Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 19 - Evidence, December 1, 2009
OTTAWA, Tuesday, December 1, 2009
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 5:32 p.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator Consiglio Di Nino (Chair) in the chair.
[English]
The Chair: This committee continues its special study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Appearing before the committee today is Chris Badger, Chief Operating Officer; and Duncan Wilson, Director, Communications and Government Affairs from the Port Metro Vancouver.
Port Metro Vancouver is Canada's largest and busiest port, a dynamic gateway for domestic and international trade and tourism and a major economic force that strengthens the Canadian economy.
The operation of Port Metro Vancouver involves many different enterprises, including cargo terminals, cruise terminals, industries requiring tidewater access, shipyards, tugboats, railways, trucks, shipping agents, freight forwarders, suppliers, builders and administrative agencies.
Are you impressed that I remembered all of that after having read it?
Gentlemen and colleagues, welcome. I understand that Mr. Badger will say a few words. Mr. Badger, you have the floor.
Chris Badger, Chief Operating Officer, Port Metro Vancouver: Thank you, Mr. Chair and honourable senators. On behalf of my executive and board, thank you for the opportunity to present to this standing committee today as part of its study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
In addition to being a key link in the national supply chain, Port Metro Vancouver is also a major contributor to the Canadian economy. We facilitate investment and access to markets, enabling our tenants to create jobs and contribute significant tax revenues to all levels of government.
Despite the current economic downturn, container traffic through Port Metro Vancouver is forecast to more than double in the next 20 years. This doubling means we need to maximize container throughput with velocity and efficiency. We are operating successfully today, and working to ensure Canada is in a position of strength and opportunity for the future.
I will address two main areas where the Government of Canada can further contribute to ensuring the long-term success of Canada's marine and transportation economy. First, we need the government's support to launch a national strategic framework for the expansion and improvement of Canada's transportation networks. Second, we need your continued support in positioning Canada optimally for benefiting as an Asia-Pacific country with strong links to all Asian and South Asian countries.
Building on the growing achievements of Canada's Asia-Pacific Gateway and Corridor Initiative, we believe the most significant initiative that the committee can recommend to support Canada's marine and transportation growth is the launch of a national transportation strategy: a framework for planning and guiding decisions about investment, policy, regulation and coordination of the needs and opportunities of the sector and the nation as a whole.
The Canadian Chamber of Commerce is advocating for the development of such a strategy, and we fully support this approach. They are calling for a strategy based on four pillars.
First is a North American vision that views the Canadian transportation system as a single, multimodal system with secure but efficient borders.
Second is multimodal transportation investment set out in a long-term plan that provides for a single window to streamline regulatory and approval processes, coordinated with provincial and territorial governments and leveraging public-private partnerships.
Third is a competitive regulatory and fiscal environment.
Fourth is sustainable development that analyzes all infrastructure and regulatory projects and weighs them against economic, social and environmental axes.
Transportation is a value-added sector with strong multipliers and pan-Canadian regional benefits, but Canada's national transportation networks need to be fully integrated and require an integrated planning approach.
Opening up capacity in one link of the chain, such as infrastructure investment in isolation of the wider strategy, is insufficient. Optimizing the investments, when and where they are needed, is essential to ensure our infrastructure can support the type of growth we can truly realize as a nation.
National coordination of that investment is essential. There is no sense building new port terminals if we do not have the road and rail links to move cargo quickly and efficiently through our gateways to and from destinations around the country. It is a network that requires a strategic approach.
Creating a Canadian vision within a North American context is essential as a guide to ensuring investment and growth that is economically, environmentally and socially sustainable. We believe this vision includes recognizing and considering the impacts on those communities most directly impacted by national projects intended to benefit Canadians as a whole.
A national transportation framework will afford the federal government an opportunity to streamline and reform regulations, integrating and rationalizing processes while still protecting the environment and ensuring sustainability. Often we are charged with following overlapping regulations, creating needless redundancy in approval and administrative efforts and, in some cases, regulations that are mutually incompatible.
Without question, these situations are unintended consequences. Officials and legislators often work with broad common goals, but without the benefit of coordination. This situation creates a burden on the marine and transportation sector and on the Canadian economy as a whole.
