Introduction

On 3 February 2022, the House of Commons Standing Committee on Transport, Infrastructure and Communities (the Committee) agreed to undertake a study on large port infrastructure expansion projects in Canada. As part of this study, the Committee visited the ports of Montreal, Halifax, St. John’s, Hamilton and Prince Rupert in March 2023. The Committee also devoted two meetings to this study and heard from 10 witnesses.

The following sections summarize the discussions with various stakeholders regarding capacity and competition issues for Canadian ports, challenges implementing port expansion projects across the country and cooperation among the parties involved in the Canadian supply chain.

Capacity and Competition Issues

During this study, several witnesses raised issues surrounding capacity throughout the Canadian supply chain in order to identify the key bottlenecks and to see how they affect the efficiency of Canadian ports. Witnesses spoke about problems with rail and container storage capacity in Eastern Canada.[1] According to Robert Ashton, President of the International Longshore and Warehouse Union Canada, ports in the West do not need to expand their container terminal capacity; rather, the focus should be on addressing problems with the rail network so that containers can move more quickly within the country.

Christopher Hall, President of the Shipping Federation of Canada, said that “cargo is king,” as shippers always find the most efficient and affordable path to ship their goods to destination. On the subject of the competitiveness of Canadian ports with U.S. ports, he stressed that Canada must ensure that it has an efficient supply chain, since “once cargo finds another routing it won’t come back.” David Miller, Senior Advisor to the Executive of the Vancouver Fraser Port Authority, said that if no port capacity is built in Vancouver and Prince Rupert, “our exporters and importers will be forced to rely on U.S. ports.”

Canada Port Authorities (CPAs) who were visited by the Committee or who came to testify spoke about their ongoing port infrastructure expansion and optimization projects. On the importance for Canada to remain competitive and invest in its trade infrastructure such as ports, railways, roads and airports, Robin Guy, Vice-President and Deputy Leader, Government Relations, Canadian Chamber of Commerce, stressed that not only do current capacity requirements need to be met, but also long-term requirements. For example, during their visit to the Port of Montreal, the Committee learned that the port estimates that it will reach full capacity in a few years and is therefore looking to build a new container terminal in Contrecœur.[2]

Daniel-Robert Gooch, President and Chief Executive Officer of the Association of Canadian Port Authorities, pointed out that the Great Lakes ports are underutilized, a finding that the Committee heard as well during its trip.

Project Review

Witnesses expressed support for a more predictable, timely and consistent review process for port infrastructure expansion projects.[3] During his appearance, Mr. Miller gave two examples of recent projects at the Port of Vancouver that did not have to go through the federal impact assessment process.[4] He said that the port authority’s internal assessment process resulted in their approval in 7 and 16 months respectively, unlike the Roberts Bank Terminal 2 project, which “has been in the federal environmental review process for nine and a half years.”

According to Jacques Paquin, Executive Vice-President of the Port of Trois-Rivières, it is “increasingly difficult to launch major new port projects in Canada,” given the challenge of getting the required authorizations. Bonnie Gee, President of the Chamber of Shipping, said that while they recognize that sometimes “government intervention” may be needed to launch projects, the lack of coordination between federal government departments on “conservation initiatives, reconciliation and project approval puts the industry in a challenging space to operate.” She expressed concern that this would result in a loss of operational flexibility for vessels, terminals and shippers. Mr. Guy argued that it is important to find a way to expedite the impact assessment process, but he also stressed that it is not a matter of economics or the environment, pointing out that they both “go hand in hand.”

Mr. Gooch said that decarbonizing shipping is a “top priority” for the CPAs. During the Committee’s trip, several authorities spoke about decarbonization projects, including exploring opportunities involving green hydrogen or improving the supply of shore power for ships. Shore power allows some vessels to shut off their engines, thereby reducing fuel consumption while docked.[5] Mr. Paquin said that this kind of initiative would reduce greenhouse gas (GHG) emissions at the Port of Trois-Rivières by 50%, but requires significant investments of over $100 million. He said that it will be “necessary to get help, and specifically funding from programs like the NTCF [National Trade Corridors Fund] programs and maybe other sources.”

Borrowing Limits and Project Funding

The witnesses heard from during the trip and others heard by the Committee said that the borrowing limits imposed on CPAs in their letters patent were too low.[6] [7] Stakeholders seen by the Committee during their visit to the Port of St. John’s explained that the authority’s financial capacity was insufficient to meet the port’s future infrastructure needs.

