Major League Ambition

Halifax has been a player and leader in the container terminal business for nearly half a century, having opened one of the first container terminals on North America’s east coast back in 1969 — Halterm in the city’s South End. Thirteen years later, in 1982, a second was opened in Fairview Cove in the North End — Ceres.

It’s a different story today however. Halifax must play catchup.

Time is getting tight for Halifax to join rivals like New York which are now servicing truly giant container ships.

CN Executive Vice President of Marketing Jean Jacques Ruest told the Halifax Examiner that “As things get bigger and bigger, we’ll get left behind because all these projects take years before the construction.”

Ruest says Halifax must have a terminal ready to handle the giants within three years — five years at the very latest — to compete.

It’s not about prestige. It’s about business. Big business. According the Halifax Port Authority website, more than 12,000 jobs and $1.7 billion in economic activity are tied to the port now. And they’re good paying jobs, on average over $45,000 according to the HPA —  almost 30 per cent above the provincial average.

According to the Port Authority, a single container has a $25,000 impact on the province’s economy and one seafood container $75,000.

Halifax’s two container terminals moved 480,000 containers in 2016 and is on track to shatter that number this year. But keeping or growing that business may well hinge on Halifax developing a huge terminal capable of handling the colossal new ships.

Competing ports increase capacity while Halifax lags

The starting size of the giants is about 10,000 TEU.

A TEU is a unit of measurement in the shipping world. It means “20-foot equivalent unit,” hence TEU. Containers come in different lengths but back in the mid 1950s 20-foot boxes were initially used and so ISO set it as the industry standard for measurement.

This summer, the urgency to have a bigger container terminal in Halifax became obvious.

For the first time, the American East Coast ports of New York, Savannah, Norfolk, and Charleston celebrated the arrival of a ship 40 per cent larger than the biggest one ever to call in Halifax.

When the 10,000-TEU ZIM Antwerp called on Halifax in late June, it caused quite a stir in Halifax, but two months later when CMA CGM’s 14,000-TEU Theodore Roosevelt sailed under New York’s recently raised Bayonne Bridge it was the talk of the shipping world. Years earlier, New Yorkers decided to spend $1.3 billion (US) to raise the bridge. Decades before, President Bill Clinton launched a $1 billion (US) project to deepen New York Harbor. Savannah and Charleston likewise prepared years ago for the arrival of the big ships.

For decades, New York has been a Halifax rival. Ships heading to North America from Europe would drop off containers in Halifax to lighten up before heading to New York and on the return to Europe, would top up in Halifax. New York’s harbour was shallower than Halifax’s.

Additionally, ships calling on New York had height restrictions because they had to sail under the Bayonne Bridge to get to the terminals. It had the same air draft as the Macdonald Bridge in Halifax. New York has now fixed its problems.

Halifax has five of the six elements needed to compete with New York and attract the big ships:  harbour depth, gigantic post-Panama cranes, skilled labour to operate them, CN rail directly into the U.S. Midwest, and associated infrastructure. Plus, it’s two sailing days closer to Europe.

Ruest explains what Halifax doesn’t have and must get to stay in the game. “You may have big cranes. You may be able to offload the ship. So how much acreage and how much track do you have behind those cranes?”

The CN executive says the boxes have to be on rail cars headed to Montreal, Toronto, Detroit and Chicago within three days. Ruest says without enough terminal space and rail, there will be congestion. That spells delays getting the goods to market.

Halifax does not currently have the terminal space for more rail and thousands of more containers. Still, Ruest is optimistic “There is a good business case for building a port in Nova Scotia that would address these bigger ships. Ones that we would like to attract instead of going to the U.S. East coast.”

Ruest included Melford at the Canso Strait and Sydney in his remarks but says it would be up to the owners of the Cape Breton and Central Nova Scotia Railway, Genesee and Wyoming, to rebuild the line so that it is capable of handling double-stacked containers and meet up with CN at Truro, an enormous expense that Halifax doesn’t have.

Ruest also noted that each proposed terminal would have different capital costs to deal with. Neither Melford nor Sydney has a terminal. In addition to the cost and time for constructing a terminal, it takes up to two years from the time of placing an order for the big cranes to receiving them.

After nearly half a century in the container terminal business, Halifax also has built up all the other infrastructure needed.

For close to 30 years Halifax competed against New York and Montreal. It was the number two container port in Canada. It’s currently number four. Although Montreal does about double the business of Halifax now, it simply cannot compete for the big ships. The Saint Lawrence River isn’t deep enough.

So, according to Ruest, if Halifax is to get back in the game, it’s got to ante up. Pick a site. Build. And do it soon.

The missing Port Master Plan

In 2016, the Halifax Port Authority hired WSP Parsons Brinkerhoff to be the lead in developing a Master Plan for the port. That plan was expected to be released in early 2017 but here it is fall and there’s still no plan.

Meanwhile, the HPA has been shopping around the harbour south of the Angus L. Macdonald bridge for a block of land large enough to build a huge container terminal. Currently Halifax’s two existing terminals are just over 30 hectares each.

Halifax Port Authority President Karen Oldfield says “there are numerous sites around Halifax harbour that would serve as potential …” for such a container terminal or other port business.

But in fact there are precious few sites where that much undeveloped waterfront acreage is available as a block.