The challenge of lack of integration of federal and provincial processes is a well developed topic, but it is worth repeating that the impact on Canada's competitiveness is real. Development of a seamless, coherent, predictable and integrated set of regulations helps with efficiency, environmental protection and financial bottom lines. It also helps support a stronger economic benefit for Canada. That set of regulations can only serve to instill confidence with all our trading partners.
In addition to the Canadian Camber of Commerce`s ideas for the national transportation strategy, there is presently a lack of operating certainty due to the absence of signed treaties with First Nations. Port Metro Vancouver has begun to make significant strides with our local First Nations, including the development of joint ventures. We believe there are many opportunities for shared benefits. However, federal advancement of First Nations treaties, in partnership with the Province of British Columbia, will aid us greatly in exploring these options.
Asia represents great potential for Canada's maritime economies. The committee returned recently from China and has a strong appreciation for the market size, scope and opportunities it can offer Canada. As Asian and South Asian appetites for products continue to grow, their need for Canadian natural resources and other products will increase. Their hunger for world trade is evidenced clearly by the expansion of their ports.
Building relationships is a fundamental element to the development of the Asian market. The existence and marketing of a resource is not sufficient. Protocol in Asia is clear: Personal, sustained and respectful relationships at the most senior levels are necessary before the full potential of the Asian market can be reached by Canada.
We have already begun to see our competitors increase their efforts to build relationships. Investing now in the development of a stronger relationship pays dividends quickly and will provide long-term benefits to ports and Canada in general.
Any threat to reliability — perceived or real — has significant consequences on the market's faith in our ports. Consider our labour relations. Over 60 collective agreements are in place at the port. We have had more than our fair share of labour management disputes that have either threatened to shut down the gateway, disrupted the supply chain or completely shut it down.
If Canada is to optimize the investments they have made in the gateway, we cannot let parochial disputes between labour and management threaten to shut down Canada's international trade. A damaged reputation manifests as doubt in our customers and results in cargo diversions away from our ports. Ensuring industry fully comprehends the impact of this culture of instability is the first step toward a reliable approach to labour.
In closing, we look to the committee for leadership in the creation of a national transportation strategy that will serve as a framework for future growth across the country, and we look to you to continue to ensure we leverage our relationships with Asia to our greatest ability. This study is one great example.
Addressing the issues I outlined today is integral to Canada's success in the global supply chain and for the Canadian economy. We have a great opportunity before us, and I thank you, the committee, for allowing me to address you today. I look forward to your questions.
The Chair: Thank you, Mr. Badger. I am sure that you and Mr. Wilson know that during our visit to China a couple of weeks ago our committee paid a visit to Hong Kong and the Hong Kong International Terminals, which left us with a positive impression.
I mention that trip so that those watching us at three in the morning a week or so from now will understand some of the questions that may come up.
Senator Dawson: I will not ask questions about China because I was not there. I will leave those questions to my colleagues who had that good experience, of which I am jealous.
I am in a bit of a conflict in that I am a big fan of Vancouver. The Standing Senate Committee on Transport and Communication completed a study on containerization. I visited the ports of Vancouver and Prince Rupert. The possibilities for growth of exports in the Pacific Gateway are fantastic.
The fact that the CN bill is currently being debated in the other place, as we call it, illustrates how such a temporary setback will cause problems for months. The ships are either on their way here or are waiting to pick up cargo. This type of problem has an enormous economic cost to Canada.
One conclusion of the containerization study was that we are sending empty containers back to Asia. Although there is a short-term decline in the industry right now, growth will continue for the next 15 to 20 years. We must have better inland ports so that we can fill those containers with something. It can be specialized grain or any other kind of product. Canada should use that available transport to make an economic loop.
I want you to expand on the relationship between the ports and the railways. You talked about the relationship between the provinces and the federal government, but in a pragmatic way this area is a federal jurisdiction. How can we help you convince the government that there has to be a national transportation policy? We cannot let the port side of Transport Canada deal with the rail side of Transport Canada and not understand that there is a necessity for better communications between those entities.
Can you elaborate on that part of the problem?
Mr. Badger: Yes, indeed; there are two things worth addressing. First, from a commercial perspective, over the last months and years we have tried to achieve a more collaborative approach between the various sectors of the supply chain, be it the terminal operators, the trucking industry, the rail companies or the shipping lines.
To a certain extent, that approach is working well. However, at the end of the day, every sector of the supply chain has its own best interests at heart. The sectors exist to make money for their shareholders and investors. There is a need for government to continue to be involved in that collaboration, and that is part of what we believe can be addressed through a national transportation strategy; understanding that the whole is greater than the parts, as it were.
