Gateways and corridors essential to economic rebound, conference delegates told
By JACK KOHANE
July 6, 2009
Fasten your seatbelts, 2009 is going to be a bumpy ride! With those words of warning Paul Ferley, assistant chief economist for the Royal Bank of Canada, launched into an overview of the state of the global economy in his keynote address to delegates at the 42nd Annual SCL Canada and CITA Conference.
“We see little to jolt Canada out of its economic funk in the near term,” he remarked, predicting that the ranks of unemployed in Canada could likely swell to above 8 per cent as the recession continues. In the United States the current rate is 8.1 per cent, he continued, and will climb toward 9 per cent before this economic slowdown is over.
“The astounding weakness in the demand for autos, both in Canada and the United States, is having a damaging effect on employment,” Mr. Ferley stated, pointing out that in the United States, 1.3 million of 4.4 million jobs lost since the beginning of 2008 were in manufacturing. In Canada, manufacturing jobs were cut by 135,000, while industries outside manufacturing increased employment by 86,200 during the period.
Mr. Ferley next touched on Canada’s trade sector. “It’s suffering, with the volume of both exports and imports faltering.” He pointed to the most recent trade data that shows the slumping U.S. economy weighing heavily on exports, while the volume of Canadian imports suffered an even greater decline due to weakening domestic demand. He sees deteriorating trends on both sides of the trade equation – imports and exports – along with scaling back of inventories. Signs such as these are expected to contribute to the economic malaise extending into mid-2009. “However, policymakers remain optimistic that the stimulus from low interest rates and government spending initiatives will support a recovery in the second half of 2009. “The shift to a highly stimulative fiscal policy not only in Canada, but globally, augurs well for a rebound in activity,” he said.
Mr. Ferley’s bearish forecasts segued neatly into the theme of the two-day Toronto conference, Supply Chain Leadership – Raising the Bar to build strong leaders to meet and beat the challenges of tough economic times. Jointly hosted by the Supply Chain & Logistics Association Canada and the Canadian Industrial Transportation Association, this year’s conference offered networking and leadership skills workshops galore for hundreds of logistics and transportation specialists who attended from across North America.
From the policymakers’ side, delegates listened intently when Kristine Burr, assistant deputy minister, policy, Transport Canada, spoke about Canada’s trade corridors and gateway strategies. Concurring with Mr. Ferley’s conclusion that the conference was taking place during a critical time in the global economy, Ms. Burr commented about how quickly the world situation has changed. “Just last year, we were talking about how to create a resilient supply chain in the context of a strong dollar, a strong economy and our enviable reputation in the world market,” she began. “But one thing has not changed: Canada’s current and historical economic growth and standard of living continues to depend on trade – in both finished products and natural resources. The current slowdown does provide an important opportunity to improve our overall economic competitiveness when the global economy rebounds.”
Corridor initiatives
A necessary key ingredient in that rebound, Ms. Burr claimed, is Canada’s gateways and corridors strategy for the Asia-Pacific Gateway and Corridor Initiative, the Atlantic Gateway and the Ontario-Quebec Continental Gateway and Trade Corridor.
Ms. Burr noted that on the east coast, Transport Canada and the Atlantic Canada Opportunity Agency are working in partnership with the Atlantic provinces and stakeholders to develop an Atlantic gateway strategy by fall 2009. The vision is to establish this region as a strategic, integrated and globally competitive entry point into eastern and central North America, she emphasized in her speech. In central Canada, the Ontario-Quebec Continental Gateway and Trade Corridor supports international commerce and economic growth in the heart of North America. It is a main transit point for international trade within the economic heartland of the United States and Canada as well as for domestic trade. For example, it involves direct access to 135 million North American consumers within a 1,000-kilometre radius.
This country’s flagship gateway strategy is the Asia-Pacific Gateway and Corridor Initiative. “This is the first application of an integrated approach to gateways and corridors,” observed Ms. Burr. “In just two years, we have announced APGCI infrastructure projects valued at over $2.6 billion across all four western provinces, including federal contributions totalling almost $1 billion.” Various private sector partners are also investing over $13 billion for gateway-related projects, from rail/road grade separations to relocation of intermodal facilities, twinning of the Trans-Canada Highway and innovative short-sea shipping projects, she added. “We have approached the Asia-Pacific Gateway and Corridor as a system, because that’s the way supply chains work.”
One particular area of interest, Ms. Burr noted, is the value-added gateway concept, where increased focus is being placed on ways to add value beyond bricks and mortar. “In other words, how to leverage the gateway investments into jobs and greater wealth creation for Canadians.” The value-added gateway will look for opportunities along the entire global supply chain.
