appreciate your invitation to come in here and speak to you about our project and give you some of our views on Canadian transportation policy. With the permission of the committee, we would like to make a very short presentation, no more than 10 minutes. We would then like to turn our minds to the five or six questions that were raised in the agenda for the meeting and would be happy to answer any other questions that you might have.
The only cautionary note that I must make is that we have a large number of very complex business partnerships and relationships, some of which are governed by very strict non-disclosure and confidentiality agreements. Therefore, there may be some questions raised that we will be unable to answer in this public forum.
With me at my far right is Richie Mann, a former Minister of Transportation and Minister of Economic Development here in Nova Scotia, Melford's vice-president of marketing; John Vickerman is the founding principal of TranSystems Corporation in Norfolk, Virginia, widely considered to be the world's leading expert on containerized trade and port development; and my good friend and colleague, Bob Stevens, our chief executive officer. I am the president of Melford International Terminal.
John Vickerman, Principal, TranSystems Corporation, Melford International Terminal Inc.: My focus will be on the PowerPoint presentation, a copy of which will be delivered to all of you in that process. I am the lead consultant for Melford International Terminal, and I would like to give you a brief introduction of their efforts.
Melford International Terminal is a 100 per cent private-sector development company. They are not interested in contributions by public entities to the process. It is strictly a private-sector initiative.
They are developing an advanced logistics center on the Strait of Canso in Nova Scotia. It is comprised of 315 acres of advanced agile port. It also has a state-of-the-art intermodal terminal associated with it and a 1,500 acre on-dock logistics and distribution centre park. Its emphasis is on efficient, secure and environmentally sustainable development.
There is an array of current partners. Many of these companies are leaders in their respective industries. Obviously, the Canadian National Railroad and RailAmerica are significant partners, and are involved in a multiplicity of operations occurring in the development of this project. Other partners include the largest terminal operator in North America, SSA Marine; CenterPoint Properties, the largest logistic park developer in the United States, known for its Joliet Arsenal project — that is where Wal-Mart just opened its 75 acre under-roof distribution centre; SAIC Canada for security, a recent investor in Cyrus Capital Partners out of London, is a significant investor in this project; and we are very proud to have the Millbrook First Nation actually contribute money and be a significant partner as well as a consultant in this process.
The value proposition for Melford involves a green field site, which has the unique ability to integrate present and future technologies right where they should be. It has a unique geography in that it is the closest North American mainland deepwater port to Europe and the Suez; and has a seven-hour saving in sailing time over that of Halifax, seven hours in, seven hours out.
It is competitive in that we believe we can achieve the lowest cost operating environment in North America by only putting the most capable technology in the right place at the right time and in the right amount.
With respect to our throughput efficiencies, we are using the latest technologies, modern work rules to apply to that and have excellent support from the unions.
We are using advanced technologies for security. We believe we can have on-site U.S. and Canadian customs participation. Ultimately, we will have the latest technology at the port with the opportunity of releasing that security at the border, allowing border crossings at speed.
The project will include an on-dock logistic park, which will add value, provide deconsolidation and consolidation of needed back-haul cargoes and the opportunity to provide a foreign trade zone in that regard.
The key to North American productivity in container ports, in my opinion, is the opportunity to optimize the intermodal transfer from vessel to rail. There are 90 deepwater ports in North America. I have had the privilege of developing 65 of those 90 ports for their container markets.
This project not only offers an access opportunity to a transshipment center for the Great Lakes — and, in fact, the lock at the causeway on the Strait of Canso is the same size as the St. Lawrence lock system — but also offers opportunity for coastal access to Eastern Seaboard areas.
I will share with you what we believe is the evolving container industry and set a context that drives this project. If we look at the key drivers worldwide — the graph you see is looking at world container trade, world trade growth and world GDP, and we have rebased that back to 100 in the year 1980, giving you a true reflection of the trade growth — container trade, as you can see, is growing at 9.1 per cent compounded annually, world trade at 7.4 per cent, and world GDP at 3.5 per cent. The world container traffic is growing at more than three times GDP growth.
Although this next slide is complex, on the left hand side is the compound annual growth rates. The very top curve is China. We anticipate a decline in the peaking of China's growth rate, which we believe occurred in about 2006. I want you to note the world growth rate in red and the U.S. growth rate in blue are fractions of China, India and Asia, minus Japan. This growth, over a long period of time, will be sustained. It is not changing.
Thus, we can see a significant increase in containers in the world today. We are at 96 million TEU containers today. By the year 2024, there will be more than 243 million boxes in the world and the need for logistics to handle that volume.
With respect to the global growth of containers in the world, North American is not growing as fast, nor do we have the significant numbers of the rest of the world. However, even though that may be the case, in the past five years, container growth in North America has increased 6.85 per cent compounded annually to a tune of about 48 million TEUs in 2005. By 2015, this volume will soar to more than 72 million.
To give you a feel for how desperate the industry feels about this lack of capacity in the world, last month the senior vice-president for CMA CGM indicated that for the East Coast of North America, by 2010 the existing capacity will have a shortfall of 4.1 million boxes. Nearly 1,000 acres of new land is needed. His conclusion, the only conclusion: build more terminals.
Another study was done by Modern Terminals Limited, one of the most prominent terminal operators in the world. If they look at the U.S. port and terminal system to the year 2010, the North Atlantic with respect to demand versus capacity falls short no matter where we are in North America.
Melford International Terminal has done extensive market analysis. Our conclusions on capacity are more conservative and less aggressive, but still offer concerns. The blue line on the graph is the forecasted demand for North Atlantic ports, from the Virginia Port Authority. The big red line is the capacity of that port system by all announced port authorities. You will see that it crosses at about years 2013 and 2014. Typically, we would want to start development five years in advance of that crossover point. That would lead us to starting today in the North Atlantic.
It was my pleasure to be a member of the design group and the consulting team for the Atlantic Gateway Business Case analysis under InterVISTAS Consulting Inc. Before you, you have three independent forecast curves superimposed. They are the Drewry Shipping Consultants out of London, CPCS Transcom Limited and our collective agreement between InterVISTAS and TranSystems, called the Atlantic Gateway forecast.
The curves in years 2015 to 2020 show that between 2 million and 3 million boxes will be available in the Eastern gateway. This is an independent verification by three independent econometrically-driven forecasted models.
You have just seen available incremental volume. However, there is no divine right to this cargo. There is no promise that the cargo will move through any gateway. Market forces and competitive realities will dictate a value proposition based on three important factors: reliable, dependable service 24 hours a day, 365 days a year, guaranteed delivery of the product; time-in-transit speed; and finally, and perhaps above all, the lowest competitive freight rate. The consumer of freight product today does not care which gateway the product comes through. They rely on the perception of quality and availability of product and price.
It is recognized in the Atlantic Gateway analysis that the private sector must lead this process. They are the most experienced in risk aversion and funds deployment in order to achieve those risks.
The role of federal government, as we see it, would be to create an unconstrained environment to optimize the transportation system. We believe that a national transportation policy must be focused on the emerging Canadian intermodal land bridge, from Prince Rupert in the West to Melford in the East, down to New Orleans at the three crown points of the Canadian National Rail System. It must be focused on increases in the inland ports, inland capability and coastal marine transport efficiencies. It must be the catalyst for private-public — and here I am using private first, public second — stakeholder meaningful cooperation.
The role of the federal government can be greatly propelled through Canada's Pacific, Central and Atlantic gateways to provide a unique springboard platform to achieve these objectives. Canada is, in fact, a world leader in this regard. I sit on the U.S. Secretary of Transportation's freight advisory board, one of 18 members, and I am a U.S. citizen. I believe Canada has the advantage today. I believe that advantage is with the gateways and the unique synergies that those gateways provide to Canada: the only cross-continental railroad in existence in North America, the only scheduled railroad in North America and the only connection and closest ports to Asia and Europe with Prince Rupert and with Melford to Europe and the Suez.
I now will answer the questions that you asked specifically and hope it gives us a framework for your response. Your first question is, ``Is the federal government creating and enabling market environment for intermodal freight growth and the competitiveness of the Canadian freight transportation system?'' Yes, through the gateway initiatives, but much more has to be done. These initiatives can create an opportunity for true systemic transportation growth. This does not occur in the U.S. You have the unique opportunity in North America to be the leaders in that regard.
Your second question, ``Is government-industry communication on issues related to the intermodal transportation system adequate?'' No, however, again, the gateway initiatives provide an opportunity to increase the coordination among the stakeholders, and we are not talking about mild coordination. We are talking about proactive, robust, full- depth, supply-chain-driven logistics coordination.
Your third question related to security, ``Has the federal government struck the right balance between the transportation security and efficiency issues?'' Intermodal productivity and intermodal security are two sides of the same coin. To achieve optimal transport performance, NAFTA block security procedures must be harmonized. We must use the latest radiological portal monitors. We have to use the latest VAC x-ray systems. We need to mimic Hong Kong in their 100 per cent multiple scanning using both systems. If we do that, in fact, Canada and its land bridge can become leaders in the world in that process.
Your next question is in regard to supply chain transparency, and it asked, ``Is information technology used enough in Canada's intermodal transportation system? If not, where should more information technology be used to increase Canada's competitiveness for international freight flows?'' No, it is not. A seamless, transparent, in-transit visibility for freight flows is essential and does not exist today. The technology for in-transit visibility is achievable and is off the shelf and commercially available. Is it fully deployed in the logistics freight market? No, it is not. Are coordination and communication among freight stakeholders available in using this technology? No, they are not. Are they available and could they? Yes, they are, and they could.
Your final question related to the environmental considerations and it asks, ``Do the current environmental regulations strike the right balance between controlling the environmental impact of intermodal freight transportation and allowing for growth in the traffic using the system?'' Our experience in the last two years of intensive work on the Melford International Terminal project is that, to date, we are very positive. We have had a very positive experience in this regard and, in fact, we feel and are linked with our environmental partners.
However, future transportation projects, and let me emphasize this, must not only be environmentally sustainable but also economically sustainable. We believe that there is a win-win in both sides of that equation and is achievable today.
We appreciate your kind attention to our remarks, and we are available for answers to your questions.
The Chair: Thank you very much for your presentation, and, of course, we are quite interested.
On January 27, there was an article in The Chronicle Herald about Mr. Hardenbergh of Freeport, Maine. He is the editor of the weekly transportation newsletter, Atlantic Northeast Rails & Ports. The article says of Mr. Hardenbergh, ``industry consultants have not convinced him that Atlantic Canada and Maine need more container capacity.'' How do you react to that statement?
Bob Stevens, Chief Executive Officer, Melford International Terminal Inc.: I believe some of my statements were reported in the presses as well. First and foremost, that address should be put in context. Mr. Hardenbergh himself qualified his statements that day by indicating that he was not necessarily qualified to make them, that he had no direct experience in ports or in railroads and that he was an interpreter of expert information that he gathered. We have a very commercially driven project. We have 17 different commercial milestones that we have to meet in order to make this project go. We have met 12 of them. One of them was to spend in excess of $1 million to try to understand what incremental volume would be available in our growth horizon in 2010 to 2015.