A rail review study is under way currently. We fully support that study with Transport Canada and we are inputting as much as we can into the study.
Senator Dawson: One conclusion of the report was that part of the problem has already been solved with the amalgamation of Vancouver. However, we still have to look at the Pacific Gateway as Prince Rupert and Vancouver. How is that part of the equation developing? Is there better cooperation than in the past?
Mr. Badger: Yes, senator, I believe that is the case. It is becoming apparent that Prince Rupert and Vancouver are going after different markets. Vancouver is going after the Canadian market primarily. In fact, 95 per cent of what moves in or out of the port is Canadian goods. Prince Rupert's market is the U.S. Midwest market. Working together, we think we are developing a successful gateway on the West Coast that is good for the economy and also good for Canadian trade.
The Chair: I have a question of clarification on your last point. I understood Senator Dawson to ask whether there is cooperation, competition, or friendly competition. Is there anything we should know for the recommendations that we make in our report that will benefit both ports?
Mr. Badger: We think that the concept of a national transportation policy will benefit both gateways. Yes, we have friendly competition, which we think is good for the system. We have terminal operators that compete for the business, and we think that competition is good, and we have railways that compete for the business.
However, in the areas in which we are looking at the benefit for Canadians, we try as much as possible to work together.
[Translation]
Senator Fortin-Duplessis: As the chair said earlier, during our fact-finding mission to China, we visited Hong Kong International Terminals, the flagship operation of the Hutchison Port Holdings Group, at the Kwai Chung Container Port.
We were impressed by the use of modern equipment, computerized management systems and award winning information technology applications in order to optimize efficiency, expedite the handling of cargo and containers, increase productivity and improve cost-effectiveness.
How is Port Metro Vancouver using new technologies and computerized management systems in order to enhance its services? And what initiatives are being planned for the future?
[English]
Mr. Badger: Hong Kong is one place we visit regularly, because we believe, as a gateway, that we can learn from other gateways around the world. In many cases Hong Kong sets the stage for much of what happens around the world.
We are doing a couple of things similar to what they are doing in Hong Kong, one of which is unique to Canada. As Hong Kong has, we try to utilize security requirements also to improve operations. In Hong Kong, you probably saw the radiation detectors and the gamma ray machines that look at the inside of containers. That technology has also been implemented in Vancouver.
We also have used a lot of electronic systems to move trucks more quickly through the port. Again, Hong Kong is famous for its ability to move trucks through its terminals. We have used similar initiatives at our terminals, including radio frequency identification and optical camera identification for registrations on trucks.
One thing that we are doing differently in Canada, which we think is unique, certainly in North America, is the development of a monitoring system that monitors the whole supply chain. Rather than look at what is happening in the port, we are trying to monitor what happens on the rail, what happens on the ships, et cetera. We are setting standards for dwell times of containers, for the movement to trucks, the dwell times of trucks, and also the arrival and departure of ships. We put that information on a website, which allows all our stakeholders and customers to see, on a day-to-day basis, how our port is doing. We believe that bringing visibility through technology into our system allows our customers to make real-time decisions on the movement of their cargo, and also shows how well we are performing as a gateway with regard to movement of goods.
[Translation]
Senator Fortin-Duplessis: Do you use information systems allowing you to locate a container very rapidly to load it on the ship? We saw this in Hong Kong and it was very impressive.
[English]
Mr. Badger: Absolutely; the use of technology for moving containers particularly is advanced. Through systems like radio frequency identification and optical identification, we identify containers to see where they are in the container yard and then to move them quickly and efficiently either to rail or to truck in and out of the port.
Of course, Vancouver is also a bulk port. A lot of what we move through our gateway is Canadian commodities moving in bulk offshore, unlike Hong Kong, which is primarily container. A lot of technology also is used there for the efficient movement of goods such as grain, coal, sulphur and potash from trains and onto ships and then off to market.
Senator Wallin: I have a couple of questions to follow up on my colleague's question.
From our notes, it says you have 600 kilometres of shoreline, 1,000 hectares of land and 16,000 hectares of water. How do you assess your state of readiness when it comes to dealing with security and potential terrorism?
