Atlantic Gateway - rhetoric or reality
Leadership needed to breathe life into huge opportunity
Trade and transportation may seem like dull subjects but make no mistake – they determine how well we live and how much we pay for products.
Poor countries have generally poor infrastructure and this includes inadequate transportation systems like road, rail, air and sea. Rich countries have efficient infrastructure in abundance. The contrast is stark. The quality of a country’s infrastructure, along with its education system, is probably the best gauge of a country’s standard of living. Wholesalers of soybeans pay a dollar more per bushel for Canadian soybeans than Brazilian beans.
Why the price difference? The answer is transportation. Brazil’s transportation infrastructure is simply not as well developed as Canada’s. Sixmile-long traffic jams of trucks can be seen on any day waiting to load or unload products outside Brazilian ports. The long trek on inadequate roads resulting in delays, idling costs and spillage make the Brazilian products less attractive to the wholesaler who would rather pay a little extra for on time and undamaged deliver- ies. Even though the initial production costs of Brazilian soybeans are lower than that of their competitors in Canada, the lack of efficient infrastructure in Brazil and the resultant delays and spoilage neutralize Brazil’s initial cost advantage and the producer’s ability to compete. Thus, in the context of economics, we can see why adequate infrastructure is so important.
This brings us to the Atlantic Gateway and why we should care about it. The Gateway was conceived almost a decade ago as a corridor for handling imports and exports from Europe and Asia. It made sense then and still does today. With the Comprehensive Economic and Trade Agreement (CETA) and the expansion of the Suez Canal, container traffic is set to boom. Traffic coming to (and from) the east coast of North America will double in the next 15 years. Already, 500,000 containers sail past Sydney every month on their way south to other ports, and in 10 years that number will nearly double. These ships reach Sydney first on the Great Circle Route and then sail right past us on their way to American ports like New York or Norfolk. The goal of the Atlantic Gateway should be to capture 10 per cent to15 per cent of this traffic – and it can be done. American ports are suffering chronic congestion and delays in moving containers inland from both the east and west coasts. These delays are cutting into American economic growth and aggravating both shippers and their customers who are, as a result, looking for alternatives. This represents an opportunity for Canadian ports on both coasts. With federal and provincial help, Prince Rupert is planning to double capacity and Vancouver has just completed a major expansion.
Here on the east coast, Montreal, Halifax and Sydney are positioned to benefit as well – only if we get our act together. Sydney’s plans for a deep water transshipment hub, designed specifically to accom- modate Triple E class ultralarge container ships, is critical to this strategy. These super- large ships represent the future of container shipping and no east coast port is really equipped to handle them. Therein lies our opportunity. How big is the opportunity? In just 20 years, Prince Rupert has grown to where it presently sustains more than 2,000 jobs. Port related activity adds $ 290 million to the province’s GDP and $550 million to Canada’s economy. That’s big money. Sydney’s economic impact could be every bit as big.
If, however, we are waiting for the federal government to act, we will wait a long time. In the 1990’s, under the pressure of unsustainable deficits, the Canadian government pretty much got out of the transportation business. They sold off airports, harbors, railways, airlines, etc. This privatization improved efficiency but it also left Ottawa with few tools for shaping transportation strategy, except writing checks. For example, $ 68 million was recently given to the port of Saint John. Halifax received a new $ 30 million runway. Syd- ney received $38 million for a vitally needed dredge.
But where does all this fit into a larger Atlantic Gateway strategy? No one knows. And it’s not Ottawa but the Maritime provinces and Quebec that must answer this question. We must provide the leadership needed to breathe life into the Atlantic Gateway. Note that Quebec just announced its own $ 9 billion maritime strategy.
The goal for the Atlantic Gateway is simple: capture 10 per cent to 15 per cent of the container traffic arriving from Europe and from Asia through Suez. To repeat – it can be done.
All we have to do is make the necessary investments in maritime and rail infrastructure, free trade zones and regulatory reform. Prince Rupert shows it can be done. In building the Canadian Pacific Railway, John A. Macdonald understood he was doing more than building a railroad – he was building a nation.