We engaged the services of John Vickerman from TranSystems, and Jim Brennan from Norbridge out of Washington, the econometric side, to determine what incremental volume would be available, and some of those results you saw today. However, we go further than that. We are the type of people that if we invest money, we like to have more than one or two opinions. We purposely attempted to show you today that other experts in the industry, with no relationship to us, from carriers to port operators to other consultants within the industry, all share the same prediction of the growth that will occur, particularly on the East Coast of North America and, more importantly, on the North Atlantic portion of that East Coast.
When we heard those comments being made, we asked the question, ``How many master plans have those people done for the 90 deepwater ports in North America?'' The answer is usually, none. We asked the question, ``How many Class 1 railways do you represent?'' The answer is usually, none. And, we asked, ``How many national advisory boards do you sit on?'' and the answer was none. We believe that we are better off and our money is better spent after the consultations with the people who have those types of qualifications.
The Chair: Some analysts say that your project will compete for container cargo business with other terminals in Nova Scotia. The Halifax Port Authority has already planned to increase its current capacity from 1.3 million TEUs to 2 million TEUs. I would like to have your comments on that.
Mr. Stevens: My understanding was that the projection for current capacity within Halifax with the existing facilities is approximately 1.2 million TEUs, which was the figure that we included in our market capacity. In the figures that we used for those types of achievable levels between 2010 and 2015, we apply Halifax at 1.2 million and ourselves at 1.5 million with full build-out of our facilities or 1 million initially. From those projections, there is sufficient incremental volume for both of those facilities to reach that capacity.
I am not certain of their plans or capacity issues to be able to get to 2 million TEUs. However, if there will be 72 million TEUs of containers coming into North America in 2020, then surely the East Coast of Canada should have an objective to at least get 3 million or 3.5 million of those.
The Chair: Is there a possibility of you working with the Halifax Port Authority?
Mr. Stevens: We believe very definitely that there is that possibility. As a matter of fact, we have said from day one — and it is Mr. Vickeraman's quote — ``A rising tide lifts all boats.'' We believe we need critical mass. We need critical mass to attract better rail rates and to have the facilities and infrastructure that are required in order to move the product inland; and we can provide critical mass.
There are different alliances and carriers, different competitive groups and the beneficial cargo owners who, more and more today, control the routing of their product. We believe that not one entity will be able to address all those competitive factions and, in fact, there are opportunities for both.
Mr. Vickerman: I had an opportunity to do the marketing for the Prince Rupert Port Authority, and I have worked for Vancouver Port Authority. I have participated in the strategic plan for the Montreal intermodal strategy, worked at the Port of Hamilton and also in Saskatchewan and other locations where we believe inland ports might be viable. In working with the B.C. ports, Vancouver Port Authority and Prince Rupert Port Authority, early in the process, the first reaction was, ``Why is there another entity here? Why can that not all be accommodated in the existing port infrastructure?''
If we look at it today, and we look at Cosco's run from Prince Rupert to Chicago, it appears they will deliver in about 95 hours routinely, although the initial estimate was 105 hours. We believe that traffic is incremental and different. I truly believe that if we apply the coming together and the partnership in the Asia Pacific Gateway between Prince Rupert and Vancouver, that eventually the rising tide and recognition in the Atlantic Gateway will occur. The Port of Halifax, a capable and professionally run port, could easily partner with the Melford issue; these are two value equations with very different specifics, very different accommodations. Then, together, the rising tide and the recognition and targeting of the proper freight are achievable. In the ports that I have dealt with, nearly every one of them in North America, we have seen that without strategic alliances and partnering, we cannot achieve the ultimate end. I believe that is possible here.
Senator Oliver: I find your answer fascinating. Have you been talking to anyone at the Port of Halifax about this, and, if so, who has been talking and at what levels?
Mr. Stevens: No, we have not. We have made, at some time, overtures toward the Halifax Port Authority. You have to remember, Senator, that I started this project back in 1998 when I participated with the Province of Nova Scotia in their response to the Maersk-Sealand proposal. It was then that I saw that Nova Scotia some day would have the opportunity to return as a gateway.
I do not need to tell you that pre-Confederation we had more ships on the seas than every other nation of the world, and we lost our trading capabilities over the years. The Maersk-Sealand proposal, or at least the response to it, told me that the geography had not been lost, and, in fact, the trends and conditions that were developing would at some point present that opportunity again.
In 2005, those conditions and trends had developed to such a state that now they were no longer a vision, they were a reality. It was then that I went out and sought the option and purchase and sale agreement for the properties from the Province of Nova Scotia. We worked, from 2005 to the end of May 2007, very much under the radar screen for very purposeful reasons. Number one, it was more effective, and we could get more done; but, most importantly, we had these commercial milestones that we had to meet and did not want to create false expectations before we were convinced that, in fact, that incremental volume would be available.
Senator Oliver: A week ago, we were in Prince Rupert, and they indicated that they had no interest whatsoever now in cooperating with Vancouver because they put their cargo on the train, it goes down to Memphis, and they are doing pretty well and want to continue that. It is not 100 hours delivery time anymore, it is 92 hours. Therefore, the Port of Halifax can get the same container to Memphis in an even shorter period.
I would like to ask some questions about information technology because I am interested in information technology. You said that in terms of freight flows, that it is not being used now. What particular technology would like to use to make it more effective?
Also, I would like to know what the federal government — because we are a parliamentary committee, not scientists or business people; we are here looking at public policy — could be do to assist in the use of information technology to make the business more viable and productive?
Mr. Vickerman: Senator, I believe I can give you at least one glimpse of that. I happen to believe that the real solution for increased productivity is not hardware but rather software, and it is the data and performance information that will empower the system across modal boundaries.
Given that, there are multiplicities of IT-related developments applicable to this industry.
Senator Oliver: That is good.
Mr. Vickerman: Let me give you one hard specific of which I am aware that might be of interest. Nine years ago, the U.S. Department of Defense had an initiative to create a fast logistic ship. The fastest container ships today travel at 26 knots. This was a proposal for a 75-knot logistic attack ship.
The U.S. military quickly found out that if they went between two slow ports with a very fast ship, they still had slow cargo. They started developing something called ``agile port.'' Ultimately, the military said, ``Until we see it tested full scale, we will not believe the availability.''
The Port of Tacoma, in July of 2003, stepped forward with Hyundai America Shipping Inc. and, at Washington United Terminals, applied the agile port technology — which I will briefly describe in a sentence to you — and they doubled the capacity of that terminal without building anything, without adding any new equipment. In fact, they had the International Longshore and Warehouse Union, ILWU — it was the first time I had to have the ILWU as a subconsultant, and the first time I have hired a union in that process. It was very creative; I was not allowed to be on the terminal and use a personal digital assistant, PDA, without a marine clerk standing next to me.
Let me explain ``agile port'' and then you will understand the technology. If we loaded the vessels, not for port call but for train destination, if we loaded the trains, not for port call or terminal call but for vessel deployment — Kaohsiung, Keelung, Osaka, Busan, Chobe — we could reduce the dwell in the ports. The average dwell time in the North American ports, in my opinion, is six days to eight days — whether import, export, reefer, dry or rag top. If we reduce that in half, we have doubled the capacity of the system without building anything.
Melford proposed that to CN. CN was enamoured with that, and the early elements of the agile port are being deployed here. Information technology then, applied to the asset of the ship and the train, not focussing on where the cargo goes but where those assets start and stop, has been proven in the United States at full scale with the unions to be a potent issue.
Now, many people argue that it would be hard to convince a third-party beneficial cargo owner to load the ship in Kaohsiung differently, but about half of the industry, in my opinion, right now believes that what I just told you is possible. That is an information technology where we load the ship and the trains in a computer and pre-assign it, not for port call, but for crossing the modal boundary between those two modes.
It is possible, sir. I have seen it with my own eyes, and we have delivered the results to the U.S. Department of Defense, and they believe it; so much so that they are expanding a new test among three ports — Seattle, Tacoma and Portland — and loading it from an inland port to prove the inland port capability.
Senator Oliver: Are any of the Asian ports, such as Hong Kong or Shanghai, using any such software?
Mr. Vickerman: Yes, they are. In fact, the ports necessarily are not, but the carriers are.
Senator Oliver: Is it being deployed in China?
Mr. Vickerman: It is, yes. In fact, in Shanghai there is a specific deployment of that at the new deepwater 54-berth port. It is not easily done.
Senator Oliver: What, if anything, do you believe the government should do in terms of assisting the increased use of information technology to increase and enhance productivity?
Mr. Stevens: First, we have been able to develop the agile port concept. We have also been able to have access to the electronic data interchange, EDI, ramp of the railroad in order to make that portion of the logistics chains transparent.
Our operating technology within the terminal is called Tideworks Technology, and it is compatible with CN's EDI ramp. Therefore, we will be able to do terminal-to-destination transparency.
Now, the difficult part is always to develop a business case for the carrier to be motivated to do that. Multiple port deployments make it more difficult. However, we believe that the ultimate efficiencies or the concluding efficiencies and freedom of movement across the border because of that transparency will, in fact, be the business case motivator for the carriers to open up. We have built in within Tideworks the ability to have carrier operating technology included. Therefore, we could go the extra step.
What can the government do? Once that type of technology is designed and working, it is then, I believe, incumbent. We were in Washington the week before Christmas having discussions with the Department of Homeland Security, the United States Coast Guard and the U.S. Department of Transportation, and the question we were asking was as though we were hockey players — we like to think like Wayne Gretzky. We want to be where the puck will be rather than where it is now; we want to be where it is in five years time.
We made the point about the security being harmonized, and the idea is that the motivation for everyone within the private sector or the public sector who is in the business, in order to motivate them to be the same and have that EDI and that transparency, is the ability to move it up a notch so that we also have it available for security and for customs. Then, all of a sudden, we have a huge amount of value add in the process. That is where government role comes in; to have those discussions with the Department of Homeland Security and get acceptance of some type of criteria by which, in fact, that EDI system or those systems will be acceptable.
Senator Oliver: We have had some evidence on that from witnesses in Ottawa, some Chinese business people and people in the trade, but thank you very much.
Senator Mercer: In your presentation, you talked about having union support for the project. I want to explore that a little bit. Tomorrow we will hear from the International Longshoremen's Association Council of Unions. If I ask them this question, will I get the same answer?
Mr. Stevens: That depends on who you are talking to, senator.
Senator Mercer: I will be talking to the International Longshoremen's Association, ILA.
Mr. Martin: Let us say that we have had several discussions with union representatives, which went exceedingly well. Let us also say that our terminal operator, who has the same marine out of Seattle, who operate 150 of these marine terminals around the world, has an excellent relationship with the International Longshore and Warehouse Union, ILWU, on the West Coast of the United States and in other areas and the ILA on the East Coast of the United States — currently operating the Port of Baltimore. They have the reputation in the industry of being firm but fair from the union's perspective, and that is what we intend to be as well.
Senator Mercer: One of the stark differences that we have noticed in our studies is the labour unrest that has been prominent on the West Coast and the labour stability that is prominent on the East Coast.
Mr. Martin: Yes, that is correct.
Senator Mercer: I have a concern referring to the unions on the West Coast when we are talking about a port that will be on the East Coast.
