Commodities boom bolsters cargo to record high at Vancouver port
Sector becomes `powerhouse' but need for more space looms at major facility
Cargo volumes hit a record high in the first half of the year at Canada's largest port, reflecting the global surge in demand for commodities.
Strengthened international demand for commodities such as barley and other Canadian grains pushed cargo volumes at the Port of Vancouver up seven per cent overall from the start of 2021 to the end of June compared to the same period last year, the Vancouver Fraser Port Authority reported in its mid-year report on Thursday.
“If you look at the numbers that we're seeing even during a pandemic, (it shows) the ports are an economic powerhouse in Canada,” Robin Silvester, president and chief executive at the Vancouver Fraser Port Authority, said in an interview.
The record volumes of cargo passing through Canada's largest — North America's third-largest — port reflect the unique dynamics happening in global supply and demand. Consumer demand in the first half of the year largely concentrated around goods as COVID -19 containment measures quelled discretionary spending on items such as travel and services. That in turn kick-started global manufacturers to ramp up production and ship out products and raw materials that quickly jammed up supply chains and filled up ports. Ports around the world including North America have been reporting logjams, while the cost to haul a 40-foot steel box from China to Europe has jumped 500 per cent compared to a year earlier, according to a Bloomberg report.
Canada's trade balance has been firmly in the black for much of the year.
“That marks five of seven months so far in 2021 in the black, the best run since 2014,” according to Benjamin Reitzes, economist at BMO Capital Markets. Exports have been driven by the auto and energy sector.
The Vancouver Port reported that Canadian grains saw some of the highest level of activities at the port from January to the end of June, with barley cargo volumes rising 151 per cent from the same time last year, likely driven by demand from China. Meanwhile, wheat and animal feed grew 23 per cent and 30 per cent, respectively. Canola, however, inched up only 0.3 per cent. Overall, cargo volumes rose seven per cent to 76.4 million metric tonnes in the first half of the year, compared to the same period in 2020 — and five per cent above the previous record set in 2019.
The number of containers in the port also surpassed records set out in 2019 and last year, growing 24 per cent. “It really comes down to ... we have more things that we want to consume being brought in containers, and medium-term forecasts for containers is two- to three-per-cent growth,” Silvester said.
While the growth is promising, the capacity at the port concerns Silvester, who said between 2025 and 2030, there may not be enough space at the port to accommodate for the expected volume surge in the coming years.
Currently the port authority is overseeing the completion of an expansion project that would make additional room for 600,000 containers, but it's also trying to get approval for another terminal expansion that would expand capacity a further 2.4 million containers.
“It's frustrating that we can look five years out and say we're going to be short on capacity,” Silvester said, adding that the port expects to see issues of congestion and export prices increasing.
“Unfortunately, those are the kind of symptoms we expect to be seeing in the last half of this decade until we have terminal two ready.”