Selling off Global Transportation Hub the ultimate dashed dream

Facility is logical, innovative response to Saskatchewan issues,

On July 25, Justice Minister Don Morgan finally announced the inevitable: “We don’t want to have a fire sale, but we think it’s appropriate for us to look for other options for the GTH,” he said.

“In retrospect, it’s probably not a business the government should have been involved in.”

The Global Transportation Hub is not a business the government should be involved in? Hmmm, not so sure about that. Let’s provide some perspective. The GTH was officially created on June 24, 2009, to deal with a suite of massive, intractable problems.

Saskatchewan is 1,400 kilometres from the nearest port, a serious problem for a province that takes considerable pride in its growing exports. And major inefficiencies are baked into our transportation system.

We truck things that should go by rail. We have a big, creaky, lumbering rail system that services big clients in the oil and gas, potash and agriculture industries.

What incentive do the two big rail companies have to spot a few bulk cars on a siding for an entrepreneur who wants to open a new international market for a new Saskatchewan product? Not much.

Then there is this problem of containers. Consider this opportunity: Timothy hay from Saskatchewan is loaded in containers in northern Saskatchewan and cracked open near dairies in Japan, Taiwan and South Korea.

But to make something like Timothy hay into a serious export industry, we need some kind of intermodal transfer point located at a road-rail interface where products can be trucked for transfer to rail.

We have a 300-acre CP Rail intermodal facility capable of 250,000 lifts per year.

We just don’t have the other stuff that goes along with it.

In fact, we can’t even get the containers we need. The preferred inbound container is a 40-foot container crammed full of high-value retail goods, while the preferred outbound container is a 20-foot partially loaded with heavy commodities like peas and beans.

Compounding the problem, container users currently have no incentive to co-operate to solve the problem, which leads to container hoarding and reliance on less cost-efficient truck routes.

The GTH established in 2009 was originally conceived of as a kind of “freight village” dealing with all of the above challenges.

A freight village is really a cluster of companies supporting freight consolidation and distribution, providing services such as office facilities, truck stops, hotels and restaurants.

Successful freight villages are intermodal transfer points where some combination of road, rail, air and sea routes intersect. There they rely on synergies that result from the co-location of related companies and naturally create value-added opportunities.

For example, the GTH was going to remove bottlenecks in the transportation of Saskatchewan’s agricultural products while simultaneously enabling the development of massive new markets for containerized Saskatchewan food in East and Southeast Asia.

The freight village is not a flaky, aspirational idea. Examples of the success of freight villages exist all around the world: Autoporto Bologna opened in 1971 where it supports a variety of export industries.

The massive Cargo Distribution Centre in Bremen, Germany, has been in operation since the mid-1980s. The Raritan Center in New Jersey hosts restaurants, hotels and banks, as well as Fedex Express, United Parcel Service and Fedex Ground logistics companies. And the development of all of these projects involved chambers of commerce, municipal governments and regional governments.

None of these projects could have succeeded without centralized management, long-term planning, carefully staged investment, robust governance and thoughtful environmental regulation.

And just for the record, in the mid-2000s smart, sophisticated government people in Saskatchewan did what government technocrats are supposed to do: They looked beyond our borders, anticipated global trends, and came up with a plan for Saskatchewan to join the global economy.

So, Mr. Morgan, this does sound a lot like a business in which the government should be involved.

Selling off the Global Transportation Hub is the ultimate dashed dream, and a failure from which our province may not readily recover.

Just something to think about while political parties make hay with the GTH land scandal and line themselves up for the next election cycle.

Sinclair is an assistant professor at the University of Regina in the faculty of business administration.