Ms. Burr was pleased to highlight an early success – the proposal to modify regulations related to the treatment of international marine containers. “The proposed changes would allow such containers to remain in Canada for 365 days with an unlimited number of movements within Canada, which would level the playing field with the United States and provide potential opportunities to make more efficient use of these empty containers.”
Her ministry is also undertaking an air cargo mapping project to examine air cargo as part of the global/integrated supply chain, Ms. Burr explained. “Through Transport Canada’s workshops on air cargo mapping, stakeholders highlighted important information gaps on cargo flows to and from Canada. It also became clear that better integration is required throughout the supply chain along with integrated e-business platforms. By working with the private sector and the Canadian Border Services Agency on these issues, it will allow us to develop a competitive advantage from a logistics, operational and skills perspective. It also strongly supports our work on the value-added gateway.”
Gateways’ advantages
Spotlighting the Atlantic gateway, the executive director of the gateway initiative for Nova Scotia’s Department of Transportation and Infrastructure Renewal, David Oxner, detailed the region’s competitive edge as a world-class transportation network. He told the delegates that “Canada’s east coast gateway via Nova Scotia is a natural intercontinental portal to North America. Proximity to markets, deep ice-free waters and excellent rail, truck, marine and air connections give our province advantages over other locations for capitalizing on the rising wave of global trade.”
The Port of Halifax is the closest mainland North American container port to Europe and, through the Suez Canal, to South and East Asia and the Indian subcontinent, Mr. Oxner said. Most of the port’s container traffic is coming and going from Ontario, Quebec and the American mid-west. “The Strait of Canso super port is also a significant player, with plans to expand its cargo handling capacity. Nova Scotia has a seamless intermodal connection – from ships to the CN line into the heart of North America, with some of the most affordable rail freight rates on the continent.” Mr. Oxner also observed that the Halifax International Airport is well-equipped with a new U.S. pre-clearance facility.
A number of infrastructure projects will also strengthen Canada’s east coast advantage as an intercontinental gateway, including an inland container terminal that will increase container shipping capacity; a transload/distribution centre where shippers will unload and sort cargo for transportation across North America; a new high-speed interchange in Truro to ease traffic flow, especially for trucks travelling to and from ports in Halifax and Cape Breton; and a Port Hawkesbury Bypass to improve cargo activities to and from the strait area.
“Together, the public and private sectors are working toward gateway-friendly transportation policies, such as flexible federal air policies, support for small airports and ferry services and investment in supporting infrastructure,” Mr. Oxner concluded. “All of which would contribute to the economic growth of the region and the country.”
For his part, Glen Vanstone, director of cargo and business innovation for Edmonton International Airport (EIA), vaunted its new initiative called Port Alberta that’s set to make the EIA the new cargo gateway combining air, rail and road transportation infrastructure. Citing that EIA is Canada’s fastest growing airport by passenger (in 2008, 6.4 million used the airport) and largest by area (just under 7,000 acres), Mr. Vanstone pointed to the main drivers of the EIA’s growing importance: Alberta oil sands’ development that is the world’s second largest oil reserves, $85-plus billion worth of international investment and continuing pipeline development, including three more major pipelines in the planning stages.
“We’ve secured new flights to the U.S. and other international destinations, while linking Edmonton to an ever-growing list of Canadian destinations,” said Mr. Vanstone. “We act as an economic driver for resource development in Canada’s North and we’ve welcomed millions of newcomers to Alberta. We’ve been growing alongside the region we’re proud to serve and we continue to look to the future. For EIA, that means Expansion 2012.”
Expansion 2012 is critical to EIA’s ongoing success as a hub for northwestern Canada. When the expansion is completed in late 2012, it will improve the overall passenger experience by adding new gates (from 17 to 30), a new NAV Canada control tower complex with expanded restaurants, retail and office space, an integrated baggage room for drop-off at designated locations across the terminal, a new passenger concourse and expanded parking. Later this year, Terminal Express will open and allow the bulk of Expansion 2012 to proceed. A temporary structure with six bridges, Terminal Express will ensure EIA remains open for business while construction continues. “Port Alberta is not about building for the here and now,” nodded Mr. Vanstone. “It is about creating an environment required 10 years from now – but we will start today.”
Bolstering the generally upbeat tone of this year’s SCL/CITA Conference, Mr. Ferley added his own sense of optimism about Canada’s economic prospects by stating that the “Central banks are committed to keeping interest rates low and governments to providing stimulus …. we believe that these policies will be successful and that a full-fledged recovery will be under way in 2010.”