Mr. Badger: Obviously, with an area that large, we have to rely on technology to see what is going on. We have hundreds of cameras that we utilize around the port to see what is happening in the port and also, we use Global Position System, GPS, on our vessels to track vessels. We have a tracking system that shows the position of all foreign- laden vessels and coastal vessels in the port at any one time. A lot of sophisticated technology is being used.
In addition, we received monies through the stimulus funding to build a new state-of-the-art integrated port operation centre, and that will allow us to bring all that technology into one place and monitor the port on a 24-hours- a-day, 7-days-a-week basis. It will also improve our ability to respond to customer needs on a 24-7 basis.
Senator Wallin: When will that centre be up and running?
Mr. Badger: The stimulus fund requires it to be by the spring of 2011. It will be ready at that time.
Senator Wallin: With 60 collective agreements — which is a stunning figure to us — that you operate under, it leads me to follow up to with this question. How difficult does that number of agreements make what you are trying to do on both security and efficiency fronts? It is more a comment than a question. How can you run a business with 60 collective agreements?
Mr. Badger: The fact is that we run it fairly effectively. In most cases, these collective agreements move fairly smoothly through resolution. However, it has been, and continues to be, a challenge.
When we go back to China and Asia, which we do on a regular basis, we are constantly asked one thing: When will we improve our reliability? In that, they are asking particular to our rail reliability but, most importantly, our labour reliability. We have a reputation in Asia for being unreliable when it comes to labour relations, and that is a real challenge for us. We believe there is probably a better mechanism that can be utilized, and we hope those sorts of things will be looked at in the future.
As a gateway, we do well for, say, nine months of the year and then end up with a bit of uncertainty because a collective agreement has a huge impact. Right now, because of what is happening, we see cargo diverted from our port to other gateways because of the uncertainty that the present disagreement in the railways is causing us.
Senator Wallin: To circle back on the security issue, then, what is the impact on security? We see these issues at other border locations, whether it is hours of work or the danger associated with work. Are you seeing any specific security issues that arise?
Mr. Badger: No, absolutely not; I think we should be proud of the security we have in our gateways. Canada took a collective approach to the development of security through the international regulations. We should be proud of the security we have. It does not mean we cannot improve, and we are continuously striving to improve. Labour relations have not had an impact on our security that I am aware of.
The Chair: For clarification on a point you made, I believe you said that the current rail dispute is already impacting on your business in a negative manner. Is that correct? Is that what I understood you to say?
Mr. Badger: That is correct.
The Chair: Thank you.
Senator Jaffer: I have a number of questions following from what my colleagues have already asked. First, I will go to the security issue. It is good to hear that you are confident about the security issue. If I am not mistaken, it is coordinated now, right? You do not have separate port police or separate security. Is the system in Vancouver integrated with the other security personnel, or am I mistaken?
Mr. Badger: I think it is a fair assessment to say it is integrated. There is a role for a number of agencies, including ourselves, to play in the security of the port. We are tasked with the overall perimeter security of the port, and obviously, organizations like Canada Border Services Agency look after what comes in and out of the port and Citizenship and Immigration Canada looks after people. That approach is an integrated approach.
One of the many positive aspects that comes out of the upcoming Olympics is we have staged three major exercises in the port over the last few months, and those exercises have allowed all agencies to work together in ensuring that we have a secure gateway.
Senator Jaffer: The way I understood it, to be clear, you are responsible for the area but CBSA and other federal security groups are responsible for what is in the container; what comes in and what goes out. Is that correct?
Mr. Badger: That is correct.
Senator Jaffer: As well as immigration, of course. The other question arising from the questions asked is, if we compare Hong Kong and Vancouver, are we there yet? How much further do we have to go? I am talking technology- wise. As you have heard from us, we were impressed with what exists in Hong Kong. Obviously, we are greedy and want that technology in our country as well. We want some idea as to whether we are there yet.
Mr. Badger: I think we can be impressed with our gateway as well. There are areas where we can learn from Hong Kong. One of them is on the productivity side, Hong Kong's ability to move containers. I will use an example. The number of containers per acre per year in Hong Kong is significantly higher than it is Vancouver. With that said, our containers per acre are significantly higher than our competitors in North America.
In Hong Kong, they have a constrained area, and they compete hard with mainland China. For that reason, a lot of initiatives come out of there. The fact they are able to move so many containers through such a small space is something worth watching. It is one of the areas that we have a problem with in Vancouver. We also have a constrained area and, therefore, our ability to mirror what they are doing as we move forward will be important.