Concerning public support for this, one of your partners was RailAmerica who owns the railbed from Truro up to Sydney. They are having some public relations problems with the adjacent landowners. One report was that the most common problem is that the railway crossings that are used by individuals, historically, the fees have escalated from a $50-per-year fee to as high as a $500-per-year fee.
It is not a great way to win friends and influence people. If this proceeds, will you and RailAmerica have public relation problems in dealing with Nova Scotians all along the line, as well as the new line that needs to be built, obviously, from the mainline into the port?
Mr. Martin: We are aware of the public relations issues to which you refer. We have had one discussion with RailAmerica about that, but we are not in a position to speak for them here today. We would like to believe that that issue will get resolved. My understanding is that there are discussions ongoing about that issue. Certainly, it is our intent to be a good corporate citizen, and we would hope that our partners will be as well.
Senator Mercer: You talked about this being 100 per cent private and not wanting government money involved. I am sure that that would have perked up the ears of the two Conservative members of our committee; they would have been impressed with that. I would like to believe that too, but I have been around too long. I have been in this province most of my life and have seen heavy water plants and everything else. I am concerned that you have not talked about the infrastructure that will be needed to support this.
Your main mode of transportation out of the port will be rail. I appreciate that, but you will have trucks; that will happen. You have a two-lane highway going from the Strait of Canso to New Glasgow. You will put many trucks on that highway. I would imagine that you are expecting the Province of Nova Scotia to participate, and the Province of Nova Scotia will be expecting the Government of Canada to participate. There is a plan to twin the road, I know, but will you be able to handle that? Will the road be able to handle it? You do not want direct government money, but these are the hidden monies that the government will have to pay to support this project.
Mr. Martin: Let me be clear, senator. We are not looking for direct or indirect money. I can assure you that we have a list of financial institutions, whether they are Canadian chartered banks through their capital arms or big international banks or investment arms or U.S. investment banks, who are lining up to finance this project. I have raised a large amount of money for many different projects over the last 20 years, and I can tell you that I have never seen quite an appetite in the financial markets for infrastructure projects of which, according to Duncan McCallum, who is the head of infrastructure financing at the Royal Bank of Canada — which happens to be our bank in Toronto — this is in the sweet spot of infrastructure financing projects. We do not anticipate any need for public money, nor is the project premised on receiving government support or money of any kind.
With respect to the highway, we cannot speak for the Province of Nova Scotia. We do understand there are discussions about the twinning of the highway from beyond New Glasgow to the Strait of Canso. This is primarily a rail intermodal facility where about 98 per cent of the cargo will travel by intermodal rail. The balance, ultimately, will probably go by short sea shipping or feeder vessels.
In our capital costs, we have included the estimated costs of improving Highway 344, which is the two-lane highway to the site to which you referred. We have also included in our capital costs the cost of building the 22-mile, or 30- kilometre, spur line into the site. Therefore, it is a complete package in terms of the facilities and access to those facilities.
Senator Mercer: We have RailAmerica owning the line coming from your spur down to Truro. Is the infrastructure there? I do not know enough about rail infrastructure to know. Is that railbed in good enough shape to carry this extraordinary amount of traffic that you are proposing to put on it? For the sake of my colleagues who are not from this part of the country, there have not been many trains going over those tracks for a long time.
Mr. Martin: The railbed and the rail system were designed to carry very heavy loads. We are advised by the railroads that it is in a good state of repair, and recently CN and RailAmerica did a joint engineering review of that track to identify any problems or any need for upgrades on the line. We do not have that report as yet but expect it shortly. We are not anticipating that there will be any surprises.
Senator Mercer: You talked about an ``on-dock logistic park.'' I did not understand the terminology. I have a vision of what it might be, but I do not want to have the wrong picture. Can you explain that to us?
Mr. Stevens: We explicitly use that term because the more conventional one out of necessity within North America is ``near dock'' and those near dock, if we are talking about Los Angeles-Long Beach, could be a hundred miles away. If we are talking about near dock in Savannah, they are probably 20 miles or 30 miles away.
We began saying that we were, ``a stone's throw away,'' but we are actually on dock. In fact, we will, if we want to, be able to move the merchandise off road into the logistic park. The importance of the logistic and distribution centre park cannot be underestimated. I heard testimony from the previous witness, and I would like to explain a little more about the extreme value add that comes with those facilities. The park not only permits the beneficial cargo owners, who today are more important in the routing of that cargo than even the carriers, to do multiple origins so that they can bring the cargo in to one location but also allows them to pick it or pack it. It allows them to pack for seasons or specific destinations and to put into that supply chain the dependability that they want so that they know it is on this side of the water and that they can deliver for that seasonal period. As importantly, it means that they are able to deconsolidate the cargo, put it into a 53-foot domestic container, and, if the product will cube out before it weighs out, they can get up to a 30 per cent freight saving on their goods moving inland. Also, they can leave the empty container at the coast and will not pay $1,500 to $1,700 to bring it back from Central Canada to the coast.
The other side of that coin is the huge value add for exports. It allows them to bring multiple origin export materials into the consolidation centre and then bring those back in that same 53-foot container with the same freight saving and put it in that empty container that stayed at the dock. Therefore, the on-dock logistic park is a huge value add for the project, and the proximity to it. There will always be a need for inland distribution centres where the 40-foot containers will go directly inland and be distributed. However, we are seeing now that some of the vessel construction that has taken place is going with 53-foot containers on the vessel.
Senator Mercer: You mentioned at the very beginning of your presentation that one of your partners was SSA Marine. In our discussion this morning during our tour with the Port of Halifax, it became quite apparent that if you do not have somebody who can attract shipping lines to the port, then you will have what we have in Halifax, namely, two piers ready to work but no ships coming in.
What does SSA Marine bring to the table? The ultimate idea of, ``Build it and they will come,'' will not happen; you need more assurance. Obviously, there are no guarantees, but what is your projection as to how you will get those lines to come to Melford?
Mr. Stevens: We have the project phased in such a way that we can handle different first-phase numbers. We also fully realize that a mixture of both carrier participation and beneficial cargo owner participation is needed. Canadian Tire may be the best example of that. They have indicated that although they have 30 per cent of their stock-keeping units, SKU's, currently coming from Asia, that will increase by 50 per cent by 2015. They currently import 90 per cent of their product through the West Coast and 10 per cent through the East Coast. Eighty per cent to 90 per cent of their consumption is in the center and, in fact, the East Coast is closer to the center than the West Coast. If they could, in fact, increase their product by imports through the East Coast by 10 per cent, they could put double digit millions to the bottom line. Furthermore, if they can deconsolidate and put it in 53-foot containers, they can decrease their material handling extensively. They handle about 70,000 TEUs a year for import, which is very small in comparison to Wal-Mart at 700,000 TEUs as number one in North America. Almost 500,000 TEUs move because of repositioning of empties. That is very costly in that operation. They have been trying to attract carriers to the East Coast of Canada for a number of years, and it is a critical mass that attracts those carriers.
Our support is that if we go to the beneficial cargo owners with the extreme value add that we have within the logistic park, we will be able to attract two or three of those beneficial cargo owners or more, which will provide that critical mass to allow that type of activity to take place. Therefore, it is a combination.
To answer your question directly, SSA Marine have excellent relations. As a matter of fact, they partner with a carrier on the West Coast of North America. They are currently constructing two terminals in Vietnam, and it is fair to say that, at the end of the day, those terminals will open with carriers already in line for those particular facilities. They are certainly capable of introducing carriers. However, as we have said, it is not divine right; we have to still go out and earn it. We have to develop the strongman deployments and at such a time when those carriers are changing their fleet so that we can accommodate those. Therefore, it is not only SSA Marine but also a combination of all the other partners that we have involved as well. Within the next three or four weeks, we will make several major announcements of other equally notable partners that we will be adding to that list.
Senator Tkachuk: In your first phase, when you open up, what will your capacity be, and is it based on an 8-hour day or a 24-hour day?
Mr. Stevens: The capacity for the first phase would be 1 million TEUs with the second phase being 2 million TEUs. However, based on volume, we can be as low as 250,000 TEUs and consider that a first phase.
The answer to your second question about the time of day, the answer is very simple. The vessel is worked upon arrival. The vessel has to be in and out of port in a very restricted period of time. The more technology, cranes, ability and efficiencies they have, the better able they are to attract those carriers. They have to be worked regardless of the time they come, whether it be time of day or day of week.
Mr. Vickerman: It is 24 hours a day, 365 days a year.
Senator Tkachuk: Halifax Port Authority, who was here earlier on this morning, said that they had the potential capacity to handle five times what they are handling now. Presently, they handle 500,000 TEUs — I believe that is right — and they felt they could go to 2.4 million or 2.5 million TEUs without any additional infrastructure. You say you will have a capacity of up to 2 million TEUs. Where will all that come from? Will you have to eat away at other ports, or do you believe that the world volume, Mr. Vickerman, which you showed on your slide, will deliver that providing we meet the business models to deliver that?
Mr. Vickerman: The market forecast for Melford indicates in the year 2015 that that throughput will be 1.5 million TEUs from a market-driven standpoint. We have looked at Halifax, which is a very capable port. We believe that they are currently at a throughput of 500,000 TEUs per year or thereabouts.
We believe that, at current capacities, their maximum practical capacity could be about 1.2 million TEUs. I am unfamiliar with the figure of 2.5 million TEUs and cannot comment on that. Let me assure you that Melford's traffic is incremental. It is not traffic that currently exists in Halifax.
The econometrics that I gave you indicate that the Asian import volumes on the West Coast will be restricted, that we will be constrained and that the manufacturers will flow backwards through the Suez in a reliable, less costly and faster mode.
Typically, one can go through the Red Sea now, past the Suez and deliver to the New York market one day faster than going across the Pacific. If that is the case, we have seen Class 1 railroads in the U.S., in Los Angeles-Long Beach, last year, raise their rates 35 per cent. We are facing a potential slowdown in terms of technology integrations into the labour unions. There are a variety of issues in Mexico where Mexico wants new gateways. I believe that the volumes, as you saw them in the slides today, will not be totally handled on the West Coast. Since 400 of the Fortune 500 manufacturers are already in the Yangtze River valley manufacturing, they will bring the freight around backwards through the Suez. That backwards flow, which we believe is more reliable, faster and cheaper is the pressure relief valve for the West Coast and is the primary driven value equation for this project. It is incremental on top of Halifax's current traffic.
The fastest growing port in North America on the East Coast is Savannah. In fact, just last month, lines moved from Charleston to Savannah. Charleston lost traffic. Halifax is not the only port having shifts in cargo in that process.
Why is Savannah so successful? They are successful because they are driving the distribution centre optimization of that flow. There are vessels going through the Suez directly to Savannah and not calling in New York or other major hubs.
To focus on logistic parks and distribution centres and to optimize the issues that Mr. Stevens talked about just previously is, in my opinion, the most paramount success factor that North American ports have. It is clear that the West Coast ports are twice as productive as the East Coast ports; much of that has to do with rail. Distribution centres' driven strategies are the next echelon of competitive factors for ports; and, in fact, Savannah is proof of that today in its growth.
