Posted on: September 27th, 2017
R. Bruce Striegler
“We have a community that is very much in support of our project,” says Zoran Knezevic, President and CEO of Port Alberni Port Authority. Mr. Knezevic goes on to point out that the Vancouver Island town of 18,000 is a blue-collar community. “It is an industry-based area that was brought to life and built by the forestry industry, so the tradition of industry and work of such kind is ever-present.” He notes this is sharp contrast to Vancouver, where he points out, tourism is king. Port Alberni is a deep port city on B.C.’s Vancouver Island, which lies within the Alberni Valley at the head of Alberni Inlet, Vancouver Island’s longest fjord, stretching from the Pacific Ocean at Barkley Sound about 40 kilometres (25 miles) to Port Alberni.
The decades from the 1950’s through the 70’s saw MacMillan Bloedel and other international players such as New York’s Rockefeller family driving the growth of the forest industry as local sawmills produced staggering volumes of lumber, and later, pulp and paper. Port Alberni made international headlines in 1964 when an Alaskan earthquake generated a tsunami that raced up the inlet and hit the town twice with massive waves. Port Alberni has been making different kinds of headlines in recent years with a plan that is both audacious as well as grand. Port Alberni Port Authority is pursuing a strategic opportunity to develop a new container trans-shipment hub in the Alberni inlet to enhance capacity and create greater efficiencies, and environmental benefits throughout the Asia-Pacific Gateway.
As Port of Vancouver thrives in volatile economic times, other potential marine industry areas in B.C. are analyzing opportunities to alleviate congestion created by Canada’s biggest and busiest harbour. While the proposed Roberts Bank Terminal Two development in Delta would potentially add 2.4 million 20-foot equivalent units (TEUs) to local container capacity, Port Alberni is promoting an equally ambitious project. With a deep knowledge gained from working at Deltaport and other marine transportation locations in Vancouver’s Lower Mainland, Mr. Knezevic says, “As a result of my knowledge, and observing the problems the region has, and will continue to face, along with a logistics chain that is not operating totally efficiently, I came up with the idea creating a transshipment hub on Vancouver Island.”
Port Alberni studies and final feasibility report represents 4 ½ years’ worth of study
The Port Alberni Trans-shipment Hub (PATH), is the Port Authority’s proposed $1.7 billion, (from “first shovel to first container”) deep-water port, which would handle up to 22,000 TEUs annually. Zoran Knezevic says the idea is to help Lower Mainland container terminals with “pre-sorted cargo.” The Port Alberni Trans-Shipment Hub (PATH) is envisioned to become a modern, fully automated container terminal, able to efficiently handle any size vessel, including new Ultra Large Container Ships up to 22,000 TEUs. This project would create one the largest container terminals in Canada. Engineering studies undertaken have included operational planning; evaluation of potential sites; preliminary design; and the development of first order of magnitude capital cost estimates. Two suitable sites have been identified in Alberni Inlet and preliminary layouts were developed.
In 2012, the total number of containers transiting through Pacific Northwest ports (Port Metro Vancouver, Seattle, Tacoma, Portland and Everett) was about 6.5 million TEUs. This market is expected to grow by over five per cent per year over the medium term. In addition, the local market for containers on Vancouver Island provides a small but growing market which could be served directly by PATH. Mr. Knezevic says, “We’ve developed a traffic forecast scenario for PATH based on the assumption that PATH can secure a weekly 14,000-TEU ship service by a major shipping line, or an alliance of shipping lines, starting in 2022, when the PATH facility would be in operations. Assuming that the service would fully-unload/load containers at PATH and a gradual ramp up of ship capacity utilization, the plan estimates that PATH could handle approximately 1.5 million TEUs by 2026. This would represent about 12 per cent of the expected Pacific Northwest market at that time.
Optimization of each site configuration has occurred to achieve a first order of magnitude total cost estimate from “first shovel to first container” at approximately $1.7 billion. An analysis of navigation issues, such as channel characteristics and open sea wave, current, wind and weather conditions associated with “short sea” tug and barge container operations in Alberni Inlet was completed. While challenging navigation conditions occur from time to time along the proposed shipping routes, appropriately sized and configured tugs and barges, combined with standard operating procedures, allow navigation issues to be effectively managed.
Pre-feasibility study looks at markets and potential savings
The pre-feasibility assessment included a review of potential markets, strategic and business requirements, and potential logistics cost advantages of the PATH concept. Under a PATH Single Port of Call scenario, it is estimated that the typical rotation (Asia-Vancouver-Seattle) of an ocean shipping line would be reduced by as many as three to four days and generate an estimated net savings for the shipper of $540,000 (time and fuel) for each vessel call. An analysis of supply chain price differential between PATH and status quo concepts was also considered. As this model was evaluated it was determined that the single port of call model offers an opportunity to achieve significant savings in overall transportation costs. Very high level estimates are that PATH has room to charge at least $205 per TEU for lower mainland cargo, $114 per TEU for intermodal cargo and more than $500 per TEU for Vancouver Island cargo and not surpass cost incurred in the present model.
Feeder barge and/or short sea shipping operations serving PATH could spread regional container handling capacity over a large number of coastal and inland terminals along the Fraser River and reduce hinterland congestion, particularly by avoiding, reducing and spreading truck transportation in the B.C. Lower Mainland. This could in turn go some way in mitigating negative externalities associated with congestion in the region. The Port Authority’s feasibility study was conducted by CPCS Transcom Limited and notes the PATH project is entirely conditional on minimal traffic guarantees, in one form or another, from one or more financially sound shipping lines. Having one or two shipping lines invest in the terminal, alongside other partners (operational or financial) would also help secure traffic.
Knezevic says that Port Authority has been gathering endorsements from the local community, the regional district, the City of Port Alberni, various First Nations and business organizations as well as private investors. “This would help with the congestion in the Vancouver area as well as open up Vancouver Island to the export market and give the area its own international gateway. Vancouver Island is a large market in its own right, bigger than three Canadian provinces in size.”
Mr. Knezevic adds that the project is supported by the B.C. Chamber of Commerce and the Port Authority is working to gain the same recognition from the national Chamber. “We’ve submitted application to the federal government to provide funding under the National Transportation Corridor Initiative. We also have a Memorandum of Understanding signed with an international operator/investor to be part of this project as a minority partner. Mr. Knezevic says that the Port Authority has presented its proposal across Canada and internationally to more than 400 interested audiences. “People are realizing that having all our eggs in one basket, that is, having all the transportation networks ending in the Port of Vancouver is not necessarily a viable solution, especially when confronted with the rising issues of congestion and population growth.”