Why Won’t the Feds Fund Halterm?

On October 11, the CBC’s Paul Withers reported from “inside the failed fight for federal funding for Port of Halifax.” He’s referring to the Port of Halifax’s application for money from the $2 billion National Trade Corridors Fund (NTCF), established by the feds in July 2017 to “help infrastructure owners and users” invest in projects that:

  • support the flow of goods and passengers by reducing bottlenecks, and address capacity issues
  • help the transportation system withstand the effects of climate change and make sure it is able to support new technologies and innovation
  • address the unique transportation needs in Canada’s territorial North to improve safety and foster economic and social development
  • build on investments made by a variety of public and private sector partners
  • increase the flow of Canadian trade around the world through our ports, airports, roads, railways, intermodal facilities, bridges and border crossings


NTCF funding process diagram

Source: National Trade Corridors Fund (NTCF) Applicant’s Guide

The first funding announcement from the National Trade Corridors Fund came on April 11 and the last in this current round (there will be another call for proposals “later in 2018” targeting the “Territorial North”) was on July 17. Halifax’s application was apparently turned down in August. (I stand to be corrected, but I don’t think this was reported at the time — it seems we’re just hearing about it now.)


What’s best for NS

To find out why the Port of Halifax was turned down, Withers spoke with “Nova Scotia’s cabinet minister,” Treasury Board president Scott Brison, although Withers didn’t say where or when this conversation took place (and he didn’t speak to anyone else involved in the “failed fight for funding”). Brison, reports Withers:

…says Ottawa is examining what is the best way for Nova Scotia to capitalize on bigger container ships that are now becoming the industry norm.

There are proposals for new container terminals at Melford, in the Strait of Canso and in Sydney, Cape Breton.

I’m assuming it’s Withers, not Brison, referencing Melford and Sydney by name, although a little more clarity would be helpful, but either way, Brison seems to be suggesting his government might assist a private sector container terminal project over the Port of Halifax, which is one of the country’s 18 Port Authorities.

To be clear, the fund did accept applications from “for-profit private-sector organizations” (and for all I know, Sydney Harbour Investment Partners and/or the Melford Group applied). But Canada’s Port Authorities were specifically invited to submit proposals and three of them were granted funding — Vancouver ($167 million and $55.8 million)  Montreal ($48.5 million and $18.4 million) and Québec ($15.5 million) — four if you include the Port of St. John’s, Newfoundland, which received $175,000 to fund a productivity study.

What’s also interesting is that the refusal to fund the expansion of the Port of Halifax comes even as the federal government is in the midst of a modernization review of Canada’s Port Authorities. The review, announced by Federal Transportation Minister Marc Garneau in March 2018, is intended to garner “views and ideas on how best to position Canada Port Authorities for the future.” The deadline for submissions hasn’t even happened yet — it’s December 3.

According to Peter Ziobrowksi, the man behind the Halifax Shipping News, the plan to expand Halterm is all about positioning for the future. As he wrote in the Chronicle Herald last Saturday:

The expansion is required to handle larger ships carriers are using. The expansion is needed to preserve existing traffic into the future. As container lines consolidate and work to find efficiencies, ports will be dropped. [THE Alliance], consisting of shipping lines Hapag-Lloyd, ONE and Yang Ming, already dropped Halifax from its AL6 Mediterranean service, likely, in part, due to a move to larger vessels.

More on that decision to drop Halifax from the AL6 Mediterranean service later, for now, it’s just worth noting that the Halterm expansion is considered so important that the Port of Halifax will go ahead with a temporary expansion without federal funding.


The ask

Scott Brison. (Source: Government of Canada website https://pm.gc.ca/eng/minister/honourable-scott-brison)

Scott Brison. (Source: Government of Canada website)

According to Withers:

Brison’s office initially said the Halifax application was for a $400-million expansion involving a northern extension of Halterm and inland rail facility, a project with a potential 50-year lifespan requiring due diligence. An official later corrected the number to about $500 million.

After the application was rejected, the port announced plans this summer for a $35-million temporary extension of the Halterm container pier in the city’s south end to accommodate a second berth for ultra-class container ships, vessels which carry 10,000 or more 20-foot equivalent unit containers.

Interestingly, in this 30 August 2018 CBC story, in which he announced the plans for the $35 million temporary fix, Halifax Port Authority spokesperson Lane Farguson said nothing about Halifax having had its application for federal funding for the bigger project turned down. In fact, he told the CBC that the costs for the more permanent expansion had not been determined, which can hardly have been the case, given that the proposal requirements for the NTCF included a “project budget including activity expenditure breakdown, financial plan and evidence of support.”