Again, I am not familiar with Halifax's figure of 2.5 million TEUs, but between the present 1.2 million TEUs, Melford's figure of 1.5 million TEUs and the forecast from three independent, respected consultants, I believe that by 2015 to 2020 that there will be enough room for both. A rising tide will lift all boats; and, quite frankly, if there is not supportive, cooperative, cross-over modal cooperation in this gateway, the full value will not be achieved. Melford is not taking and is not targeted to take cargo from Halifax. There are two different value equations in play.
Mr. Stevens: Our market analysis concentrated on origins from Southeast Asia and the Indian subcontinent to destinations that could be competitive for Melford. Therefore, it did not include China's traffic in that analysis. We hear much of China's traffic, and it is a long route. However, it is actually here and demonstrated very clearly.
In the last five years, China, as a manifest origin, has taken over market share; the largest market share of the North Atlantic ports from Virginia to Halifax now is captive by China. It replaced Northern Europe. Therefore, it will not come; it is already here. It is a question of how much more will come. Again, to repeat, our market analysis, which developed those incremental volumes, was of Southeast Asia, Indian subcontinent.
Senator Tkachuk: Mr. Vickerman, when you were making your presentation, you talked about the shipping saving time between Europe and Halifax versus Europe and the Melford.
Mr. Vickerman: Yes, that is correct.
Senator Tkachuk: What was that number?
Mr. Vickerman: Our estimate is that there is a seven-hour sailing saving time at 20 knots to deliver product to Melford over Halifax. That would be a seven hours in and seven hours out, or 14 hours in total per vessel call.
Senator Tkachuk: How big is Nova Scotia anyway? That seems so difficult to believe.
Mr. Vickerman: If you look at the geography in the great circle route, it would take a vessel another seven hours to get down to Halifax.
My argument would be that that 14 hours of sailing savings over a year's period is a couple of free turns on a $100- million vessel across the Atlantic. When one has hundreds of vessels and is under that debt service to pay that off, having a couple of free turns on the Atlantic on an annual basis is an attractive argument.
Senator Tkachuk: Therefore, when they reach the railroad, is it longer?
Mr. Vickerman: No, sir, in fact, we have had extensive partnering and work with the CN railroad. Initially, the market assessment did not include New York.
Mr. Stevens: An hour and a half.
Mr. Vickerman: Sorry, an hour and a half.
Mr. Stevens: We lose an hour and a half.
Senator Tkachuk: Over Halifax.
Mr. Stevens: On the rails.
Senator Tkachuk: On the rails, and is that more expensive?
Mr. Stevens: On-land costs are always more expensive than water costs.
Senator Tkachuk: Yes, they are.
Mr. Vickerman: I want you to understand that when we now look at the New York consumption market, we believe we can deliver to the back door of New York faster and cheaper than the ship calling at the front door for the consumption in the Tri-State area of New York and the consumption zones in the Northern region. Therefore, we believe that coupling the vessel sailing-time saving, the saving of lower dwell time at the port because of the agile port issues, which we talked about earlier, and an optimized vessel-to-train transfer in partnering with CN, that we will develop a new capability for distribution centres along that route.
The Chair: Thank you very much for your presence with us this afternoon. We do appreciate the discussion we have had with you.
Senators, our next witnesses are from the Atlantic Canada Opportunities Agency, ACOA. We welcome Debbie Windsor, who is the vice-president, and Janine Fraser, who is a policies analyst.
We are pleased to have you with us.
Deborah Windsor, Vice-President, Nova Scotia, Atlantic Canada Opportunities Agency (ACOA): Thank you very much, Madame Chair. I am very pleased to be here today representing the Atlantic Canada Opportunities Agency, or ACOA as we are known. I want to provide you with an overview of the work of ACOA and to talk about some of the research that we have done and what we see as the next steps.
As you know, the Government of Canada has identified the Atlantic Gateway as a priority within its broader gateways and border crossing strategy. It is also a priority for our agency because of the potential for significant economic benefits to the Atlantic Region. Because of this, ACOA has taken a very strong advocacy role in order to help advance this whole initiative within our region.
I am also the co-chair of the Atlantic Gateway Federal-Provincial Officials Committee, and I will be talking more about that committee later on. It is through this committee that we do much of the intergovernmental work and collaboration on an Atlantic-wide basis. I know that type of collaboration is very important to the work of this committee.
The focus of my remarks today will be on ACOA's role, our research and what we have learned through our engagement with the private sector.
In terms of our advocacy role, we have, within the agency, a number of advocacy priorities. We have a champion that takes on those priorities. Although I am the vice-president for Nova Scotia, we take a more Atlantic perspective on those advocacy files. The Atlantic Gateway is a file for which I am the Atlantic champion for ACOA. Therefore, in that light, we take specific initiatives, partner with the provincial government and work with the federal Government. We look at really developing an advocacy strategy, looking at research and coordination with all levels of government, with Transport Canada and as well with the private sector.
In terms of research, we have undertaken a number of initiatives, for example, the Asia Pacific Foundation of Canada; we sponsored work there, recognizing the work that they had done on the West Coast, which is very important to add that knowledge base to what we are doing here in Atlantic Canada. We commissioned work that was undertaken by APEC as well. Recently, our most comprehensive work was a study that we undertook in October of 2007, which looked at the business case around the Atlantic Gateway initiative, and I will go into that in more detail.
In terms of coordination — again, I know that whole area is very important to this committee — ACOA has taken a very active role in coordinating regional collaboration across provincial governments and the private sector.
In 2007, the Honourable Lawrence Cannon, representing Transport, Infrastructure and Communities Canada and my minister, the Honourable Peter MacKay, representing National Defence, and the Atlantic Canada Opportunities Agency signed the Atlantic Gateway MOU, with the four Atlantic provincial governments. That was a very significant undertaking that represented a strong level of cooperation amongst the federal and provincial departments. That occurred October 5, 2007.
The MOU sets out an agreement to develop an Atlantic Gateway strategy. This strategy will identify the necessary policy and regulatory changes, infrastructure investments and security issues that are necessary to make the Atlantic Gateway work.
The MOU commits governments to work together and, more importantly, to work with the private sector to ensure their views, concerns and actions are reflected in this work. While this strategy — and you will see through the MOU — is intended to be completed in no longer than 24 months, there is an opportunity to take early action on implementing a number of components. An example of one of those is marketing, and we hear that again and again as being very important to the Atlantic Gateway initiative.
As well, the MOU states that the Atlantic Gateway Federal-Provincial Officials Committee will be the key forum for federal-provincial collaboration amongst the parties in the development of the gateway. I co-chair this with an ADM from the New Brunswick Department of Transportation.
This committee, I should note, was first established in January of 2007. We meet on a regular basis, generally once a month, sometimes every two weeks, depending on what actions we are focusing on. There are 10 members of the committee, representation from each of the four Atlantic provinces, ACOA and Transport Canada.
The mandate, as I mentioned, is to develop a strategy. We have also identified some specific tasks that include areas of public policy and private sector activity with direct impact on the effectiveness and growth related to the Atlantic Gateway — which focuses on, for example, skills, marketing, energy, research and development; to identify approaches and timing related to private sector involvement; and to develop the overall strategy.
I should note, as well, that the whole area of private sector engagement is very important to the committee. We were a bit slow in getting the level of engagement that we hoped to get because it was important for the federal-provincial committee to first gel as a committee. We have undertaken a number of private sector consultations. We also, as ACOA, have linked into some provincial private sector consultations that have been undertaken. I will talk a later in terms of some of the observations that we have gleaned from these sessions.
In terms of the opportunity for the Atlantic Gateway, I know that you are very aware of that; and, again, we have provided copies of the business case, and it is strongly outlined in that case.
As you know, the federal government certainly recognizes the opportunity from the deeply integrated global supply chains and the growth that has happened with respect to national trade. We are looking at a very integrated approach, including both physical and policy infrastructure. At the national level, the development of our national strategic gateways and trade corridors is a key priority.
Canada is making an unprecedented, long-term investment in infrastructure totalling $33 billion over the next seven years through the Building Canada plan. Within that, there is a $2.1-billion Gateways and Border Crossings Fund to improve the flow of goods between Canada and the rest of the world. This merit-based fund will help enhance infrastructure at key locations, such as major border crossings between Canada and the United States and, as well, supporting the Atlantic Gateway.
We know that the Atlantic Gateway is an integral part of Canada's national gateway system along with the other key components, such as the Asia Pacific Gateway and the Ontario-Quebec corridor. It is key that these three gateways work as a system and complement each other rather than compete with each other. In fact, through initiatives, such as short sea shipping, we have the opportunity to see increased collaboration between ports; for example, the Port of Halifax and the Port of Montreal.
The Atlantic Gateway is a key part of that system that makes Canada more globally competitive. We know that we have a competitive edge, and the intent is to build on that competitive edge.
In terms of studies, I mentioned the APEC study, which looks at the issues and challenges from a rather broad perspective in terms of existing transportation assets. We have the Asia Pacific Foundation of Canada work, commissioned by us, that looks more broadly at the gateway opportunity but focuses in on the impact of the global supply chains and how the Atlantic Gateway fits within that.
Finally, we have the Atlantic Gateway Business Case, which was commissioned by ACOA. It was undertaken by a team of three consultants: one international, one national and one local. It was the national one that took the lead, InterVISTAS Consulting. They have done a considerable amount of work for the Asia Pacific Gateway. This was extremely helpful to ensuring that the opportunity within Atlantic Canada is positioned in a complementary fashion.
The Atlantic Gateway Business Case looks at a number of components to increase capacity and improve competitiveness: first, improved marketing and product development — specific strategies for target markets, trade missions, in-country representatives in key markets; second, gateway infrastructure improvements and protection — the development of a multi-modal action plan to identify infrastructure priorities, improve truck access turn-around time at ports, consideration of plans for new berth capacity and land-use planning; third, security and border efficiency improvements and to become an early adopter and implementer of leading-edge technology services; fourth, stakeholder collaboration to create an industry advisory group, develop communication strategies to communicate what the gateway concept is and how governments can support it; fifth, policy initiatives to improve competitiveness; and sixth, development of the region's human resources.
This study has helped to facilitate the consensus, particularly at that federal-provincial table, of developing this common understanding and information base and really looking at helping us to understand where best to focus our actions. We are considering these recommendations at the federal-provincial table as we develop our strategy. The whole area of marketing, for example, has been identified as a first priority.
Moving on to private sector engagement, I mentioned earlier that ACOA has engaged the private sector through a number of means. We consistently hear about certain areas in those consultations. Marketing is identified as the top priority. Our ports and airports are well-positioned, as you have heard, to handle more traffic, and this is where governments can best support the private sector in the short term. This is what the private sector tells us. They also tell us that there are a number of policy issues that we can address, and those include the following: facilitation of increased interprovincial trade, air accessibility, border security issues and positioning our workforce so that they have the necessary skills and labour practices to ensure that we have a competitive workforce.
As well, we have heard that the private sector would like to see a focus and a concern related to environmental issues. We have also heard that this is an opportunity to position our ports as green ports and a way to rise above the others; in effect, the idea of the Atlantic Gateway embracing environmental stewardship in a meaningful way but also in terms of marketing.
