Prince Rupert Port Prepares for Container Ships to Call Soon

The Port of Prince Rupert, located along the mist-shrouded upper reaches of Canada’s west coast, once was planned as a land link to ship Chinese silk from Asia to Europe.

When railway builder Charles Hays, the originator of that idea, boarded the Titanic and went down with the ship in 1912, Prince Rupert’s destiny changed. Its chief exports later became big-bulk items such as coal, lumber and grain.

In later years, those goods were increasingly diverted to Vancouver’s port, 500 miles to the south. The coal mines dwindled in volume. In 2005, the port handled only 4.4 million metric tons of cargo, compared with 14 million in 1994.

To keep its terminal gates from closing, the Prince Rupert Port Authority tapped into the burgeoning growth in cargo container ships sailing from Asia to North America. The port decided to convert its Fairview Terminal, which handled bulk cargo, to a cargo container terminal with the latest equipment to handle the biggest ships being planned for the seas at a cost of $110 million.

On Sept. 12, the revamped Fairview Terminal, now called the Fairview Container Terminal, was officially opened at Prince Rupert with one berth and three cranes large enough to handle cargo coming off the new mega-ships carrying as many as 12,900 20-foot containers, or TEUs, a standard cargo container measurement.

At the end of October, the terminal, operated by Maher Terminals in Port Elizabeth, N.J., will receive its first cargo container ship coming from China. It will be carried by the Shanghai-based China Ocean Shipping Co. (COSCO), which in May signed an agreement to be the first cargo shipping line to call at the port once a week. No other shipping lines have signed on yet.

“All the equipment is new, and everything is automated,” said Don McBeth, executive vice president of marketing and sales for Maher Terminals, which is also the largest container-terminal operator in the Port of New York and New Jersey. “There is no time wasted from when the containers are unloaded from the ship to the time they are put on the train. They are on their way.”

Phase I of the project calls for the port to handle 500,000 TEUs a year. By 2011, expansion plans call for the port to process 2 million TEUs.

That is still nothing compared with the Port of Long Beach and the Port of Los Angeles. Last year, Long Beach saw more than 7.3 million 20-foot containers reach its docks. Los Angeles’ traffic was a little higher at 8.47 million TEUs. Together, the two ports handled 40 percent of the cargo coming to the United States from Asia.

But with cargo volumes projected to grow at double-digit rates at West Coast ports during the next decade, Prince Rupert port officials figured they had a chance to snare their share of the business.

“By 2012, demand should exceed capacity [in the United States],” said Jon Poelma, senior director of Pacific Services at Maersk Line, a subsidiary of A.P. Moller-Maersk, the largest shipping line in the world.

Prince Rupert may seem like it’s located at the far end of North America. After all, it is 500 miles north of Vancouver, British Columbia. But with Prince Rupert being 1,200 nautical miles closer to Asia that any other West Coast port, it means that containers crossing the ocean from China or other surrounding countries can make the journey two to three days faster than they could travelling to other West Coast ports.

Port officials are banking on loading most of the containers that arrive at Prince Rupert on trains headed to the Midwest and beyond. All containers will be shipped by rail. No trucks will be used. “We have a railway that is operating at less than 15 percent,” said Barry Bartlett, a Prince Rupert spokesperson.

Howard Finkel, executive vice president at COSCO Americas, said the journey for a container traveling from Asia to Chicago will only take 18 days, and one going to Memphis, Tenn., will take 19 days, two to three days faster than it would going via Los Angeles/Long Beach.

COSCO’s ships, which will be carrying as many as 5,500 TEUs, are scheduled to sail from Hong Kong to Yantian, China, and then Yokohama, Japan, before arriving in Prince Rupert.

Once docked, all containers will be unloaded and shipped by rail via Canadian National Railway Co. (CN), which has invested more than $30 million in rail upgrades and purchased 50 new locomotives. Its lines stretch into the United States, serving cities as diverse as Chicago, Detroit, St. Louis and Memphis.

“Our supply chain in the United States is mature with limited growth [at the ports],” Finkel said. “The land bridge [the railroad] is running at full capacity, and rail growth is expensive.”

But the emergence of Prince Rupert as a competitor doesn’t have Southern California port officials too worried yet. “It’s more competitive to the Northwest ports than it is to us,” said Port of Long Beach spokesperson Art Wong.But the Northwest ports express little dismay at seeing a port opening to the north. “The growth of trans-Pacific trade is such that there is going to be plenty of cargo to go around,” said Port of Tacoma, Wash., spokesperson Mike Wasem. “We have long-term leases with customers, and these are 25- to 30-year leases. So they will continue to call here.”

Last year, Tacoma saw 2.1 million TEUs pass through its terminal gates. That should remain flat this year. It is projected to rise to 3 million TEUs in three years, Wasem said.

The Port of Prince Rupert could shine next July when the contract between longshore workers at 29 West Coast ports and the shipping lines expires. The last time the contract expired between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Union, in 2002, there was a 10-day lockout that crippled cargo transportation at those ports.

While Prince Rupert’s longshore workers are ILWU members, they operate under a different contract that expires at a different time.

“This gives most importers a contingency plan for next year,” said Enrico Salvo, chairman and founder of Carmichael International Service, a Los Angeles customs broker and freight forwarder with a number of apparel clients. “Prince Rupert could be one way to enter the continent, go across Canada and enter the United States to Chicago [during a strike or a lockout].”

Prince Rupert is just one of several port-expansion projects being planned outside the United States to compete with the country’s West Coast ports.

In Panama, residents approved widening the Panama Canal to handle the new mega-ships that carry more than 8,000 TEUs. Right now, the 93-year-old canal can only accommodate ships that carry no more than 4,000 TEUs.

The route is used to transport goods between Asia and the U.S. East Coast.

The canal project will add another lane by 2015, doubling its capacity.

On Mexico’s West Coast, major expansion plans are going on at Laacute;zaro Caacute;rdenas, south of Manzanillo, where giant terminal operator Hutchison Whampoa Ltd. of Hong Kong is upgrading a large container terminal that will soon allow it to take in 700,000 TEUs a year instead of the current 100,000.

The idea is that most of the goods arriving at the docks will be destined for Mexican consumers. But a fair share will be shipped on the Kansas City Southern Railway de Mexico to Kansas City, Mo., and then routed to other U.S. cities.