CHICAGO (Reuters) - A new container port on Canada’s west coast expected to open next year could boost Canadian National Railway Co.'s <CNR.TO> annual revenue by C$300 million to C$500 million, the company’s top executive said on Thursday.
“This will be a big part of our growth,” moving forward, Chief Executive Officer Hunter Harrison said at a transportation conference hosted by Merrill Lynch in New York.
The facility in Prince Rupert, British Columbia, will have an eventual capacity of 1.2 million TEUs (20-foot equivalent units). Harrison said the first phase of the project – which could provide capacity of up to 750,000 TEUs – should be completed by October 2007.
The Canadian railroad has ordered 50 locomotives from Electro-Motive Diesel Inc. to handle traffic coming out of the port.
Canadian National intends to use the port at Prince Rupert to tap into soaring Asian trade, bringing goods to U.S. consumers in the United States through a rail network that covers Canada coast to coast and runs north to south from Michigan and Minnesota all the way down to New Orleans.
Over the past three years, U.S. imports have seen double-digit growth, much of that from developing nations such as China. Ports on both coasts of North America are competing to cash in on that growth, in particular because of concerns over capacity constraints at the largest U.S. port complex at Los Angeles-Long Beach.
Harrison said that if Long Beach suffered from congestion, Prince Rupert could move goods by up to 10 days faster than the L.A. port.
I lived in Prince Rupert from 1996 to 1999. They were talking about putting in a container facility then but city council there forever put it off. The main reason is that what worked in the past works well now. Meanwhile in that 3 year period I lived there 54 businesses closed downed & only 11 new ones opened up. I knew the mayor & a couple of aldermen, they were more interested in prestige than getting the city back on its economic feet. They have a wheat terminal there which used to close up shop for 3 to 6 months a year. The coal terminal depended on what coal came out of the Tumbler Ridge area of B.C.
Unless things have changed since 1999, I’ll believe a container facility will open up in the Prince Rupert area when I see it. For this was a place more interested in the status quo than doing anything concrete.
The terminal should open in mid to late 2007, and the 50 SD70M-2 locomotives are supposed to arrive at the same time.
Prince Rupert is about 50 miles from Alaska’s southernmost point.
50 locomotives, now could we get the exact statistics on the new port facilities and their costs also, and who is paying for this massive multi billion dollar expansion? or are they just going to use existing facilities and start hauling in “stuff” with their new diesels ?
The container port is being built on land that was previously known as Fairview Terminal which was primarily a lumber reload centre. CN in addition to buying the 50 locomotives which probably will not all be used on Prince Rupert container traffic is spending 30 million Cdn$ on yard work at the port and increasing clearance on a few tunnels between Prince Rupert and Prince George. The Cdn and BC governments are each contributing around 100 million Cdn$. Maybe Mr. Hay’s dream for the Grand Trunk Pacific is coming to fruition in spite of his demise on the Titantic. Coal traffic to Prince Rupert is also increasing slightly.
I was visiting friends in the Prince Rupert/ Terrace 3 years ago and at that time many of the sidings were taken out of use with the track and CTC signals still in place but the switches removed. If the volumes are as anticipated then this will be a big bonus for Prince Rupert and CN. There is a big difference in sailing time to Prince Rupert compared to Los Angeles. It will be interesting to see if Mr. Harrison has the double track that was laid between Jasper and Hinton in the 1980’s and was pulled up several years ago re-installed. It is amazing how short sighted corporations can be trying to keep investors happy.
The new Container facility at Prince Rupert will serve two purposes.
First it will be the closest North American Port to the Orient and will save at least 36 hours sailing time over Los Angeles.
It will give the CN the fastest transit times for good traveling out of the Orient to Chicago, Toronto, Montreal, New York, New Orleans, Memphis, St. Louis and even Atlanta.