If I can pause for a second to give an example, we are about to open the third berth at Deltaport. This berth is the third in our major container terminal. On that terminal, there will be quad container cranes. That crane means operators can lift four 20-foot containers at one time. That crane basically quadruples the efficiency of the ability to move containers on and off the ship. That kind of technology has been tried in Asia and has proven to be successful, but we are the first port in North America to utilize it.
Senator Jaffer: When we were in Hong Kong, one thing we heard was the partnerships the port has built with South Africa and Tanzania, to name a few. Are you canvassing any kind of partnership with that port, such as with Cosco? Are partnerships in the works?
Mr. Badger: I would say the port is being built on partnerships. Stepping back, we have a number of sister ports around the world, I think three in China alone, where we trade information and personnel with from time to time. We are building up that relationship, which we believe is important.
Also, we have partnership arrangements in the way we develop our terminals. We have one internationally renowned terminal operator and one North American renowned terminal operator looking after two of our terminals.
Whenever we are building or participating in building any infrastructure, we look for strong partnerships. More and more, those partners are international.
Senator Jaffer: You talked about reliability. The biggest challenge the port has had is to ship goods on time. As long as I can remember, labour unions and railways have been a challenge. You are dependent on many people. Reliability is the biggest problem for the Vancouver port.
You talked earlier about Aboriginal issues. You started to say something and did not finish. I do not want to put you on the spot. You had ideas on how to improve reliability. If you want to give us a written answer later, that will be fine. It will be interesting to see if we should make recommendations.
Mr. Badger: I believe that the issue of reliability comes down to the collective bargaining process. We can show, through our monitoring and measuring, that we have continuous improvement in reliability, for example, in the turnaround time of containers, ships or trucks. That is a continuous improvement process, which we think is working successfully.
We can be efficient for nine months of the year. If we are under threat of strike for three months of the year, this issue is the most significant issue we have currently. If that issue can be resolved, we will take our place — where we should be — as one of the most efficient and reliable ports in the world.
Senator Stollery: You told the committee that Prince Rupert deals with the American Midwest. I found that surprising. I have been in Prince Rupert only a few times and have taken the train from there to Edmonton. It seems odd that they would send products there. What is the story in that relationship?
Mr. Badger: The marketing strategy Prince Rupert has taken seems to be appropriate — go after the U.S. Midwest. It is not to say they will not compete with certain Canadian cargoes. Again, we think this competition is healthy.
Prince Rupert is closer to Asia. Ships take less time to come to Prince Rupert where they can load a train and move it directly to Chicago. That strategy has proved effective for them.
Senator Stollery: I have not been in Prince Rupert for a while and have not seen the changes that have taken place.
Whenever I go to Vancouver, I watch the port. I am a runner and I am always running around Stanley Park. You cannot help but notice the big sulphur pile.
The container port is at Tsawwassen. The committee has been in Shanghai, which is said to be the largest container port in the world. I think Shenzhen and Hong Kong together rival the container space. I also spend time in Panama, so I am used to a lot of container traffic.
Consider that Prince Rupert is closer to Asia than Vancouver, but Vancouver is closer to Asia than ports on the U.S. West Coast. When I am in Vancouver running around Stanley Park, I do not have the impression of a large container port. I am sure there is a reason for that impression. Maybe I simply do not go to the right place.
Why do I not have the impression of a container port? I am not being critical of you. It is simply not obvious to me where this container traffic takes place.
Mr. Badger: First, we should coordinate our running. I run in Stanley Park as well, so we should go around it together sometime.
Second, our container facilities are split. The largest is at Roberts Bank near the U.S. border in Delta near the ferry terminal. We also have two container facilities in the inner harbour and Burrard Inlet that move many containers every year.
One thing that surprises everyone is how balanced our container movements are through Vancouver, which is why Vancouver is performing well in our view. What do I mean by balanced? Senator Dawson mentioned that empty containers often return to Asia to be filled with commodities. Currently, Vancouver is completely balanced. Our situation allows us to take the containers that have been emptied of imports and have them "restuffed" with Canadian goods to ship offshore. In fact, we are balanced 50-50. That balance is one of our competitive advantages.
I hope the reason you do not see many container ships is that we try to move containers quickly. Therefore, you do not have the chance to see them sitting around.