Dartmouth waterfront

The Port Authority looked at the military’s Shearwater air base. We were told by DND spokesman Evan Koronewski in an e-mail on Thursday that “there are currently no plans to divest any land from 12 Wing Shearwater to the Port Authority of Halifax.”

The HPA cast its gaze a little further along the Dartmouth waterfront to Exxon Mobil’s old Imperial Oil refinery site.

In late August, port officials told Halifax Regional Council during an in-camera session that they had their eye on the 160-hectare refinery site.

Asked if it is a realistic proposition, Halifax Port Authority Board Chairman Hector Jacques responded, “I can’t say. Our Board hasn’t made any decision yet.”

Asked how much of the 160 hectares the port would like, HPA President Karen Oldfield replied, “that’s all very much under review, analysis, consideration. I think its far too premature to hazard a guess and any guess would be just that.”

Exxon spokesperson Merle MacIsaac told the Examiner in an e-mail that “Imperial continues to dismantle and remove surplus equipment from the former refinery site.”  And then without actually saying it, seems to close the door on the Port by stating, “We expect remediation to take place over the longer term. We have no plans to redevelop the land previously used for refining operations.”

Harold Kenny, who won a U.S. Environmental Protection Agency Phoenix Award for handling remediation of the 154-hectare CN shops site in Moncton back in the 1990s, says it took three years and $14 million to do the job at that time. He wouldn’t speculate on what would be involved with the former refinery site. Imperial’s refinery was in use for nearly a century and for about 70 years or so, used lead as an additive in gasoline.

We asked Hector Jaques, who was a founder of the environmental engineering firm Jaques-Witford, how long it would take to remediate the former Imperial Refinery site. “No comment,”  he said.

But it seems to be a moot discussion for the port in any event. In a second e-mail, MacIsaac, the Exxon spokesperson, said that “Imperial continues to use the refinery site footprint to supply the market with refined products from a variety of sources.”

That would certainly suggest that Imperial will continue to bring in petroleum products by ship, store them, and distribute from the site.

Asked about any discussions with the HPA, MacIsaac wrote, “We do not comment on speculation or rumours.” It would seem, however, from his comments on Exxon’s plans for the site that the former refinery lands are out.

HalTerm

The Halifax Port Authority owns a site for potential expansion — Halterm.

Halterm doesn’t have any issues with water depth or air draft. No bridge obstructions. No environmental clean-up or complex dealings with the military.

Oldfield told the Halifax Examiner recently, “ … that certainly would be a possible site but not the only site.” In the mid 2000s, Oldfield told me in an interview that the HPA could expand Halterm by extending the terminal northward by filling in between existing piers adjacent to Halterm.

It’s not a new idea either — it was first proposed about 35 years ago when the HPA was known as the Halifax Port Corporation and headed by Ray Beck.

In October 1989, UMA Engineering of Halifax submitted its final report to the Federal Department of Industry, Trade and Technology on proposed development of South End Halifax Waterfront lands. It recommended expanding Halterm northward — to about Morris Street extended into the harbour — and incorporating some of the CN rail yards into the port.

It also proposed eliminating the downtown route that hundreds of tractor trailers use every day hauling tractor containers to and from Halterm. It suggested that the trucks instead share with trains the rail corridor that cuts across the city from near Halterm to Ceres and Rockingham. It’s commonly referred to as the rail cut.

In 2008, then-Premier Rodney MacDonald looked at expanding the rail cut to allow for rail and truck traffic. The idea was nixed at the time as too expensive. The cost was estimated at $225 million dollars.

Closing Ceres?

Since the HPA began shopping for a new container terminal site, there were reports suggesting that it was looking to eventually close the Ceres terminal in the North End and Halterm in the South End and build one huge terminal.

The height of the Angus L Macdonald and A. Murray MacKay bridges limits the size of ships that can pass beneath them.

Nevertheless, it appears the future of the Ceres terminal is secure.

Ceres President Calvin Whidden told the Halifax Examiner that “I really don’t see that [closing Ceres] in the future for Ceres or the Port of Halifax…there’s lots of ships afloat that can clear those bridges. We’re servicing those customers today.”

One of the Ceres customers, Happag-Lloyd has been calling at Halifax since 1972.

Wolfgang Schoch, Managing Director of Happag-Lloyd (Canada) says “At the moment we don’t have plans to put those big ships here.”

Atlantic Container Lines has made Halifax a regular call since 1967. It also calls at Ceres and just put the last of its new fourth generation ships into service; all are just below 4,000-TEU.

Schoch says cut-throat margins carriers live on make a one-terminal port less attractive.“It’s always good to have alternatives for a shipping line” he says.

Karen Oldfield put bullet to the notion that the HPA has plans to close Ceres. Asked about it, she replied, “Not even on our radar screen. Their lease, all systems go. They’re very busy at Ceres.”

So that leaves Halterm. Or wherever Oldfield and her Board of Directors plan to build.

It’s not clear why there’s a delay in making a decision. If a terminal operator like Ceres or Halterm is going to expand, it is reasonable to assume that the operators will have to agree to new lease terms. So, if Halterm were to expand by 50 per cent or more, what would the lease cost be to the terminal operator Maquarrie Infrastructure?

The new giants of trade are calling at Halifax’s competitors now. Tick Tock.