Rapid Growth Puts Prince Rupert at Design Capacity

The following is from the 20 December 2012 edition of Journal of Commerce.

The arrival of the Cosco Vancouver at the Port of Prince Rupert on Nov. 18 was a milestone at the 5-year-old port because the vessel carried the 500,000th container unit to be handled this year at the rapidly growing gateway 500 miles north of Vancouver.

The event also sent a message to U.S. West Coast ports, terminal operators and longshoremen that Prince Rupert is becoming one of the preferred gateways for handling Asian imports moving to Chicago, the most lucrative market in the U.S. interior for trans-Pacific container lines.

Prince Rupert opened its Fairview Container Terminal in late 2007. In its first full year of operation in 2008, the terminal handled 182,523 20-foot container units. Prince Rupert is on track to handle 550,000 TEUs in 2012, which would be an increase of about 40 percent over last year.

“The year-over-year growth we’ve experienced has made the Port of Prince Rupert the fastest-growing container terminal in North America and one of the fastest in the world,” said Don Krusel, president and CEO of the port authority.

Prince Rupert has certain geographical advantages over U.S. West Coast ports. It is at least a day closer to Asia via the Great Circle route. Canadian National Railway provides efficient intermodal rail service from an on-dock facility to Chicago and south to Memphis and New Orleans.

The efficient transfer of containers from vessel to train enhances the attractiveness of the Prince Rupert gateway, said Jean-Jacques Ruest, executive vice president and chief marketing officer at CN. “Customers don’t just buy rail transit time. They buy total transit time,” Ruest told the annual Intermodal Association of North America conference last month in Anaheim, Calif.

Krusel said that from its inception, Prince Rupert was envisioned as a gateway to Canada and the U.S. Midwest for high-value, time-sensitive shipments. The port authority, terminal operator, railroad, federal and provincial governments all work together to make Prince Rupert an efficient port. “That is what our gateway is all about,” Krusel told the IANA conference.

High-value shipments seek those ports that offer efficient marine terminal operations, a reliable labor force and excellent intermodal connections to inland population centers, he said. Canada International Longshore and Warehouse Union Local 505 in Prince Rupert has bought into this philosophy.

“We are very pleased with the success of the terminal and proud of the role our growing membership has played in reaching this milestone,” Glen Edwards, president of the Canadian ILWU local, said on the occasion of the 500,000th TEU handled at the port.

Ten days later, the Office Clerical Unit of ILWU Local 63 in Los Angeles-Long Beach, began picketing 10 of the 14 container terminals in the port complex. ILWU dockworkers honored the picket lines, idling about 70 percent of the cargo-handling capacity at the largest U.S. port complex for eight days.

Edwards noted that the membership of ILWU Local 505 now stands at 80, with about 200 casual, or part-time longshoremen.

About one-third of the containers handled at Prince Rupert are shipments to and from the Canadian market. Two-thirds of the containers move to or from the U.S. along the CN route from Chicago to New Orleans.

The Fairview terminal was built with a design capacity of 500,000 TEUs per year. Since the terminal has already exceeded the design capacity, port executives say efficient operations have expanded the true capacity by about 50 percent. “The productivity of labor and management at Fairview Terminal has since brought capacity to an estimated 750,000 TEUs,” the port stated on its Web site.

U.S. ports are well aware of Prince Rupert’s rapid growth. “We don’t take our business for granted. Prince Rupert is a legitimate threat,” said Chris Lytle, executive director of the Port of Long Beach.

While Prince Rupert’s container volume will increase about 40 percent this year, from a relatively small base, the container volume at U.S. West Coast ports through October is up only 2 percent in the first 10 months of 2012, according to the Pacific Maritime Association.

Nevertheless, Prince Rupert’s presence represents a diversion of more than 350,000 TEUs from U.S. West Coast ports in 2012.

Prince Rupert has three weekly services provided by the CKYH Alliance of Cosco, Yang Ming Line and Hanjin Shipping. Michael Gurney, manager of corporate communications, said the port is aggressively marketing itself to carriers in the trans-Pacific trade.

The Fairview terminal in its current configuration can probably handle another weekly service, but the port’s marketing efforts would be easier if confirmation could be given of firm plans to physically expand the facility, Guerney said.

The port has plans to expand the terminal northward to provide an annual throughput capacity of 1.2 million TEUs, and is waiting for the operator, Maher Terminals of New Jersey, to make the commercial decision that the expansion will take place. Guerney said Prince Rupert would like to see such an announcement in early 2013.

Contact Bill Mongelluzzo at [email protected] and follow him at twitter.com/billmongelluzzo.