Senator Stollery: I am sure this experience has also happened to you. I have known Hong Kong for many years. Suddenly, we pass this massive container port on the way to the new airport that we never saw before because we did not travel that route. We think it is unbelievable, particularly when another container port is nearby on the Pearl River at Shenzhen. That port makes everything else in the world look a little smaller.
Senator Mahovlich: We were impressed visiting the port in Hong Kong. Senator Fortin-Duplessis mentioned that The Hutchinson Group runs the port. They run their technology in computerized ports around the world. I think they have 10 or 12 companies involved.
Have the ports in Vancouver or Prince Rupert been approached by The Hutchinson Group?
Mr. Badger: Yes, we have. We have realized for a number of years that we have to build another container facility in Vancouver at some point. Therefore, we sought expressions of interest. We were comforted that a number of good companies bid in the process.
The company that we chose to negotiate with is APM — a sister company of Maersk Line — and SNC Lavalin. However, The Hutchinson Group was one of the companies involved in that process.
The Chair: Before I go to a second round of questions, you talked about your list of recommendations for the Government of Canada and the provinces. You mentioned that a national transport strategy is at the top of the list, and labour disruption is potentially one problem issue that can impact your profitability.
This is an opportunity for you to have an impact on our report. Are there one or two others that you want to highlight?
Mr. Badger: We will stick with the two items. We do not want to dilute the importance of those two, but thank you, chair.
[Translation]
Senator Fortin-Duplessis: The Port of Angeles Port encompasses about 3,800 hectares and 60 kilometres of waterfront. It also has 27 cargo terminals including dry and liquid bulk, container, breakbulk, automobile and omni facilities. It handles almost 190 million metric revenue tonnes of cargo annually. To what extent does the Port of Los Angeles compete with Port Metro Vancouver for the same market and the same clients?
[English]
Mr. Badger: We compete with Los Angeles and Long Beach for container bids. We are making sure our Canadian business remains in Canada and, where we can, we try to pick up some of the U.S. business as well. The majority of the goods that we move through our bulk exports are coal, grain, potash and sulphur. Generally speaking, we do not compete with Los Angeles on those cargos. However, we compete with other ports on the West Coast of the U.S., including Portland, Seattle and Tacoma, particularly in areas like fertilizers, which can be diverted to those ports if we are not offering the kind of service they expect in Vancouver. There is competition between us, but primarily, for LA. Long Beach, the competition is on the container side.
[Translation]
Senator Fortin-Duplessis: What advantages, such as services, access to markets and commodities moved does Port Metro Vancouver have over the Port of Los Angeles? And what are Port Metro Vancouver's disadvantages relative to the port of Los Angeles?
[English]
Mr. Badger: I will start with the disadvantages. Clearly, we are seen as less reliable than the U.S. ports, which is surprising in some cases considering it is the same longshore union south of the border as it is in Canada, the International Longshore and Warehouse Union, ILWU. We are seen as less reliable from that perspective.
On the positive side, on a productivity basis, we are seen in many cases as more productive. The implementation of the Asia-Pacific Gateway and Corridor Initiative is being carefully looked at by American ports. In fact, the ports recently banded together to call themselves a gateway with the intention of looking at similar infrastructure development in their facilities as well. They see Western Canada as leading in that area. Right now, that productivity is probably one of the primary competitive advantages we have as a gateway.
I also mention that we are a balanced gateway when it comes to containers, meaning as many exports go out as imports come in through container; something that is not enjoyed by the U.S. ports.
[Translation]
Senator Fortin-Duplessis: Thank you very much. This was my last question.
[English]
Senator Downe: You highlighted in your presentation this evening the importance of labour relations. What is the current state of your labour relations?
Mr. Badger: Senator, we have one situation at the moment with CN and their engineers. We have another collective agreement coming up with the ILWU, which expires early next year. That agreement was ratified only this year, but because it took so long, it expired at the end of this year and will go into negotiations again next year. At any one time, we can expect to see at least one or two collective agreements under negotiation.
Senator Downe: You have 60 collective agreements.
Mr. Badger: That is our estimate.
Senator Downe: Do they all expire in the same time frame, or do they expire at different points of the year or in different years?
Mr. Badger: They expire at different times of the year and in different years.
Senator Downe: Obviously, as you indicated earlier, the number of agreements is a problem. Are you taking any action to try to consolidate those agreements into fewer agreements?