Mr. Miller said that the process for raising borrowing limits can take several years, which makes “responding quickly to commercial opportunities impossible” for CPAs. Mr. Paquin would like limits to be quickly adjustable in keeping with the profitability of proposed projects. Mr. Gooch recommended that borrowing limits be eliminated and that the Government of Canada consider funding projects on their merits and on the creditworthiness of the CPA putting forward the project.

During his appearance, Mr. Guy said that “a federal commitment to major, strategic long-term investments is key to building Canada’s trade infrastructure.” Like Mr. Gooch, he agreed that the NTCF was a good program that funded projects able to support the Canadian supply chain. Mr. Guy said that the federal government should work to increase the speed at which projects receive funding, a desire shared by Mr. Gooch, who pointed out that delays can be cause for concern in “an environment in which construction and material costs, and inflation, are quite extensive.” Along these same lines, PSA Halifax recommended that existing NTCF beneficiaries be able to apply for additional funding to cover higher project costs caused by inflation.

Labour and Automation

During his appearance, Mr. Paquin pointed out that Quebec’s ports are facing a labour recruitment and retention challenge and he argued that artificial intelligence and automation are solutions to this issue. He said that the Port of Trois-Rivières, in collaboration with other St. Lawrence ports, has undertaken the creation of a port logistics centre of expertise and has asked the federal government for financial support for the centre and for support to encourage collaboration among the CPAs.

Mr. Hall expressed concern not just about shortages, but also “the overall efficiency of how labour is organized in Canada’s major ports.” He said the following:

Labour is having a difficult time recruiting, like all sectors. From a sustainability standpoint, how are we going to maintain the volumes, or grow the volumes, at our ports if we don’t include technology as part of the solution?

Mr. Hall said that introducing automation does not necessarily mean job losses. However, Mr. Ashton expressed concern that part of the work at Roberts Bank Terminal 2, including what he called “horizontal traffic,” would be automated. He believes that automation could result in the loss of jobs driving tractor trailers and operating the rubber-tired gantries. With regard to this project, Mr. Miller said that it was too early to estimate the degree of automation. He also said that the industry seems to be trending toward “partially automated terminals, where there are still a significant number of jobs.”

Mr. Ashton called on the Government of Canada to consult with labour when port infrastructure projects are likely to have an impact on their working conditions. He also recommended allowing labour unions to sit on CPA boards. When asked about this proposal, Mr. Hall said he believed that it is an interesting concept and that involving labour in the development of large port projects “would only benefit everyone.”

PSA Halifax argued that there was a shortage of Class A pilots at the Atlantic Pilotage Authority and asked the government to “allocate more resources to pilot training” in order to increase the pool of Class A pilots to meet demand at the Port of Halifax.

Relations Between the Port Authorities and Neighbouring Communities

The state of the relationship between CPAs and the surrounding communities was discussed during the Committee’s trip. While some CPAs said that they meet with communities regularly, including through a committee of local representatives, others said that they meet when a project is being considered. Committee members also heard about efforts by CPAs to relieve congestion on local roads by building infrastructure to move truck traffic or by increasing rail capacity at the port.

During the Committee’s visit to the Port of Prince Rupert, port officials spoke at length about the involvement of the neighbouring Indigenous communities in port operations. This includes labour at the port, where over 35% of the workers identify as Indigenous. Also raised was the participation of Indigenous-led business in conducting infrastructure projects. The port cited the Fairview-Ridley Connector Corridor project, a 5 km road built by the Coast Tsimshian Northern Contractors Alliance, a local First Nations joint venture, and completed in 2022.

Mr. Paquin said that the Port of Trois-Rivières’s growth was largely due to the relationship between the port and the city and neighbouring communities. Pointing out that the port did not have a lot of vacant spaces to develop, he said that the city transferred a major road to the port, enabling it to more effectively manage the truck traffic entering and leaving the port. Mr. Paquin also spoke about a project in collaboration with the city to redevelop a portion of the port facilities near the downtown and the historic quarter of Trois-Rivières. He said that since the project is of a more “recreational and tourist” character, it falls outside the powers it has an a CPA, and this is why the authority could not go ahead.[8] He asked the federal government for “greater agility and flexibility” to conduct projects that go beyond the responsibilities of CPAs.

Herbert Pond, Mayor of Prince Rupert, asked to explain the special case of his city, with a population of 12,000, which is host to Canada’s third largest port, the Port of Prince Rupert. He pointed out that the trade corridor through the city “supports billions of dollars of economic activity across Canada and generates millions of dollars of revenue for the provincial and federal governments”, while the city is battling “aging infrastructure, near-zero vacancy rates and inadequate revenues.” On the topic of infrastructure, Mr. Pond explained that the city had to declare a state of emergency last winter following 14 water main breaks in two weeks. He asked the federal government to provide the city with financial assistance to modernize its “aging water system.”

