(The following column by Roger Taylor appeared on the Chronicle Herald website on July 18.)
HALIFAX, N.S. — The Port of Halifax developed pneumonia when the U.S. economy caught a cold and the result has been a decline in port traffic here while other East Coast ports have been able to maintain and grow their business.
Halifax is considered a “discretionary port,” which means it is useful because its harbour is deep, it’s ice-free in winter and labour costs are reasonable, but very little of the cargo arriving in Halifax stays in Halifax.
The Nova Scotia capital is mainly used as a port of entry for manufactured goods coming from overseas and destined for markets in Central Canada and the United States. But the decline in the U.S. economy has meant there are fewer goods being imported, which is bad news for a port like Halifax.
East Coast ports in the U.S. may very well feel the same pain Halifax is experiencing, but I’ve been told that many of those ports have been able to make up the difference with an increase in export cargo leaving the U.S. for Asia and Europe.
Meanwhile, the decline in business has justified a reduction in rail service in Halifax, which seems to make the Nova Scotia port even less attractive to shippers.
Officials from CN were in Halifax on Thursday to discuss what will happen when the railway cuts its daily Halifax-to-Montreal train, leaving its daily Halifax-to-Toronto train as the only means by which companies seeking to move cargo through the Port of Halifax can get their product to markets in the central part of North America.
The container terminal operators in Halifax are in a tight position, because their operations have been built around the fact there were two trains leaving Halifax on a daily basis bound for Central Canada. Now, the terminal operators have to be careful not to accidentally leave a container behind in Halifax because the much-promoted two-day rail service to Chicago could quickly increase to three or more days, further eroding Halifax’s reputation as a desirable port of entry.
On the other hand, if CN says two trains were too inefficient, then in theory a single daily train should result in greater efficiency and lower shipping costs for customers using the Port of Halifax.
Whether the rail change creates greater efficiency remains to be seen, but there is uneasiness in Halifax over the role CN is playing in the new Prince Rupert container terminal in British Columbia. The concern here is that the railway may be focused on building up traffic at the West Coast port at the expense of its East Coast business.
One critic told me recently that CN can make more money hauling cargo to Central Canada from Prince Rupert than it does bringing containers from the East Coast to the same destination. Therefore, he argues, it is only natural the railway would be tempted to encourage more West Coast business.
On the other hand, another source pointed out that CN recently teamed up with the Port of Halifax to jointly produce a marketing brochure to sell Halifax as a desirable port for shippers. He views that as a sign the railway is making more of an effort to bring business to Halifax.
There is no denying that there is a panic building in Nova Scotia, where the Port of Halifax has been a key economic engine not only for the city but for the entire province.
During the short term, Halifax may be suffering as adjustments are made to counter economic conditions and high energy costs but over the longer term it is believed that a big, deep port like Halifax will benefit from the construction of mega ships that will have difficulty entering smaller ports along the East Coast of North America.
And it isn’t likely the U.S. economy is going to be in decline forever, meaning imports will rise once again. The West Coast will again become congested and shippers will be encouraged to bypass the clogged terminals by taking the Suez Canal and crossing the Atlantic to deliver cargo to ports on the East Coast.
That projected shift has experts estimating that East Coast container traffic will increase by about three million TEUs (20-foot equivalent units) over the next seven years. Supporters of the Port of Halifax complain that construction of additional container handling capacity in other parts of Nova Scotia, like that proposed for Middle Melford, Guysborough County, and Sydney, will only siphon business away from Halifax.
There are plenty of problems with that kind of thinking, however.
Melford International Terminal, for example, is not being developed because the government decided it wanted a container terminal built in rural Nova Scotia. The terminal came about because a group of Nova Scotia businessmen were able to make a business case for it with their financial backers.
There may be concern coming from Halifax now but, as one executive told me recently, everyone will have a better idea on how much business there is in a couple of years.