Mr. Badger: We do not have that ability because we do not control the collective agreements, but we support the concept of alternative dispute mechanism. We believe that the supply chain needs to have that kind of reliability, and that is something we think needs to be considered strongly.
Senator Downe: What is the major issue with the workers at your port? Is it wages, benefits, a combination, or is it unique to each agreement?
Mr. Badger: It is fair to say it is unique to each agreement. I am not that close to the issues, but I believe the one at the moment is around hours of work as well as wages.
The Chair: To follow up, have you had any serious problems with labour disruptions and, if so, when was the last serious problem that impacted in a major way the operation of the port?
Mr. Badger: Prior to this one, the last one was early this year with the ILWU foreman when there was a concern there would be a strike. It is generally the concerns — the unknown — that cause most of our problems, because that period usually lasts longer than the strike itself.
For example, we go back to Asia once a year with our report card and explain how we are doing. I was giving the report card in November last year and, as we finished, there was the potential of an imminent strike in the port. This time, our CEO went to Asia to give the report and, as soon as he finished, there was a potential for an imminent strike at the port. We face these challenges as a supply chain every year.
The Chair: It sounds as though you have been able to manage the situation well.
Mr. Badger: It is affecting our reputation. When we go back, every time we meet with a customer, the first thing they talk about is the unreliability of our gateway. We have to be concerned about that situation.
Senator Downe: Given that we have freedom of negotiations for labour unions, do you have any suggestions on what should be done about your labour problem?
Mr. Badger: We believe we should look at alternative dispute mechanisms. For example, the B.C. coast pilots are an integral part of our gateway or supply chain. The pilots are the qualified captains that move all deep sea ships in and out of the port. A few years ago, they went to final offer selection. That has proved to be successful. We do not suggest that is the only way to solve the problem, but mechanisms like that should be considered.
Senator Jaffer: On the same topic, I am not sure if I received an answer from you. You had ideas on how to improve this situation. You talked about dispute resolution, but I am not sold, having worked in that system. There is still a dispute, and they have to resolve a dispute, and that still leads to reliability issues. Earlier, when you made the presentation, you said you may have other ideas on how to improve reliability. If you do not have them today, you can always send them to us in writing.
Mr. Badger: We would love to provide you other information on that issue.
Senator Dawson: The reality is that the employees are not employees of the port, so we have the shippers and the people that manipulate, et cetera. That is where having a national transport policy would help, to say: Do not look at those issues as being individually something that the port can solve; it is not really their responsibility; it is the responsibility of the people using port.
That being said, that issue is part of looking at the subject from a global perspective, as far as our report is concerned.
In the non-container field, we went to Russia, and China. Are pork and beef carried through your port facilities?
Mr. Badger: Absolutely; there is obviously an increasing market particularly for beef and pork from the prairies, and that market has been growing over the years. That market is usually a refrigerated container market. In fact, one of the challenges we had this time last year when things were looking good, or in the middle of 2008, was a lack of refrigerated containers because the market was so strong. Those issues have to be looked at when this market comes back.
Senator Dawson: Does that market include both Russia and China?
Mr. Badger: Primarily China.
Senator Dawson: Do you foresee a period in which India can be a market for you, versus India using the Atlantic Gateway, if I can use that expression?
Mr. Badger: India ranks about seventh or eighth in our trading partners on the West Coast. The real pivot point in Asia is around the Strait of Sumatra, and Strait of Singapore. Generally speaking, if all things go well, anything west of there prefers to use the East Coast of Canada, and anything east of there prefers to use the West Coast of Canada.
There are people at Halifax Port Authority who have more knowledge than I do, but I suspect Halifax will be a key gateway for Indian subcontinent products in the future.
Senator Stollery: We have had, over the years, much testimony from various sectors — as you know we are also the International Trade Committee — about our trade statistics.
We have often heard that trade statistics are not accurate because many Canadian exports — instead of being exported through, say, Vancouver or Prince Rupert — go to Seattle and then are re-exported. Then they show as exports to the U.S. when, in fact, they are in transit through Seattle.
My impression, from listening to these people over the years, is that Seattle is a major competitor with Vancouver. Listening to these people, my conclusion is that there are blockages in the Port of Vancouver for some reason, and so shippers use Seattle. Is that conclusion correct? That is the obvious conclusion one would draw. Why can we not obtain our figures even though shipments are going through Seattle? I realize that question is not your department.
