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Report on Business Vancouver port authority, tenant battle over terminal plans as container capacity worries mount

GCT Global Container Terminals Inc. runs the existing Deltaport container-shipping operations, with three berths located 30 kilometres south of Vancouver.

DARRYL DYCK/The Globe and Mail

The Vancouver Fraser Port Authority is locked in a bitter fight against one of its own tenants over how best to expand container capacity at Canada’s largest port.

The powerful landlord that oversees four container terminals in the Vancouver region is warning that Canada’s West Coast could run out of capacity to handle container shipments within six years.

At stake is the Canadian government’s quest to strengthen its Asia-Pacific gateway strategy. Canada wants to ensure that British Columbia is well positioned to handle increased transpacific trade, especially shipments to and from China. Cargo shipments in containers were worth more than $100-billion in 2017 at the Vancouver area’s four container terminals.

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To avoid missing out on increased transpacific trade, the port authority said it needs to win regulatory approval to build a new terminal that would be situated on reclaimed land south of Vancouver, with operations opening in 2029. The port authority reports to the federal transport minister.

The proposed expansion project, called Roberts Bank Terminal 2, would take about eight years to build. That includes nearly six years for major construction, notably land reclamation, and another two years to complete the terminal.

But a rival proposal from a tenant, GCT Global Container Terminals Inc., has cast doubt on whether the landlord’s plan makes economic sense.

Depending on final engineering designs and addressing environmental issues, the port authority estimates Terminal 2 would cost between $2-billion and $3-billion, while GCT’s budget ranges from $1-billion to $1.6-billion for its rival Deltaport 4 plan to add a fourth berth to its existing terminal.

No operator has been signed up yet to run the port authority’s Terminal 2, but the new site would be a competitor to GCT’s existing Deltaport operations, with three berths located 30 kilometres south of Vancouver. The Tsawwassen First Nation has industrial land nearby. Other neighbours include Westshore Terminals Investment Corp.'s coal export site and the BC Ferries passenger ferry terminal.

The Terminal 2 proposal needs approval from a three-member panel of the Canadian Environmental Assessment Agency, which is expected to rule in early 2020. Final written submissions to the panel are due by Aug. 26.

Even with expansion at the Fairview terminal in Prince Rupert in northern British Columbia, Canada’s West Coast could be at full capacity for handling containers as early as the mid-2020s, warns Duncan Wilson, the port authority’s vice-president of environment, community and government affairs.

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“We need to make sure that we can get infrastructure built in a timely manner in this country,” Mr. Wilson said.

Four container terminals in the Vancouver region handle imports of consumer goods from Asia and exports such as lumber and agricultural products from Canada. While 70 per cent of the imported containers that enter waters in and around Vancouver are destined for British Columbia and other parts of Canada, 30 per cent of them end up being transported mostly by rail into the United States.

“Our project does cost more money,” Mr. Wilson said. “It costs more because we’re building it in a more environmentally sustainable location."

GCT counters that Deltaport 4 has remediation plans to mitigate the ecological effects of expanding into waters with eelgrass beds and juvenile crab.

The port authority said there needs to be healthy competition among tenants and it doesn’t want GCT to operate Terminal 2 because the company recently controlled at least two-thirds of the container market in the Vancouver area.

But in the competitive shipping world, major North American rivals include ports in Los Angeles, Long Beach, Calif., Oakland and Seattle, said Doron Grosman, GCT’s chief executive officer.

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GCT estimates it had a market share of less than 10 per cent of the container shipments in 2017 into Canadian and U.S. terminals along the West Coast.

“When you’re looking at our market share, you should be looking at our market share of all containers coming into the West Coast of North America,” said Mr. Grosman, who added that he doesn’t see Canada’s West Coast facing a container capacity crunch until 2030.

He said the port authority hasn’t been taking GCT’s private-sector solution seriously.

Ontario Teachers’ Pension Plan and Australia-based IFM Investors each own 37.5 per cent of GCT, while B.C. Investment Management Corp. holds a 25-per-cent stake.

In March, GCT filed an application for a judicial review over the port authority’s refusal to process the proposal for Deltaport 4. That case before the Federal Court of Canada is slated to be heard in September.

The shipping industry deploys large vessels to carry containers, which are reusable steel boxes measured as 20-foot equivalent units (TEUs). Vessels loading and unloading in the Vancouver area typically have room to each carry between 6,000 to 13,000 standardized containers, depending on a ship’s size.

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Mr. Grosman disputed Mr. Wilson’s characterization that Terminal 2 has a better location in deeper waters, emphasizing that Deltaport 4 would have a smaller footprint with plans to add two million TEUs to increase annual capacity to 4.4 million TEUs by 2030. By contrast, Terminal 2 would be a new operation with 2.4 million TEUs.

A new container terminal had been envisaged for the B.C. community of Delta as far back as 2003, and the port authority has been working on its revised version since 2013.

GCT operates two container terminals on land leased from its landlord, the Vancouver Fraser Port Authority: Deltaport, located south of Vancouver; and Vanterm, located along Burrard Inlet near downtown Vancouver. Dubai-based DP World PLC operates Centerm and Fraser Surrey Docks in the Port of Vancouver, as well as the Fairview terminal in Prince Rupert.

GCT also runs container terminals in New Jersey and on Staten Island in New York.

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