The reasons

So why did the feds say no to the Halifax plan? Did they have problems with the budget? Did the plan not meet the objectives set out for NTCF projects? Was there an issue in terms of climate change resiliency?

Possibly, but those weren’t the reasons cited by the Treasury Board president, who highlighted two other issues:

…Brison says the proposed expansion submitted by Halifax raises multiple issues, including its impact on truck traffic downtown Halifax and best use of land.

“There are 700 trucks going through downtown Halifax every day,” Brison said. “That is one of the considerations we have to consider in terms … of a community where people want to live and a quality-of-life perspective.”

Container trucks parked along Deltaport Way create safety concerns. (Source: Delta Optimist https://www.delta-optimist.com/news/staging-area-to-get-trucks-off-shoulder-1.2020978)

Container trucks parked along Deltaport Way create safety concerns.
(Source: Delta Optimist)

Let’s start with the truck traffic issue, one that has been under discussion for some time and that the Port of Halifax has already introduced some measures to address. As the CBC reported in August:

Farguson said truck traffic in the city’s downtown is still a concern and the port is doing a few things to address this such as unloading trucks in Moncton, N.B., and moving goods by rail into Halifax.

He also said digital schedules allow trucking companies to schedule deliveries for off-peak hours.

What struck me immediately about the truck traffic argument was that it had to be an issue in the Ports that actually received federal infrastructure monies, all of which are located within cities.

And of course, it is.

The president of Québec’s trucking association, Patrick Turcotte, told LaPresse in April of this year that delays at the Port of Montreal, which sees 2,500 trucks enter and leave each day, have been a longstanding problem. Turcotte said they result in traffic jams on Rue Notre-Dame, the city street leading into the Port, and on Autoroute 25, the main north-south freeway in the city’s East End.

Things were particularly bad at the time Turcotte was speaking to the newspaper — he said at its worst, the line of trucks waiting to enter the Port extended eight kilometers along Rue Notre-Dame. This was due to a series of unfortunate events that included late-arriving ships, limited operating hours — trucks can only enter and leave the Port between 6 AM and 3 PM — and new rules from one of the shipping companies which demanded empty containers be returned directly to the Port rather than to the designated container depots located elsewhere on the island. Some trucking companies were charging customers for each hour spent waiting to pick up a container — and the waits could be up to five hours.

Truck traffic is also an issue in Vancouver, where in 2010, Port Metro Vancouver closed one of its gates to inbound container trucks headed to the Centerm terminal due to “unacceptable levels of congestion and traffic management issues along Clarke Drive and on port property.” Three years later, the Clarke Drive gateway re-opened, but only after Metro Vancouver and the City of Vancouver had completed $75 million worth of improvements to the affected roadways.

Container trucks, Port of Halifax (CBC Photo)

Container trucks, Port of Halifax (CBC Photo)

In 2015, a Metro Vancouver report considered the possibility of moving containers by barge. As the CBC reported:

The report…looked at the potential for more “short-sea shipping” in Metro Vancouver, and found 26 per cent of trucks leaving the port are heading to distribution centres in Metro Vancouver.

Taking those trucks off the road — an equivalent of 229,000 containers per year — would help reduce traffic congestion and greenhouse gas emissions…

Having raised the possibility of reducing traffic congestion and emissions, though, the authors then shot it down:

But the report concludes more “short-sea shipping” is unlikely, in part because trucks are still cheaper, especially after the province built the new South Fraser Perimeter Road from the port in Delta to the Trans-Canada Highway in Surrey.

I’d go out on a limb and suggest truck traffic problems and container shipping are pretty much inseparable, unless your container terminal is accessible only by rail or water or some combination of the two. (Los Angeles, for example, which is home to the two busiest container ports in the United States, was considering a $6 billion expansion to the 710 freeway connecting the ports to a railroad freight yard because daily truck trips — which now number 36,000 — are expected to hit 55,000 by 2035. But city transportation officials bowed to protesters and postponed the plan indefinitely, in part because of the principle of “induced demand” which shows, according to this very interesting Citylab article, that “increasing roadway capacity merely invites more drivers to show up.”)

So truck traffic issues, while serious and in need of addressing for any number of reasons — including those of environment and health — are not specific to Halifax.


Highest and best use

Brison’s other reason for turning Halifax down had to do with the best use of public lands.