With respect to new opportunities, the private sector is identifying exploring new ways to expand the market reach. This involves creative consideration of a whole range of existing assets, including such initiatives as maximizing the shortline railways in Atlantic Canada and Northeastern U.S. to establish a rail route from Halifax to Boston.
Short sea shipping, I know you have heard much about that. It is consistently raised in terms of its economic possibilities, for example, between the region and Northeast U.S. ports, and between Halifax and Montreal-Hamilton.
We have heard repeatedly that the window of opportunity is very short, and we need to act now. We need to identify these opportunities and the constraints and put some initiatives in place that will enable us to capitalize on this expanding international trade.
In all of this, ACOA's goal in the Atlantic Gateway is to help us position our assets to capture those opportunities presented by global trade and transportation. We will continue to do this through our research, through direct partnerships with key partners, including the private sector, provincial governments and other organizations, for example, the Atlantic Provinces Chambers of Commerce, Canadian Manufacturers & Exporters, Greater Halifax Partnership, the Halifax Gateway Council to name a few.
There has been consistent messaging from the research as well as from the private sector that the greatest and most immediate opportunity is for containers. We want to work toward maximizing other high-growth opportunities in Atlantic Canada, such as air cargo and air and cruise passenger travel, and this will be all part of the development of the Atlantic Gateway strategy. We have some analytical work ahead of us and that is part of the plan of the Federal- Provincial Officials Committee.
The next steps are the development of the strategy. ACOA is dedicating resources to ensure that the work of the Atlantic Gateway Federal-Provincial Officials Committee is done thoroughly and in a timely manner. We have dedicated resources to help develop the gateway in each of the provinces. A second action item is to implement a marketing strategy. Then, in terms of looking at other growth and development initiatives, we will continue to work with our partners to implement specific initiatives and actions that have the potential to grow the gateway opportunities. Growing the transload industry, for example, has been a priority activity here in Nova Scotia. ACOA has supported a collaborative approach to this challenge through research and through resources. We will continue to support specific initiatives being done at the provincial level to grow and to improve the Atlantic Gateway.
I want to thank you very much for inviting me here today. This is the end of my formal presentation, and I am very pleased now to take questions.
The Chair: In APEC's report on Atlantic transportation and gateway, entitled The Changing Global Economy: The Implications and Opportunities for Transportation in Atlantic Canada, it is said that:
If the Port of Halifax increases its container handling from Europe and Asia, there may be potential spillover effects to other Atlantic ports to provide complementary services. However, the scope for this potential is not yet clear. It is also not clear if there is potential for Atlantic companies to add value by capturing additional supply chain activity in the region.
I would like to have your comments on that.
Ms. Windsor: All kind of forecasts have been done with respect to the potential container traffic. The baseline forecast done in InterVISTAS study that we commissioned, which was after the APEC study, indicated that there was certainly potential to grow. The baseline identified in that study was 2 million TEUs by 2025, which clearly indicates that there is an opportunity for other Atlantic Canadian ports. As well, I believe that the Port of Halifax and the Port of Saint John, for example, work very well together in terms of that spillover capacity, particularly with respect to bulk cargo.
Senator Oliver: Thank you, Ms. Windsor, for a most excellent and comprehensive report. It covered many of the issues that this committee has been looking at; I will have to study it in greater detail.
You are co-chair of an extremely important organization arising from the memorandum of understanding signed between the four Atlantic provinces and the Government of Canada. I am wondering if there should not be another MOU between the various ports in Nova Scotia who would like to be the gateway port. Do you feel that an Atlantic Gateway can include the Port of Sydney, the Port of Canso, and the Port of Halifax?
Ms. Windsor: Absolutely. I have had meetings with the Port of Sydney, the Strait of Canso, the Melford group and Halifax. Looking again at what the business case tells us, the opportunity is there and it is very important that these ports do work together. The baseline we have identified indicates that there is a need for additional capacity. Therefore, the ports have got to work together, and to some extent they do, but I think that definitely could be strengthened.
Senator Oliver: According to last year's figures for the Port of Halifax, which is the only one open and operating now, it actually lost container traffic in 2007. The port lost two major lines.
Ms. Windsor: It lost two lines, which I understand is the result of structural changes that happened within the industry itself as opposed to a competitive advantage that the port might have. The decisions were made within those companies.
There is a huge opportunity to attract other lines to this region. Given the growth that is happening internationally, given the competitive advantage that we feel we have, we feel that we can grow this, and marketing is key. We have to get out there and we have to start more aggressively selling together, as a team. As an Atlantic team, we have to be selling this competitive advantage. The misconceptions out there are surprising. For example, there is not a clear understanding that we have an ice-free port.
Senator Oliver: If, for example, Sydney, Melford and Halifax are all targeting Vietnam as a source of container traffic, in the absence of cooperation between the three ports, Vietnam will hear representations from these three places and will say, ``They do not seem to have their act together, so we will go down to Savannah.''
Ms. Windsor: You are right.
Senator Oliver: We will lose out. A lot of capital, including some of your capital, can be put to developing these ports and they will all go down. In the absence of cooperation for marketing and everything else, I cannot see success at the end of the line.
Ms. Windsor: When we as a government look at marketing, it is critical that we market the region, not market one particular business within the region. I think that approach will help bring those relationships together.
Senator Oliver: How much money has the Atlantic Canada Opportunities Agency or the government put into the Atlantic Gateway concept to date, and how much is promised?
Ms. Windsor: In terms of the promise, that is difficult to say because the gateway funds themselves are competitive. Anything that would come forward from this region would have to be competitive in order to access dollars from the $2.1 billion.
In terms of expenditures to date, the business case itself was a significant expenditure that was put towards the whole concept. We have also funded studies related to the airport and studies related to the port. I do not have the total, but we can certainly provide that to the committee.
Senator Oliver: That would be useful. Has any other Atlantic Gateway money been pledged and made public?
Ms. Windsor: No, not like for Western Canada and Central Canada, but we do have to recognize that in Eastern Canada it is an opportunity. In Central and Western Canada, there are issues that need to be addressed right away, which is the reasoning behind that. In terms of the federal-provincial committee, we are trying to develop a rationale for an opportunity.
Senator Mercer: I was tempted to quote Lucien Bouchard about us being slapped in the face by having to compete for the money. There is money set aside for Central Canada, there is money set aside for the Pacific Gateway. I am very disappointed that there is no money set aside in the last budget for the Atlantic Gateway. There is money there that we can apply for and compete for, but there are no specific funds. Am I correct on that?
Ms. Windsor: That is correct.
Senator Mercer: When you did this work, did you factor the Melford terminal into your plan?
Ms. Windsor: The consultations that were done prior to the business case focused on current operations, but the consultants certainly were aware of the plans around Melford.
Senator Mercer: Okay, but the actual numbers that Melford is projecting are not reflected in that.
Ms. Windsor: No. These were independent of Melford's numbers. I believe the consultant they are using was one of the consultants we used as well.
Senator Mercer: The MOU has been signed. Who signed it? Who is really driving this? There are many players here, but I do not see a champion; I do not see a Captain Atlantic saying, ``I will drive this forward.''
What happens next? You used the 24-month time frame. What happens after that 24 months?
Ms. Windsor: Minister MacKay, Minister Cannon and the four provincial ministers of transportation signed the MOU. It was signed on October 5, 2007.
As for who is driving it, Minister MacKay is very much the champion for the Atlantic Gateway. The federal- provincial officials committee is driving the work, and I am the co-chair of that with the Province of New Brunswick. We are the group that put together the action plan that will satisfy the conditions and the terms of the MOU. Leading up to the 24 months, we see a number of initiatives, including marketing and more analytical work that needs to be done around this value proposition. Then, after the 24 months, I expect that we will see some identified infrastructure that will be required in order to realize the potential of the Atlantic Gateway.
Senator Mercer: Where do the provinces stand in this? You talked about being from the Atlantic Canada Opportunities Agency, but I see my good friend David Oxner, from the Province of Nova Scotia, here. Are the other provinces similarly engaged? Have they put human resources or financial resources into this project? Are they pushing Mr. MacKay on this project?
Ms. Windsor: The provinces are very involved. David Oxner and his counterparts at the assistant deputy minister level from each province sit at the table. We also have intergovernmental affairs from provinces represented at the table.
In terms of their commitment, the provinces have undertaken important initiatives, such as private-sector engagement. New Brunswick has done a lot of work in that area in the past year. Nova Scotia is looking at marketing initiatives on their own private-sector engagement. Newfoundland and P.E.I. are working to identify the opportunity. I believe Newfoundland has engaged some consultants to look specifically at what the opportunity is for Newfoundland, while P.E.I. is identifying its internal strategy. This table brings all of that work together, so we have the opportunity to look at it from a more global perspective.
Senator Mercer: I guess my comment sounded more critical than I had meant. To quote a famous movie, ``What we have here is a failure to communicate.'' If I can be so bold as to make a suggestion, I think we need to communicate better that the players are at the table and that there is actually something happening, because those of us who are not at the table do not see the puck moving up the ice.
Ms. Windsor: I agree completely, and that came loud and clear when we had our private-sector engagement. Some representatives around that table had no idea of what we were doing and where we were headed with this initiative. We do need to communicate better what is going on.
Senator Mercer: Good, thank you.
Senator Cowan: I wanted to follow up on a couple of points that Senator Oliver mentioned earlier. I share the same nagging concern about the Melford train going down the track and Halifax struggling for its share of container traffic. In your marketing strategy, are you marketing the Melford plan in addition to the Halifax plan? Will that be part of your action plan that is being developed? What will you market?
Ms. Windsor: It will be part of the action plan that we are developing, but a private sector would not market any specific port but rather would market the effectiveness of the whole system, using some of the terms and looking at how close our markets are to the Indian subcontinent and that value proposition, for example.
Senator Cowan: I understand that you would not say, ``Well, you should go to Saint John rather than Halifax,'' or, ``You should deal with Ceres rather than Halterm.'' I understand that, but when you are putting together a plan, are you saying, ``We are Atlantic Canada and here is what we have in Atlantic Canada''?
Ms. Windsor: That is right.
Senator Cowan: That will include Melford in the first phase at 1 million TEUs and in the second phase at 2 million TEUs?
Ms. Windsor: Well, it is not there yet.
Senator Cowan: Okay.
Ms. Windsor: It is not something we could even include, and we have not done this material. Clearly, we have to think this through. I would say you would market the assets you have.
Senator Cowan: In other words, you are developing a marketing strategy for assets that exist at the present time, which does not include Melford.
What is the status of the action plan? When will it be available, and are you producing discussion papers or draft papers along the way that one could get access to?
Ms. Windsor: The work of the committee has been within the committee, so we have not had a communications plan to disseminate the work that we are doing. The action plan is developed; we have identified the elements, the time frames for each and who is responsible for doing them, but we have not publicly put this information out. We have been talking about a website that would include all of this information.
Senator Cowan: When will that website go up?
Janine Fraser, Policy Analyst, Atlantic Canada Opportunities Agency (ACOA): Probably by March or April a website will be available. On the Transport Canada site now there is a link to the Atlantic Gateway, as there is to the Asia Pacific Gateway. The site is not populated with much at the moment, but that is the next task.