The second advantage the new Port facilities will give CN is it will create the true Land-Bridge with traffic to the Orient able to move to Europe a week faster than anything today. Ships will unload Containers in Prince Rupert and one carrier will move them to the Port of Halifax where they will be reloaded on a Containertship to complete the trip to Europe. Premium pricing yopu bet! And most of the premium will go to CN and its shareholders. Long rumored it will finally come to fruition the true North American Land Bridge.
The real question though is how much traffic will divert. The ships used in the Asia - West Coast trade tend to be the largest in the world. When they are loaded in Shanghai, Singapore, or wherever they are carry containers for all North American destinations. The smallest blocks will be for Canadian destinations. If sailing time were the largest driver of the Shipping Companies operations,the Puget Sound ports would already be the first ports of call, when in fact it is currently Los Angeles/Long Beach. KCS is betting on Lazaro Cardenas at least a Day’s sailing time further from the Orient. Cheaper Mexican labor rates will help them. The best bet for CN will be if they can get some of the smaller lines to call there or some of the smaller ships of the big lines. Otherwise Prince Rupert might become the last port of call with much of the traffic being outbound empties.
That seems to be the way of business today: no long term plans, and the only strategies considered are the ones that will get the best ROI this quarter, to heck with the next quarter, because Mr Executive VP may well be gone by then, floating with his golden parachute, on his way to the next corporation he can fuppduck.
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QUOTE: Originally posted by idhull
It is amazing how short sighted corporations can be trying to keep investors happy.
That seems to be the way of business today: no long term plans, and the only strategies considered are the ones that will get the best ROI this quarter, to heck with the next quarter, because Mr Executive VP may well be gone by then, floating with his golden parachute, on his way to the next corporation he can fuppduck.
What is even more amazing is that government is even more short sighted. Everybody seems to think that it is great that there is 24 hour trading around the world and that the market can instantly react to these changes. There is a downside to all this and that is that everybody hedges their bets in favour of the short term. The short term view creates policies that undo the previous day’s policy. Where is the idea of sober second thought and sticking with a plan?
idhull? Did Fairview Terminal close down or is it changing format to serve containers only[?] When I lived in Prince Rupert it was the only terminal doing anything year round.
Prince Rupert is 30 hours or thereabouts to the Asian markets than Vancouver. An added attraction is that Prince Rupert doesn’t have the waiting times that Vancouver has or did have. It saves deep sea frieghter companies thousands of dollars per day in saved berthing costs.
Maybe the business community in Prince Rupert finally saned up. When I was there is was strictly controlled by about 6 families that hated change in any way shape or form.
Fairview Terminal is being re-configured and expanded. The wharves are being extended into deeper water and further along the shoreline. A good deal of the existing terminal will be rail tracks for loading and unloading and then a paved area for sorting and storage. I don’t know whether there are changes to the road access but the amount of freight being delivered into the local area will be miniscule.
The big question is whether it is worth it to the shipping companies to divert the ships to Prince Rupert. I don’t know if the shipping line is charging the full delivered price or only the ocean portion. If they are only charging for the ocean portion there is no advantage to unload in Prince Rupert unless the turnaround time will be less since they would be maximizing revenue by going to Los Angeles. If the shipping company is charging the delivered price then the CN route probably makes sense for goods destined to the US mid west and
I think this whole initiative is a result of CN wanting to increase their traffic and probably has nothing to do with the action or inaction of the local business community.
Thanks, idhull, for the information. Glad to see something positive happening there. Prince Rupert’s economy had been going down the drain for years, so maybe things are turning around there. For awhile the only growth industries there was bankruptcy firms, divorce lawyers, mental health facilities and the pop/can recycling depot.
There were a lot local residents that were sore with Canadian National for selling the park that overlooked the waterfront railyards into the mall.
The beauty of this is that the impact of this traffic will be felt all the way between Prince Rupert and Chicago. I know that Prince Rupert has had a rough time economically with paper mill closures and fish plant closures in the past 10 years.