Mr. Pond expressed support for the port’s expansion, saying that Prince Rupert has “a lot of undeveloped land in the port complex, and congestion [there] is very low.” He did say that he would like to see the city benefit more from this expansion. He suggested that for smaller communities that host large ports, the federal government should expand the mandate of CPAs to include investment in housing. Mr. Pond also explained that the amount of payments in lieu of taxes by the Port of Prince Rupert to the city is a friction point between the two parties, with the city looking for “predictable long-term cash flow so that it can borrow to do the work it needs to do within the municipality.” He also recommended that a portion of the fees paid annually by CPAs to the federal government be returned to the host communities.

Cooperation Among Port Authorities

During the Committee’s trip, the members were interested in the extent of collaboration among Canadian ports and learned that it was limited, despite some openness on the part of CPAs. The Committee heard that Canadian ports are competing more with their U.S. counterparts than with each other.

Mr. Paquin explained that the ports of Trois-Rivières, Montreal and Quebec City decided to form a partnership to increase the competitive capacity of the St. Lawrence. Working groups were created to focus on various subjects of interest to the three entities, such as the environment and marine traffic management. He said that they were currently working on “standardized procedures for receiving ships at the three ports” and also spoke about implementing a “shared communications tool” so that users of the three ports can register at the same place.

Mr. Paquin argued that the Government of Canada “has to create conditions that are favourable” for greater cooperation among the ports. He added that the three CPAs in the partnership would like to expand their cooperation, but he had the following to say about the limits imposed by the Canada Marine Act:

[I]f we wanted to look at optimizing our infrastructures and sharing our strategic plans and development plans, and try to establish a strategic plan that reflects the strengths and weaknesses of each of the three facilities to make the network more effective as a whole, we could not do that. That is prohibited.

Mr. Gooch also argued that there is a need to explore ways for Canadian ports to collaborate more, such as on “joint infrastructure projects or procurement.”

Like Ms. Gee, Mr. Hall recommended implementing a national supply chain strategy. In his view, it would “guide Canada’s future decisions regarding investment in trade-enabling infrastructure.” With a similar objective, the implementation of a national freight strategy was also discussed during the Committee’s visit to the Port of Halifax. Mr. Hall said that such a strategy would need to take into account the uniqueness of each port.

Mr. Guy spoke about a strategy for the corridors, particularly in the West, the St. Lawrence and the Arctic, and said that the federal government should play a leadership role in its development. He believes that this strategy would bring the stakeholders together, including the provinces, the private sector, communities and Indigenous groups.

Mr. Gooch pointed out that locally, port authorities take a strategic view of how all the pieces of the supply chain fit together. He said that a national supply chain strategy is needed to “put all the pieces into a national context.”

Along these same lines, Mr. Hall also recommended the development of a national supply chain data and digitization strategy. During the trip, the Committee members learned that several ports have projects to increase the visibility of data about the flow of goods through their ports and the performance of their corridor. For example, during their visit to the Port of Hamilton, the members heard about a partnership between the port and McMaster University to create a data analytics resource, Fluid Intelligence, aimed at solving the challenges associated with the flow of goods in southern Ontario.[9]

The members found that CPAs appeared to be working individually and not with the shared goal of improving the fluidity of the supply chain nationwide. As a result, the members noted a lack of standardization between the data collected from one port to another. Mr. Hall’s proposed strategy would be to pool the data collected by the different platforms. In this respect, Trevor Boudreau, Director of Government Relations for the Vancouver Airport Authority, made the following recommendation:

[F]ocus support and prioritize digital infrastructure and data sharing to create greater visibility, efficiency and multimodal collaboration. This will ensure that Canada is making the most of existing and future port infrastructure, providing clarity for end‑users and delivering improved climate outcomes.

Mr. Hall argued that “[g]overnment departments and agencies must also be prepared to join the digitization effort,” particularly through a “maritime single window reporting model” that would consolidate all data collected from all the components of the supply chain. Ms. Gee agreed, saying that there was a lack of coordination not just among ports, but also between federal government departments. She said that there seems to be no coordination in terms of managing the arrival of vessels and clearing the vessels in.

Conclusion

During its study, the Committee heard from various Canada Port Authorities about their plans to expand and optimize their port infrastructure. Witnesses spoke about the challenges implementing these projects, including the time required for the project review process, the authorities’ low borrowing limits, and the labour shortage in the marine sector. Challenges related to the cohabitation between the ports and adjacent communities were also discussed. Lastly, witnesses expressed support for greater collaboration among Canadian ports, including greater sharing of cargo flow data and the development of a national supply chain strategy.