Senator Cowan: What is the relationship between the Atlantic Gateway council and the Halifax Gateway Council? As Senator Mercer pointed out, there is some confusion in the public mind about who is doing what and when and why. I think that as Atlantic Canadians, one of our problems has always been that we are competing more against ourselves than against the outside world. Maybe it is a Canadian problem. I think all of us would acknowledge, at least publicly, that we should get over that and we should market the region. That seems to me to be what you are proposing and what the MOU proposes.
Ms. Windsor: Absolutely.
Senator Cowan: Where does the Halifax Gateway Council fit in? Is it part of your organization, and does it support what you are doing?
Ms. Windsor: No, it is not part of our organization, because the federal-provincial committee is a government committee only, and that committee engages the private sector, one component of which is be the Halifax Gateway Council. The Halifax Gateway Council is a mostly private-sector council. I sit on it as a resource so that we have that information connection, but in our engagement of the private sector, the council is one of the stakeholders.
Senator Cowan: The Halifax Gateway Council is a stakeholder. That is fine.
Senator Zimmer: Going back to the question of who is driving this, I am more interested in the destination of your agency. By that I mean that in the atmosphere you work in, you deal with many intrinsic elements and intangibles, and consequently it is hard to measure the success of your results. You have to complete a report in 24 months. How do you measure for that? What measurable results can you point to so that you can say, ``We are successful, we have completed and implemented the reports''? What are the measurables to indicate that you have achieved your objectives?
Ms. Windsor: That is a good question, because it is a challenge to get tangible measurements. For the federal- provincial committee, one tangible is the MOU, the fact that we have actually come together as government to address this important opportunity. A second tangible would be to get the information base that is common to all. The business case is another. The bottom line is that we want to see additional business coming to the region. That is the ultimate goal, and it is a longer-term goal.
Senator Zimmer: Right.
Ms. Windsor: We want to see some of the business that is declining increase in the case of containers, which we recognize as being 80 per cent of this opportunity, and also in the other modes of transportation.
Senator Zimmer: Part of this team is to ensure that you can see the results that will be achieved by the other parts of it.
Ms. Windsor: Yes, the whole measurement aspect is included.
Senator Zimmer: I want to follow up on Senator Cowan's question regarding the global picture. Right now you are doing the MOU on the Atlantic Gateway with the four provinces, but I want to look at a larger picture. You are looking at the Atlantic Gateway as one element, but that element must have an effect on the rest of the country and the rest of the world. From a global perspective, there is a motto that says, ``Think as big as you can and then double it.''
From what countries can Canada learn the most about best practices in container transportation? From the perspective of the rest of the world, how important is it that Canada forms part of an integrated North American container transportation system? I know that will be the next phase.
Ms. Windsor: We can probably learn a lot from the U.S. We have, I think, though not through the gateway officials or the federal-provincial group. The Port of Halifax and the Greater Halifax Partnership have visited Savannah to look at that as a best practice. In terms of other ports, I would not know where to look for the absolute best practice, but I expect we will learn about that over the next little while.
Senator Zimmer: I always hear that you have to see Singapore and Hong Kong because they are some of the best ports in the world. I do not know whether that is true, but obviously they have something pretty good. Hopefully someday we may get a chance to look at those.
Senator Tkachuk: All the talk here both this morning and this afternoon has been very optimistic, but I was looking at the historical container statistics here, and in reality there has not been any growth for seven years, since 2000. There was a drop in 2006 and I believe 2007 from the high of 2005, and for seven years it has been the same.
Ms. Windsor: That is the whole point.
Senator Tkachuk: Yet we have this very optimistic forecast of what will happen in the next 10 years or 12 years, and it has looked like both ports would be close to their maximum. What is causing the decline, and how do we overcome it? It is not just the U.S. economy, because this has been going on for seven years when the U.S. economy was extremely strong in ports and at an all-time high. I do not know how we will get the business. The tide will have to rise a lot.
Ms. Windsor: That is right. The tide has been rising, but we are not getting lifted, so the question is how we will do that. How will we get a piece of that increased international trade? It is growing significantly, and we know, looking at the opportunities and the basic economics, that the value proposition is there, so why are we not getting that increased share? We know that some of this decline has been a result of structural things within the shipping lines, and I had mentioned that, but we see that there is a huge opportunity but there is not an awareness internationally around the benefits of dealing through our ports. That is why marketing is being put out there as key by anyone we talk to. The consultants identified the private sector time and time again in the report, saying, ``We have got to get out there and market this region and market the advantages that we have.''
I started to say earlier that on an earlier trip to India I heard questions like, ``What about the ice in your ports? How do you get in?'' Again, there are many misconceptions out there and there is a huge opportunity. We see that with Canadian Tire looking at balancing their risk by bringing a larger share of their business in through the Port of Halifax. Again, these are good business decisions, so we need to market the port and market the advantages.
Senator Tkachuk: I noticed in the cargo statistics, the book we have in front of us, that Savannah had a 21 per cent increase, Boston a 4 per cent increase and Norfolk 1 per cent while almost all the other cities — New York, Charleston and of course Halifax — all declined. What are they doing in Charleston, do we know?
Ms. Fraser: The only comment I would make — and the same point was made by Mr. Vickerman before us — is that those ports that are growing have been putting energy and money into growing distribution centres.
The Port of Halifax is of course focused on the transload. We do not have a large local market, and that makes us vulnerable to shifts in the industry. Overcoming that vulnerability is part of what will make the ports here more competitive. Hence, there is a focus here on the transload and on finding other methods of marketing the port.
The Chair: Thank you very much for your presence here today. You said there was a document you wanted to send to the clerk, so it will be distributed to the members of this committee.
Ms. Fraser: Thank you.
The Chair: Senators, our final witnesses this afternoon are from the Greater Halifax Partnership: Stephen Dempsey, President and Chief Executive Officer; and Dan English, Chief Administrative Officer with the Halifax Regional Municipality.
Welcome to our committee, gentlemen. Please proceed.
Dan English, Chief Administrative Officer, Halifax Regional Municipality, Greater Halifax Partnership: Good afternoon. I am pleased to be here today with my colleagues from the Greater Halifax Partnership, or GHP. Together we will present on our vision for the Atlantic Gateway. In a few minutes, Stephen Dempsey will outline the benefits of gateway to this region and the role of the Greater Halifax Partnership.
First, I would like to give a brief overview of some of Halifax Regional Municipality's transportation priorities. We are working with the Halifax Port Authority and CN to develop a strategy to address truck traffic congestion in the downtown areas. The Halifax-Dartmouth Bridge Commission is leading a study with Halifax Regional Municipality, HRM, and the province looking at a third harbour crossing. The study will likely be finished this summer.
Our regional plan has set aggressive targets for increasing transit ridership over the next 25 years. Two years ago, we launched the express bus service known as MetroLink, which has surpassed our goals and will soon be expanded.
We are also studying options around launching a high-speed ferry with destinations around the harbour. In addition, we are incorporating transit needs into current community planning instead of trying to catch up later.
Under the Atlantic Gateway and specific to our focus of supporting Atlantic Gateway, I would like to describe what HRM specifically has done to date, how we have been working with government and community partners to improve competitiveness and investment, and where we plan to go from here to make the gateway strategy a reality.
On January 22, just a couple of weeks ago, Halifax Regional Council endorsed a municipal role and alignment of strategies internally and with community partners for Atlantic Gateway. This will enable HRM to respond effectively to gateway opportunities in the long term. We have copies of the HRM council report and policy paper to take with you today.
We currently have several initiatives underway to build up the infrastructure needed and to improve marketing. A district park is being developed in the Burnside Park to accommodate the logistics and transload sector. Having these distribution facilities available is key in attracting additional container traffic. One company is already open and another one is under construction.
Key areas of HRM's transportation strategy are being built around gateway plans. For example, a Sackville- Burnside expressway is planned to accommodate the increased number of transport trucks and to ease congestion. HRM traffic has made gateway a key priority in its economic strategy, its harbour plan and its regional plan.
As referenced earlier in the presentation, building the gateway requires a high degree of collaboration between all three levels of government and stakeholders. In the past few months, Atlantic Canada Opportunities Agency, which you just heard from, the Province of Nova Scotia and HRM have each developed strategies around the gateway. The policies and goals in these strategies are aligned so that the three levels of government are all working towards the same goals. This initiative is also supportive of the Atlantic premiers' agreement to work together on developing the Atlantic Gateway as well as a regional transportation strategy.
HRM and the Greater Halifax Partnership are working closely to coordinate our efforts around gateway. We are both also in close contact with the Halifax Gateway Council to coordinate our marketing, infrastructure, investment and policy initiatives. Halifax Regional Municipality, the Greater Halifax Partnership and the Halifax Port Authority are working together to facilitate our work around gateway.
HRM has also taken a proactive role with various community partners to articulate areas of common interest so that we are able to align priorities and resources where appropriate. In terms of future needs, we are well placed to move forward and make gateway a reality. Strategic investment and infrastructure are vital for Halifax to increase its size relative to other ports.
The recent ACOA study found that gateway could increase jobs by 61,000 and GDP by $3.43 billion. The marine container sector alone would account for 68 per cent of this growth. To achieve this, increased marketing of this port is necessary to turn Halifax into a must-call destination. We have only a limited window of time in which to attract container traffic. The sooner we can begin marketing the gateway, the greater its chance of success to support industry in our region. To be successful, we require federal government support and recognition that this is a national and not just a regional issue, strategic investment and infrastructure and increased ability to market the gateway.
Mr. Dempsey will take you through some of these points in more detail.
Stephen Dempsey, President and Chief Executive Officer, Greater Halifax Partnership: Thank you. It is a pleasure to address the Senate committee. In the interest of time and recognizing where we are sitting on a Friday evening and knowing that you have a busy schedule tomorrow, I will move through my presentation quickly. I think the opportunity for discussion and dialogue is really what you are seeking here.
We are a public-private partnership; we are an economic development group. Like every city, we work to try to grow the businesses that are here, retain them and attract new businesses, and the gateway is a great way to do that. We work with all levels of government. Our three levels of government are partners in this endeavour, along with 150 private businesses. On the slide you can see logos of the various businesses. They are national, local, regional, international, obvious ones; they are all engaged in seeing this community be strong and thrive and grow. They all put their money on the table to make this happen, and gateway is a clear, recognized priority for these private companies for supporting the growth and the future growth of our community.
Mr. English mentioned the significance of the gateway and GDP. From HRM's point of view, 16 per cent of all our economic activity, over $1 billion, is connected to our gateway. In my job of trying to grow our economy, there is no better place to look than the gateway. There is no better place to get a payoff in terms of economic growth than focusing on the gateway, and our entire business community understands that and is focused on it.
We are often asked, ``What is the Atlantic Gateway?'' and, ``How does this connect to the Nova Scotia gateway?'' I know that this committee is dealing with the same questions. I heard some of the questions previously, so I do not attempt to answer them other than to say that we know what the Halifax gateway is. It is focused on driving the economic activity around our transportation assets here, and we have created a gateway council to help us in that regard.
We also recognize that there is a federal initiative underway currently to support the development of gateways. They have five lenses through which they are looking at various communities to determine their fit with respect to that. Certainly, we are the East Coast destination for post-Panamax vessels. All of Canada's post-Panamax cranes on the Atlantic Ocean are in this city, and you have seen some of them today. They exist in no other place.
