Port of Vancouver sees expansion as crucial even as global shipping slumps

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The federal agency that manages Canada’s largest port says expanding its cargo capacity is crucial, despite a slowdown in container volume amid a lingering slump in the global shipping industry.

The Vancouver Fraser Port Authority received approval last month from the federal government to construct the $3.5-billion Roberts Bank Terminal 2 container project. Upon completion of RBT2 near Delta, B.C., the Port of Vancouver’s container capacity would rise about 50 per cent by the mid-2030s.

“It’s really all about the long-term trend versus the short-term point in time,” port authority president Robin Silvester said in an interview Monday.

With Canada’s gross domestic product expected to show steady growth over the long term, demand for container shipments on the West Coast is also anticipated to gradually increase, he said.

The shipping industry deploys large vessels to carry containers, which are reusable steel boxes measured as 20-foot equivalent units, or TEUs.

Almost 3.6 million TEUs of exports and imports went through the Port of Vancouver last year, down 3 per cent compared with 2021. In total, the Port of Vancouver saw its overall cargo volume decrease by 3 per cent to 141.4 million tonnes last year.

Last year’s declines reflected a softening economy and the ripple effects from supply chain disruptions during the COVID-19 pandemic, Mr. Silvester said.

The port handled a record number of empty containers in 2022 – more than one million TEUs of “empty exports of air,” up 15 per cent from 2021. Nearly 59 per cent of the total exported containers from the port last year were empty.

There was a period of surging container demand that began in the fall of 2020, when consumers stuck at home under pandemic lockdowns began ordering goods online in droves.

Rather than waiting for the containers to be loaded with Canadian goods, shipping companies are paying for them to be sent to Asia empty, so that they can be filled faster for the trip back to Canada.

“It’s the unwinding of the strange volatility of the pandemic,” Mr. Silvester said.

The trend of reduced container handling has continued into 2023.

In the first quarter of this year, there were 707,767 TEUs processed at the port, down 15 per cent from the same period of 2022. Empties accounted for 44 per cent of total container exports of 342,635 TEUs in the first quarter of this year.

GCT Global Container Terminals Inc., which operates on land leased from the port authority, already runs a container site near Delta. GCT wants to increase capacity at its three-berth Deltaport facility, proposing a fourth berth in a project that it argues would be better than RBT2.

GCT and other critics say there isn’t any shipping crisis expected for many years to come on the West Coast, factoring in capacity expansion at the Port of Prince Rupert in northern B.C.

A wide range of environmental groups and community activists oppose RBT2, warning that the project will trigger a decline in mudflat biofilms, a critical food source for migratory and other shorebirds, and will also have adverse environmental effects on endangered southern resident killer whales.

Flooding and mudslides in the B.C. Interior and the Fraser Valley severed highways and rail lines in and out of Vancouver in November, 2021, with the supply chain congestion extending into early 2022.

RBT2 won’t resolve rail and inland bottlenecks experienced over the past couple of years or in the future, said Marko Dekovic, GCT vice-president of public affairs.

On the export side last year, the Port of Vancouver saw strong levels of shipments of commodities such as fertilizer and coal.

Canadian trade with China fell about 11 per cent last year at the port, though Canada-China shipments remain the largest at 33.5 million tonnes. Year-over-year cargo volume with Japan climbed by 3.5 per cent to nearly 19 million tonnes.

Freight rates continue to slide as global demand falters. Drewry Shipping Consultants Ltd.’s world container index has plummeted 78 per cent over the past year, dropping to US$1,740 for transporting a 40-foot container last week.

Drewry’s container index is still 23 per cent higher than in 2019, before the pandemic led to a slowdown in global trade in the first half of 2020. The index peaked at US$10,377 in September, 2021, with ships backed up along trade routes as North American demand for consumer goods from Asia skyrocketed.