(The following story by Brent Jang appeared on the Globe and Mail website on January 17.)
TORONTO — Hard-luck Prince Rupert, eager to revive its depressed economy on the B.C. coast, is asking Ottawa for a $40-million grant to help build a new container port being touted as a gateway for Asian cargo into the U.S. Midwest.
The Prince Rupert Port Authority warns that Canada risks missing out on booming Asian trade, especially consumer goods from China, if the funding request to kick-start the $530-million project is rejected.
“Without the development of a container terminal in Prince Rupert, Canada will have insufficient capacity on the West Coast to meet demand. Jobs and economic benefits will go to U.S. ports,” said a briefing note used by port officials to lobby Industry Minister David Emerson and Transport Minister Jean Lapierre.
“A $40-million contribution by the federal government is needed to make the terminal economically viable,” said the note, urging Ottawa to commit to funding by mid-February.
The first phase of construction would cost $180-million and operations could open by late next year to complement the busy Port of Vancouver, say supporters lobbying for a second container port on Canada’s West Coast.
“It could transform the northern B.C. economy,” said Don Krusel, president of the Prince Rupert Port Authority.
While ports fall under Mr. Lapierre’s file, Mr. Emerson is British Columbia’s co-lead representative in cabinet and he supports heavy lobbying efforts by Prince Rupert to resuscitate its stagnant economy.
“There has been no decision made” by cabinet on the funding request, said Ian Jack, spokesman for Mr. Emerson. “Whenever somebody asks for money, no matter how good the case is on any file, you have to consider what other demands this is going to trigger.”
Prince Rupert’s underutilized port has been languishing for more than a decade. Although it serves as a terminal for ships exporting Canadian bulk products such as coal, grain and forest products, it doesn’t have the facilities to accept consumer goods flowing in from Asia in containers.
Now, in staking out territory as a North American gateway to the U.S. Midwest, Prince Rupert is promoting itself as a novel port that would rely on Canadian National Railway Co.’s tracks to move Asian goods primarily south of the border.
That continental strategy distinguishes Prince Rupert from Vancouver’s port, where the overwhelming majority of goods from Asia are transported by truck and train eastward and stay in Canada.
Officials at the Port of Vancouver and Calgary-based Canadian Pacific Railway Ltd., which doesn’t have any rail lines into Prince Rupert, said they hope that Ottawa doesn’t play favourites.
CPR is concerned that government funding for Prince Rupert would “basically create artificial competition,” said CPR chief operating officer Fred Green.
The Vancouver Port Authority is relying on private sector financing for its $1.4-billion expansion to relieve congestion brought on by a surge in imports from China.
Anne McMullin, the Vancouver Port Authority’s director of corporate communications, said it remains to be seen whether the Prince Rupert plan will be successful.
“If they build something, will the customers come? All the power to them if they can build a container terminal and make a business case and get the customers,” she said.
For the first phase of the Prince Rupert project, the B.C. government already has agreed to kick in at least $17-million while CN would contribute $15-million and Maher Terminals Inc. of New Jersey would invest at least $60-million.
If Ottawa injects $40-million, that would leave the Prince Rupert Port Authority to borrow up to $48-million.
Morley Strachan, a vice-president at TSI Terminal Systems Inc., which runs two of the Port of Vancouver’s three container-handling terminals, argues that the Prince Rupert container port isn’t needed any time soon.
“If the market forces are there to drive it, why would you need government funding? The private sector will come if there’s a need,” Mr. Strachan said.
He said the Prince Rupert project will eventually make sense, but not for another decade.
Prince Rupert, however, wants development to take place quickly, aiming to finish the $350-million second phase by late 2009.
Given Prince Rupert’s remote location, the strategy is to move the Asian goods strictly by rail on a so-called Chicago Express Line.
Montreal-based CN stands to benefit from a new Prince Rupert container terminal because it owns the rail tracks into the city. CN also owns various connecting lines through its BC Rail Ltd. freight subsidiary — which CN bought from the B.C. government for $1-billion last year.
“CN sees significant potential,” CN spokesman Mark Hallman said. “We’re dead serious about this. Our view is that Prince Rupert’s time has come.”
If Ottawa agrees to lend a helping hand, it must do so in a fashion that doesn’t contravene the Canada Marine Act, which prohibits the federal government from directly investing in Canadian ports.
Prince Rupert supporters say that 600 container-terminal jobs could be created within five years, and there would be huge economic spinoffs well beyond the port.
For instance, some of the containers that would otherwise head back empty to Asia could be filled with Canadian products supplied by companies across Western Canada close to the CN tracks.