Port of Montreal cargo levels on rise

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A rising global tide of shipping is finally buoying revenues at the Port of Montreal, but significant challenges remain for the inland facility - including competition from deep-water ports able to accommodate the world's ever-larger ships.

Reduced shipping activity over the past few years forced the Montreal Port Authority to scale back ambitious expansion plans for the sprawling facility. Then, last summer, a potentially crippling labour dispute was settled after a three-day lockout.

But in 2011, the inland port, which runs 26 kilometres along the St. Lawrence River, is poised for a robust performance, president and chief executive officer Sylvie Vachon says.

It's too early to confirm, but the port could end up turning a profit in 2010 after posting a net loss of $21.7-million in 2009, Ms. Vachon said in an interview. Preliminary figures point to a 4.5-per-cent growth in volume - both container and bulk - handled at the port last year, she noted.

In 2009, the total for all types of cargo handled fell 12 per cent to 24.5 million tonnes from the previous year. For 2010, it looks like the total will have rebounded to 25.6 million tonnes, Ms. Vachon said.

The gains are pretty much in line with those at major port facilities around the world as the economy rebounds and trade in commodities and consumer products picks up.

For Ms. Vachon, the first priority is ensuring Montreal's port remains one of North America's major inland transshipment facilities.

It is working to reduce its dependence on northern Europe, and "we're beginning to see results," said Ms. Vachon, who took over the top job in 2009. The port is drumming up more business with shipping lines that sail out of Mediterranean ports as part of that strategy.

But major constraints on physical expansion limit how much new traffic it can take on, she said. "As the economy rebounds, capacity becomes a major factor."

The port's management team is looking at expansion options, including going off the Island of Montreal to build a new container facility at Contrecoeur, on the South Shore.

However, the slowdown in activity over the past few years has put a major dent in the port's ambitious growth plans. A target of tripling container capacity to 4.3 million twenty-foot equivalent units (TEUs) by 2020 has been abandoned. The more modest goal now is 2 million TEUs by 2016.

The port also had to contend with the impact of a potentially crippling labour dispute last summer involving about 900 longshoremen. The damage was for the most part contained when a settlement was reached.

Although Montreal enjoys an excellent position as an intermodal port that acts as a key gateway to Canada and the U.S. Midwest, capacity limitations present a significant problem, said Claude Comtois, a port and shipping expert at the University of Montreal.

The port is also hobbled by the fact that it can't accommodate the ever-larger ships being built, which require deep-water facilities, he said.

"It pushes the port to the sidelines in terms of the big global shipping networks that are being created."

Ben Hackett, managing director at Hackett Associates Ltd. in Washington D.C., agreed.

"Looking forward, fundamentally, the economies of scale favour the U.S. deep-water ports, like Norfolk [Va.] The carriers prefer to use the bigger ships for economies of scale," he said.

"There's not much that Montreal can do about this."

Mary Brooks, commercial shipping and ports expert in the faculty of management at Dalhousie University, believes Montreal can continue to thrive as a niche player, however.

"There is a good straight run for shippers from northern Europe to the U.S. Midwest" that the Port of Montreal can continue to service as long as it continues to do a top-notch job of providing services, she said.