We have an East Coast navy, and we talk about security. The admiral was at lunch today, and the ability to integrate security and the role of our navy with our gateway and our transportation assets here is tremendous. One supports the other and we work collaboratively. In fact, the admiral sits on our board as a director of the Greater Halifax Partnership, so we work together.
We also believe that this is about having options in the country. Asian traffic can come to Canada through the Pacific or through the Atlantic. We now have options, and that strengthens the national competitive position of our country in terms of supplying things.
We have had substantial investment — $475 million in private-sector investment in our gateway assets in recent years, including the cranes, the railcars, and much of the infrastructure that is necessary for us to be competitive in the marketplace.
In the context of national transportation, Halifax handles about 12 per cent of Canada's container handlings and 75 per cent of what moves into inland markets in Quebec, Ontario and the Midwest. Halifax is a port for Ontario and for Quebec, not just for Nova Scotia. It connects our country, which is, I think, quite significant.
We also talked a bit about the Asian flow of traffic. Halifax has had a history of serving the North Atlantic traffic. That has been the basis of our business, but we are seeing significant growth through the Suez Canal, and that is where the opportunity is. I know this committee has heard that before, and the question that we have to answer is, ``How do we achieve our part of that?''
Our approach is to use a public-private partnership, to engage industry that has the expertise to be able to do these things and do them in the way that they must be done, and to work with all levels of government. That is how we get things done every day, and I hope that that is what you saw here today and what you are hearing from us. We are aligned and working together.
The Greater Halifax Partnership is focused on supporting the Halifax Gateway Council and building the transload distribution hub that Mr. English mentioned earlier, aligning our priorities around infrastructure and what is needed to support the development of the gateway and developing public-private partnerships as a mechanism to execute on those.
I think I will end with this slide showing a list of the members of the Halifax Gateway Council, which was created in 2004. You see members directly from the transportation sector, from both the air transport sector and the marine transport sector. You see trucking companies and you see governments and economic development organizations all clearly working together to improve the performance of our economic gateway.
The Chair: It seems that you have developed an aggressive business development strategy with the goal of increasing trade and investments to improve the growth opportunities for more than only the HRM, but when you mention the Atlantic Gateway, that is more towards the Port of Halifax. How many ports can you envision for the future? It seems that everybody wants to have their own port.
Mr. Dempsey: I think that is a very good question. In this part of the country, we have gone through a lot of rationalization with respect to our ports. Through changes in legislation, moving the control of the ports to the communities that they serve has been significant in terms of creating empowerment. Our challenge is clear. We have not realized the potential that exists with respect to capturing a bigger share of the Asian trade. It is not that the trade is going to other parts of the country: those post-Panamax ships cannot go up the St. Lawrence seaway and they cannot go to a port that is not yet built. Therefore, our opportunity is immediate, and that is to say, ``How do we get more of what is out there today and compete with U.S. ports?'' The North Atlantic ports in the U.S. are our competition, and that is where we have to focus our competitive efforts, not around our region here.
Senator Oliver: I think you should be on the committee that was struck following the memorandum of understanding with the federal government and the four Atlantic provinces, because it seems to me that part of their mandate is to deal with many of the things that the Greater Halifax Partnership is attempting. Is there any way that you can serve on that committee even as a non-voting member? Do you see that as being important?
Mr. Dempsey: Senator, it is obviously not for me to say whether I could be on the committee, but we certainly want to work together and we believe wholeheartedly in a stronger Atlantic region creating a stronger potential for the Port of Halifax and vice versa. Whatever we can do to support that agenda we will, but our focus is clear: we must stay focused on the vitality and the growth of the Port of Halifax.
Senator Oliver: That is why your voice on that committee would be so important. They had a stakeholders meeting a while ago. Were you involved in that meeting?
Mr. Dempsey: We were not directly involved in that meeting, although the Halifax Gateway Council was represented.
Senator Oliver: If Halifax is the only port that can take post-Panamax ships, that should be giving you a bit of an edge now. However, if you are not there, how can that voice be heard? Who is there? You know, Newfoundland will not speak for that voice; neither will New Brunswick, nor Prince Edward Island.
Mr. Dempsey: Right.
Senator Oliver: The Minister of Transportation for the Province of Nova Scotia has obligations to Sydney, to Canso, to Melford and other places, so do you see what I am getting at?
Mr. Dempsey: I do, senator. As the Past Chair of the Atlantic Provinces Chambers of Commerce, I know a little bit about working in this region and the importance of cooperation and collaboration, but, at the end of the day, it is about getting the job done. My concern with respect to the Atlantic Gateway is that it might take our eye off the ball. We have to keep our eye firmly on this ball, the Port of Halifax, which is what we have today and what we are focused on growing. That is my concern. I am not suggesting that we do not want to work cooperatively with others in the region. We absolutely do, because it is in our best interest, but we cannot do it to the extent that it distracts us from our primary focus.
Senator Oliver: I am still concerned that you are not on that committee, but I have heard your responses.
Senator Mercer: I have asked this question several times today of different groups, but I think it is probably very important to ask the City of Halifax this question too. Do you have representatives, either from your own offices or by contract, in the marketplace in China, India, Pakistan or Vietnam? We continue to hear people say that we have to raise the port in the world. I grew up here and have lived most of my life here, and I know that, but I still want to see that somebody is out there selling this place. We need somebody to be out there marketing. Do we have that? Does the City of Halifax have someone, and have they committed resources to do that marketing?
Mr. English: Halifax Regional Municipality does not have the resources for that, but I would think that the Halifax Port Authority would do that kind of marketing, visiting other countries and looking for business overseas.
Senator Mercer: I remind you, though, that the Halifax Port Authority told us today that they have one office.
Mr. English: Right.
Senator Mercer: I wish I had the opportunity to ask the Province of British Columbia or the Port of Vancouver the same question, because I know the answer is very different. If we want to play in the big leagues, we have to pay in the big leagues. The Pittsburgh Penguins had to pay Sidney Crosby a lot of money because they wanted to get back in the business of having a good hockey team. If we want to have a good port, we will have spend some money to make some money. That is my concern.
Mr. Dempsey: Senator, I echo your concern, and clearly the Halifax Gateway Council, as a mechanism, is working to build its strength. We have a budget of $85,000 a year and a half-time executive director, and I can tell you that that is not sufficient for the purposes we are discussing here today.
Senator Mercer: Absolutely, I agree with you 100 per cent; $85,000 does not buy you much in this world of commerce over time. I am concerned that this seems to weaken the efforts of the Atlantic Gateway, because we have other ports. Is it your fear that if we take our eye off the Halifax puck and focus on the Atlantic Gateway, somehow Halifax will lose something that we already have?
Mr. Dempsey: Well, certainly, there is only so much time and resources in the day for anyone, and we all recognize that. Therefore, I think we have to make some tough decisions. In a perfect world, the Atlantic Gateway would treat everybody equally, but we know that that is not the world we live in. It is easy for me to sit here as Halifax and say, ``We are it; support us.'' I recognize as an Atlantic Canadian that that is not the spirit in which we work together and that we must support others, but there is a fine balance. We have to make some tough decisions, and with the weight of the evidence here, I think we have to go with what we have, and that is Halifax.
Senator Mercer: I understand that. When a port is working at 30 per cent to 40 per cent capacity and has all this excess capacity and there seems to be a demand, well that is where I see the problems in the middle. We have the harbour, we have the terminals that will handle the ships, and there is a demand for that out there. The only way you will get that is to bring a willing buyer and a willing seller together, as they say in real estate. I am expressing my frustration more than I am asking a question. Is there a need for the province to be more involved? Then, let us step it up one more level. Is there a need for the Government of Canada to be much more aggressive in this through the Atlantic Gateway or through Atlantic Canada Opportunities Agency or through the Department of Foreign Affairs and International Trade?
Mr. Dempsey: Senator, I think there is, and I would answer your question with two responses. One is that the awareness piece is absolutely critical, and that takes resources and many people saying the same thing. So, if we have the Atlantic Gateway marketing Halifax for containers and a Nova Scotia gateway in Halifax, are customers collectively going to hear the same thing? I think that is okay. I think marketing we can do in the collective.
Second, infrastructure and cost competitiveness I think rest where you live. That is the other side of it, and we have work to do there, also. We have focused a lot on volumes and potential, but any business that looks only at their potential market and does not focus on their core business is in trouble. I am not suggesting we are in trouble, but we need to closely examine our cost structure and the nature of the relationships in the supply chain and make sure that at every point we are the most competitive port at our current volume that there can be in the North Atlantic. If we get that right, we will grow and we will capture a bigger share. Both of those pieces are important.
Senator Mercer: Like some other cities in the country, Halifax has a problem because it does not have a good highway system through the city. Halterm port is locked at the south end of the city while the major exits from the city are in the north end, to the highway on the west or to the bridges on the east. Has the city committed to doing something to address the infrastructure problems to get trucks from the south end out of the city, whether they are going to Burnside or to the highway to transship someplace else?
Mr. English: Yes. We have been holding discussions with the province. We are also looking at solutions with CN to divert much of the truck traffic that now exists in the downtown core and get the trucks out of the downtown through other mains, but we have not found the solution yet.
Senator Mercer: I have one pet project that I will put a plug in for. CN has part of the solution. They own the railroad cut. Putting a highway on top of the railroad cut makes logical sense because you would have another exit for people and also from a security point of view. This city is a prime target for terrorism, and in a time of conflict we are a prime target because of our military base. It seems to me that another exit out of the city would be logical, and if we had one or two exits added at the ends, to the highway and to the bridge, that would be fine with me.
Mr. English: That is what we are looking at.
Senator Mercer: I am glad to hear it.
Senator Cowan: I confess my bias, obviously, coming from Halifax, but I share your concern about the danger of lack of focus here and trying to be all things to all people. I think there is a lot of confusion in the public mind between the Atlantic Gateway and the Halifax gateway. We heard a presentation this afternoon about the 24-month plan that ACOA has undertaken, or that is funded by ACOA, in order to produce an action plan. We have also heard about the narrow window of opportunity that we have. There is an essential conflict in there that we need to be concerned about. Can the Halifax Gateway Council access any of that $2.1 billion that is in the Gateways and Border Crossings Fund?
Mr. Dempsey: We have had discussions with the Atlantic Canada Opportunities Agency, Transport Canada and Infrastructure Canada about the Building Canada Fund. We are tracking that. Certainly there are infrastructure pieces that we believe would be consistent with the purpose of that fund, and we will be bringing those specific requests forward in the very near term. The answer is yes.
Senator Cowan: I think we have heard, and it was certainly my understanding before, that there is nothing specifically allocated for the Atlantic Gateway. I think projects in Atlantic Canada are entitled to compete for that. It is not necessary for you to go through the Atlantic Gateway council in any way. You can access that either as the Port of Halifax or Halifax Regional Municipality or Halifax Gateway Council; is that correct?
Mr. Dempsey: Yes, we believe the mechanism we will use is the Halifax Gateway Council. It is an incorporated separate entity modelled after the Greater Vancouver Gateway Council. All of the partners I had listed on the screen earlier are represented there, so it is an efficient mechanism for us.