Mr. Badger: We also keep an eye on those figures. We think ours are robust. Right now we estimate that only a small fraction of Canadian goods are moving through Seattle-Tacoma. Having said that, we should not sit back on our laurels on that issue.
In the early to mid-1990s, about 40 per cent of Canada's West Coast container trade went through Seattle-Tacoma. We have managed to bring that back through competition, but Seattle-Tacoma are strong competitors. Right now, as you are probably aware, those ports are suffering far more than we are, so expect that competition to become even stronger in the future.
Again, our importance as a reliable gateway will increase in the next few years.
The Chair: We spoke about technology a little while back. Are we as advanced or more advanced than our competitors in that area?
Mr. Badger: In the use of that technology, we are on par with our competitors, certainly our North American competitors. As you know, the technology changes quickly, and keeping abreast of it can be a challenge.
I think there are areas on which we will focus in the future. That focus will be around the area of truck movements and the ability to use technology to improve our truck turnaround times in the port. There are a number of reasons we think that focus is important.
Clearly, that focus is good from a trade perspective, but also from an environmental and a community perspective. When we look at the concerns the community has for what is happening in the port, truck traffic is high on the list. If we can use technology to improve the turnaround times to reduce congestion and wait times, and to reduce the number of trucks in the Lower Mainland, that improvement will have a significant benefit not only to our business but also to our local communities.
The Chair: Should government be playing a role in that development of technology?
Mr. Badger: I will say, yes, I believe there is the case. The federal government has some initiatives right now that many of our customers and stakeholders have access to, Smart Corridor initiatives being one of them. That initiative is one of the areas that we are supportive of, and hoping to benefit from as well.
Senator Mahovlich: Does Hong Kong have a problem with their trucks? It did not seem to me that they had a problem. Their trucks were coming in and going out. The timing was right on. I think this group, with their technology and computerized systems, has the answers.
Mr. Badger: I do not disagree. I think, though, beyond the technology, it is a fact that the Hong Kong government has a coordinated approach to the way trucks move. The government sees the approach as something that must happen. Much of the truck movement comes across the border from Mainland China, so the government ensures it is well coordinated.
Senator Mahovlich: The Chinese are working with the Hong Kong piece.
Mr. Badger: That is correct. If the trucks ever break down, even for an hour, the backlog in Hong Kong can be dramatic.
The Chair: Thank you, gentlemen. Our colleagues all seem to be satisfied. Thank you for coming to visit us this afternoon. You have given us much food for thought. We extend to you not only our good wishes but our appreciation for your contribution to these hearings.
Mr. Badger: Thank you very much.
The Chair: Colleagues, if you can stay for one moment we can let our guests and presenters leave and then take a couple of moments to discuss the draft Russia report. A number of you have made comments, but not all of you.
I do not know if the committee wants a little extra time. We can go in camera and deal with some of the issues today. I will make a suggestion that tomorrow we take half an hour or 45 minutes at four o'clock when the Senate rises. We can meet in camera for the sole purpose of discussing commentary on the report, which we can then have included in a second draft to be given to us as soon as possible. If we want a report before the Senate rises, we should have it no later than next Thursday.
Senator Stollery: Several things are happening at this moment that we all have to rush off to, and so we will look at the commentary tomorrow at four o'clock. That time line seems reasonable, and it gives everyone more time et cetera.
The Chair: I will call a meeting tomorrow at four o'clock, which should last no longer than 45 minutes. Please send comments if you cannot be here.
Senator Downe: I received — and some other members did as well — a letter from the chair of the Russian foreign affairs committee, I believe, who wants to follow up on an invitation to visit Canada. I assume, on behalf of everyone, you will respond.
The Chair: I am responding. I think he also suggested — I am trying to remember if it was in that letter — that I should make a strong recommendation to the Prime Minister's Office and those in charge of the G20 to extend possibly an invitation to the foreign affairs committees of the countries involved, to participate in side meetings during the G20. I will look into that suggestion as well.
Senator Stollery: May I add to Senator Downe's comment that, considering Russia is now using the Canadian dollar in their basket of currencies to protect their reserves — as they announced this week — that announcement makes it even more important that we follow up on this letter.
The Chair: Thank you. Colleagues, I appreciate your time. The meeting is adjourned.
(The committee adjourned.)