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  • Ports want action on replacing old infrastructure to meet anticipated export growth

    Posted on: February 25th, 2018

    By Alex Binkley

    With two trade agreements in hand and exports of grain and other food products on the rise, Canada’s major ports are under pressure to replace aging infrastructure, says Wendy Zatylny, President of the Association of Canadian Port Authorities (ACPA). In a late January interview about issues facing the ports as well as during an appearance before the Senate agriculture committee in late 2017, she raised the need for the 18 main Port Authorities to deal with antiquated infrastructure. Zatylny says that positive economic signs plus the free trade deal with Europe that came into effect last year and the Comprehensive and Progress Trans-Pacific Partnership pact to be signed in March add to the reasons the ports want to proceed with infrastructure replacement and upgrades. The ports “currently have a $1.9 billion requirement to replace legacy infrastructure, and also require funding to support advanced infrastructure while handling this increased throughput,” she said. The $1.9 billion in projects were identified in a study conducted jointly with Transport Canada to identify the overall port needs, she said, and “an additional $4 billion is needed for other infrastructure projects”.

    The aging infrastructure includes “things like the piers that survived the Halifax explosion, or wall facings, or port roads that run through residential or commercial communities. If we rerouted some of those roads, we would achieve more efficient routing of vehicles into the ports,” she said.

    The ports have applied for financial support to the National Trade Corridors Fund announced in the 2017 budget for their infrastructure renewal projects, she said. Transport Canada says funding under the program is “to make Canada’s trade corridors more efficient and reliable. It will support the flow of goods and passengers by reducing bottlenecks, and address capacity issues and help the transportation system withstand the effects of climate change, and make sure it is able to support new technologies and innovation.”

    While the ports may be in line for funding from the National Trade Corridors Fund, “we note with some concern that the program was launched in September and it is already vastly over-subscribed,” she said. “To date, the 170 applicants that were approved to move to the second phase of the competition are requesting a total of $9.9 billion in project funds for the short term, whereas the entire program has an available pool of only $1.9 billion over 11 years. “We are not sure how this will play out, but it certainly points to a tremendous backlog of demand for infrastructure funding within the transportation trade corridor system, which includes all the Port Authorities.”

    At the same time, the Port Authorities are pivoting toward new opportunities and various markets, she said. “From our perspective, a great example is Port of Hamilton, which is reorienting its focus from steel to agriculture. Its goal is to become the agricultural hub for the shipment of pulses and other agrifoods serving all the farmers in the southern Ontario region. “Ports on the West Coast and in the Great Lakes, and specifically Thunder Bay in the Great Lakes, are dealing with near-record volumes as grain harvests increase,” she said.

    The government has set a specific goal of $75 billion in agrifood exports by 2025, compared to the $56 billion achieved in 2016. “What this means is that new investments in terminals, cargo-handling equipment and intermodal linkages are required to meet this expected demand,” Zatylny said. “The infrastructure funding that is being made available to us through the National Trade Corridors Fund will help with that because it is aimed at identifying and eliminating bottlenecks within the supply chain.

    “As we know, marine infrastructure is extremely expensive—more so than many other types of infrastructure—and Port Authorities have to play in that space,” she said. Typically, Port Authority projects are funded through a combination of internal financial resources available to the Port, bank loans, as well as grants and loans and other financial arrangements it can make with other government and private partners.” When Port Authorities were created 20 years ago, they were given “artificially low borrowing limits from the federal government,” she said. They “are forced to go on a case-by-case, project-by-project basis to Transport Canada, the Department of Finance and Treasury Board to ask for a one-time increase in their borrowing limits which, of course, slows down or adds to the time it takes to get financing in place for a project.”

    The Canada Infrastructure Bank could be helpful for ultra large projects in the major ports, she said. Amendments to the Canada Marine Act contained in the transportation reform bill now before the Senate will enable Port Authorities to access funding from the fledgling bank. “We look forward to that because it will be an essential component of that patchwork quilt of funding.”

    She also said that Port Authorities have evolved from mere wharf operators “to become experts in logistics and efficiency that is expressed in ships, cargo, trucks and trains,” she said. “They are, at their heart, data managers, knowledge economy participants, innovators and logistics experts. “We have been advocating for changes to the Canada Marine Act and to our regulations, such as borrowing limits — for example, letters patent amendment processes — that allow the ports to fully come into their own in that area.”