Senator Cowan: That would be the mechanism that you would use to apply for funding.
Mr. Dempsey: That is correct. Then we would do separate projects that will come out of that initiative.
Senator Zimmer: You have a very comprehensive plan and tremendous opportunities and challenges. I have one simple question from one simple guy, but Senator Mercer asked half of it, so I guess it is one half simple question from one half simple guy.
Senator Mercer asked about your needs and what we can do from the federal side in terms of funding and infrastructure and so on. The other question is whether there is any legislation that you need that is affecting or determining your objectives and goals.
Mr. Dempsey: Senator, we have considered that question, and there has been a discussion at the Halifax Port Authority with respect to its ability to carry out its mandate within its current legislative environment, so I will not speak to that. I think that is more appropriately left to them.
We have looked at it from the Halifax Gateway Council's point of view, and we are optimistic that the Building Canada Fund and the Gateway funding that has been identified will be sufficient to enable us to access infrastructure mostly to improve our competitiveness — for instance, things like being able to deal with our truck traffic. Getting the trucks out of our downtown core and out to where they can connect to distant markets as efficiently as we can is the most important thing. There are simple measures: new road connections, when built, will reduce truck transit times, thereby taking cost out of the system and dealing with traffic in a way that is responsive to the environment, and will allow us to better handle more time-sensitive cargo.
It is simple, basic stuff — perhaps a simple answer to a not so simple question.
Senator Zimmer: You were sort of grandfathered, I guess, by how things were probably built without a master plan at first. Then all of a sudden all these elements come together and you realize that progress is being impeded and you have to go back and fix those elements. Thank you very much.
Senator Oliver: Are you able to discuss with us some of the proposed locations for the new bridge going from Halifax?
Mr. English: Senator, I cannot disclose that because I have not seen it yet. I believe I will be seeing that report next week. This is a long-term plan. There is no need for a third bridge at this time, as most people know, but if and when a new bridge is necessary, the work will have been done to show the location, but I cannot tell you the location now. I will know next week based on the consultant's study, which is just winding up.
Senator Oliver: It would be something to try to move trucks with containers from Halterm and Fairview out to the highway in a faster way.
Mr. English: I am sorry, senator, but are you referring to the location it would be in that area?
Senator Oliver: The north end or the south end of the peninsula of Halifax.
Mr. English: There was a study done a number of years ago on a third bridge crossing, and it was in the south end.
Senator Oliver: Yes.
Mr. English: Other than that, I have not seen any of the consultant's work yet.
Senator Oliver: Have you given much thought to a new Cogswell interchange? Where does that now stand?
Mr. English: Yes, we are looking at that now. We have a couple of consultant's reports. There is some conflicting information in terms of the condition of the structure, but we are definitely looking. That structure will not be rebuilt, it will be demolished. It is 40 years old.
Senator Oliver: Do you mean the actual road, the interchange?
Mr. English: The actual infrastructure, yes, and the walls and the whole ramps.
Senator Oliver: Oh, my goodness.
Mr. English: It is 40 years old and it has outlived its useful life, and it was built for another purpose. When that Cogswell interchange was built, it was actually going to connect to the third crossing many years ago, but that whole area will be redeveloped in the future.
With respect to the third bridge crossing, I want to reiterate that we are talking about 20 or more years out for another bridge crossing in this area.
Senator Mercer: Unfortunately, for some of our colleagues this is pretty local stuff, but I would assume that in their study they took into consideration the redevelopment of the Shearwater lands, which will probably dump an awful lot of people at that end of the Dartmouth mainland side of Halifax and, again, probably driving that bridge south, which is not a bad idea.
Mr. English: Right. I hope that the consultants have taken that into consideration.
The Chair: Thank you very much for your presence here today. Feel free to send us more information if you have any.
Senators, we are now pleased to be able to hear from representatives of NSCAD University. We have before us Linda Hutchison, Associate Director of Advancement, and John Mabley, Vice-President of University Relations.
Linda Hutchison, Associate Director of Advancement, NSCAD University: Thank you very much, honourable senators. It is a delight and a privilege to be here and we appreciate the time that you are giving us. We would like to take a minute to introduce you to what we do at NSCAD, how it fits within the Atlantic Gateway strategy and how we see that we could possibly play a role.
At first glance, you may think that containers and art colleges do not have much in common, but we do. We are both world travellers, we have a global impact and we both navigate through very difficult waters.
Our foremost challenge is funding. NSCAD has just completed our 70,000 square foot Port Campus in space that is leased by the Halifax Port Authority. The campus serves as the anchor tenant for the revitalization plan for the seawall development, which is an arts and culture destination.
The Port Campus is a marvellous brownfield development positioning visual culture as one of the first lines of sight for the harbour entrance, including the streams of cruise ship visitors that come to our beautiful province. Our new ceramics facility is one of the best-equipped in North America. In addition, this campus is engaged in sculpture, woodworking, product design and rapid prototyping for the manufacturing sector.
From our Port Campus location, we attract hundreds to our continuing education programs and are engaging in the development of a high-end summer institute for the arts. Our students can almost touch the cruise ships as they are docked outside our three-storey glass curtain wall. Cruise passengers step off the boats and first see NSCAD University, then the Mary E. Black Gallery and the wonderful testament to immigration, Pier 21.
From an immigration perspective, NSCAD successfully attracts students from all corners of the globe, and once immersed in the culture of Atlantic Canada, many students decide to remain here and work within Nova Scotia's strong and distinctive cultural community. NSCAD is successful in attracting globally based on its significant international reputation for visual culture and research studies. Our school is recognized by all of the foremost museums, art institutions, collectors and galleries worldwide. Our influence in the visual arts dates back 120 years to when Anna Leonowens of The King and I fame founded the Victoria School of Art in 1887.
The increased global profile is a natural fit for an institution such as ours with students applying from all over the world. We have undergraduate and graduate students from Asia, Africa, South America and Europe. NSCAD was fortunate to meet this week in Ottawa with other members of our higher education communities, industry leaders and political representatives. The High Commissioner from Uganda was delighted to report to me that his son was a student with us.
Enhanced cultural links are a great benefit to our region. We applaud the Atlantic Gateway Business Case completed by InterVISTAS and would like to draw your attention to the community and social benefits of a successful Atlantic Gateway strategy.
Containers are the economic life blood of the Atlantic Gateway proposal, and we would urge you to consider the fit that NSCAD may have within the discussions around infrastructure developments. As both the physical plant located on Halifax Port Authority property and the visual arts university, NSCAD is a vital anchor for cultural commerce. We are not only advocates but also torch bearers for cultural industries in their region. We are committed to the Atlantic Gateway project and would wish to partner in its success. Thank you very much for this opportunity to share our excitement for the wonderful institution of national cultural significance.
Senator Mercer: I met with the President of NSCAD a number of months ago and he described the new campus on the waterfront. If I understand correctly, it backs right onto the old pier and is on the water, so its attractiveness is because of the lighting in the space. Is that right?
Ms. Hutchison: Yes, absolutely. It is three storeys of glass situated 10 feet from the water, so the view is spectacular. The cruise ships dock right in front of the windows.
Senator Mercer: Yes, we saw the building this morning. Currently, how many students are registered at NSCAD full time and part time?
Ms. Hutchison: We have approximately 1,000 full-time equivalents.
Senator Mercer: They come from all over the world and all over Canada?
Ms. Hutchison: Yes.
Senator Mercer: Do you have a breakdown as to how many would be Nova Scotians as opposed to from elsewhere?
Ms. Hutchison: I can certainly get those figures for you.
John D. Mabley, Vice-President, University Relations, NSCAD University: Roughly 50 per cent of our students are from Nova Scotia and 50 per cent are from elsewhere in Canada and the world.
Senator Mercer: My brother-in-law used to be a professor at NSCAD and taught painting, so I am a big fan. It is a great school.
Ms. Hutchison: Fantastic.
Mr. Mabley: Thank you.
Senator Oliver: You lease a large building from the Halifax Port Authority and you have started to refurbish that property. In your presentation you said that, in addition to trucks and containers, there really should in a development like this be an opportunity to have social benefits, and the community should have an opportunity to have some cultural links.
Ms. Hutchison: Yes.
Senator Oliver: That is something that your university would like to do. Have you considered an incubator mall at all? If so, do you have a vision of what would be available for those engaged in the container pier?
Ms. Hutchison: At this time, the structure we are using is a centre for cultural technologies, and underneath that umbrella are a series of incubation clusters. Some of them are located in the Port Campus to do with ceramics, rapid prototyping and that kind of thing, and the others are included in the film building which is also in a stage of growth.
Senator Oliver: Is the film building on the Halifax Port Authority property?
Ms. Hutchison: The film building is in the old Alliance Atlantis building on Sackville Street. It was a gift from Alliance Atlantis.
Senator Oliver: What university-sponsored activities would take place on the container pier where that building is located? In other words, what could people who came in with the cruise ships or others be able to see when there?
Ms. Hutchison: There are lots of opportunities. There is gallery space and there are public lectures.
Senator Oliver: Are students working on their crafts and art and painting and design?
Ms. Hutchison: Absolutely. Much of our students' work would be shown in the Mary E. Black Gallery next door. Our alumni are also represented in there, and from time to time Pier 21 does some displays as well. I have actually had a show there myself.
Mr. Mabley: When cruise ships dock just outside the curtain of glass, the passengers can see into the building and see art students and ceramic students doing what they do. Travellers have told me that this is a greeting or a welcome to Halifax that makes this a pretty unusual port of call. As you implied, there are many opportunities for us to make further use of that space for incubation and also to take advantage of that cruise traffic.
Senator Cowan: I have a quick question on statistics. You said earlier that you support the Atlantic Gateway council. Did you mean the Atlantic Gateway or the Halifax Gateway Council? We had a conversation earlier and I think there is a certain confusion in all our minds about the two.
Ms. Hutchison: I would admit to that confusion as well.
Senator Dawson: Which are you a part of, then?
Ms. Hutchison: We are part of everything that brings support for NSCAD.
Senator Mercer: It is a very exciting project. I cannot wait to get to see it when it is fully functioning.
Ms. Hutchison: Any time you would like a tour, just give us a call.
Senator Mercer: The campus itself is unique as it is in very old, historic buildings. Halifax had reclaimed them and turned them into an art school. What a great idea.
The Chair: Do the students mind having all the containers around?
Ms. Hutchison: Well, the containers are not directly beside us; they are not that close.
The students are engaged in being part of an industrial working community. It is part of living there. I think the students recognize the economic benefits as well as we do.
Mr. Mabley: Industrial arts.
Ms. Hutchison: Yes, and the very nature of the Port Campus is industrial because it is an old, refurbished warehouse space.
Senator Dawson: This is off the topic, but is the farmers' market proposal dead now?
Ms. Hutchison: No, I think it is being reborn. Actually, we would like to be involved in the discussion about the farmers' market, particularly around the green roof.
The Chair: Thank you for your presence here. We will keep this. I think it is very important to us to add the arts with the containers.
Ms. Hutchison: It works.
The Chair: That is a good change.
The committee adjourned.