Ziobrowksi (who, in passing, is interested in planning himself and is the founder of the Action Group for Better Architecture in Nova Scotia or AGBANS), says the land use argument comes out of “Halifax planning circles.” As he wrote in the Chronicle Herald last Saturday:

Many people in Halifax salivate at the thought of the development potential for the port lands. Halifax doesn’t currently need the land. There are already several undeveloped lots downtown, and the Cogswell redevelopment will open up significant new land in the area.

Canada Lands, the Crown corporation responsible for divesting federal lands, already has Shannon Park and the Ralston building downtown in the pipeline. Those holdings sit fenced off and unused.

It is beyond the scope of this article to explore this issue in detail, but I found this 2010 YouTube video by businessman, Chronicle Herald columnist and one-time Tory leadership contender Bill Black, who makes the case for developing the port lands.

Black advocates closing Halterm (and moving all container traffic to the Fairview Cove terminal) and the “underused” grain elevator next door, thereby freeing up about 100 acres of what he characterizes as “some of the most valuable land in Eastern Canada” for “low rise developments, for more public spaces, for commercial, residential, things that would complement the Nova Scotia College of Art and Design campus, the farmer’s market.”

In addition, he proposes turning the rail cut that serves the port (carrying one train a day to Montreal) into a commuter roadway with a separate path for bikers. (Black expounded on the idea in a subsequent column on his New Start Nova Scotia blog, explaining that some have argued the cut could be used for commuter rail rather than as a roadway, a prospect Black felt would be too costly but agreed should be studied.)

Taken all together, Black argues, the changes would make Halifax a better place to “live and work.”




Critics take issue with a number of Black’s points. One commentator I read suggested half the rail cut could be paved providing a one-way route (sometimes in, sometimes out) for priority vehicles — like container trucks and buses — thereby, at least in theory, solving both the the truck traffic and the time-consuming commute problems.

I’ve also seen the counter-argument that the plan to move all container traffic to Fairview Cove is flawed because the terminal can’t handle the bigger ships that are beginning to show up in Halifax. Ships like the 349-meter-long ZIM Antwerp, which has a capacity of 10,000 TEUs (twenty-foot equivalent units) and which set a Port of Halifax record when it called in June 2017:


Still others have proposed a have-your-cake-and-eat-it-too solution that would see the container terminal move to Dartmouth, freeing up the Halifax-side lands (and some Dartmouth-side lands) for development. One such proponent, Bernard Smith, a former treasurer of the City of Halifax and former NS deputy finance minister, while making the case for Dartmouth in the Chronicle-Herald recently, admitted the possibility hadn’t been properly analyzed or costed. He then took what seems like a rather wild stab for a former deputy finance minister, saying “For argument’s sake, could we peg the overall cost at about $700 million?” (Which, of course, we could — for argument’s sake we could peg the cost at $3.49 in Canadian Tire money — but is that really a good basis for decision-making?)

For what it’s worth, Port Authority spokesperson Lane Farguson told the CBC in August that “looking much further into the future” if land were to “become available in Dartmouth” the Port would be “interested in acquiring it for a terminal on that side of the harbour.”

Personally, what I found particularly striking about Black’s arguments was how little value he placed on the container business. In his follow-up article he noted that in response to his suggestions about the port lands:

The local International Longshoreman’s Association president fumed that hundreds of millions of dollars of activity would be lost—perhaps he did not notice, or wilfully ignored, the fact that the number of containers to be handled would not much change (never mind that container handling does not produce anything like that much economic activity).

It’s the last line that interests me, the notion that container handling doesn’t produce that much economic activity. Because it’s so completely contrary to what we’re being told here in Cape Breton, where the Port of Sydney has painted an incredibly rosy picture of the “economic activity” associated with container handling:

The moral, I guess, is not to rely on project advocates for your facts.


AL6 service

Speaking of Sydney, I suppose it’s finally time to get around to examining that Brison quote I began with — the one suggesting the government might be considering supporting the container terminal projects in Sydney or Melford. (Or maybe somewhere halfway between the two, like Fourchu).

I’m going to couple it with a consideration of another recent development at the Port of Halifax — the aforementioned decision of the Transport High Efficiency (THE) Alliance to drop the port from its AL6 Mediterranean service. We are now about to see whether I understand this well enough to explain it — covering the shipping industry is really not for the faint of heart:

THE Alliance, as noted above, includes Hapag-Lloyd, Ocean Express Network (ONE) and Yang Ming. ONE, which was formed through the merger of three Japanese shipping lines — Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha and Nippon Yusen Kaisha — has hot-pink shipping containers. That is neither here nor there in the bigger question of what Brison’s comment means for Sydney but it’s sure to interest a particular Spectator reader — you know who you are — for whom I am including this picture:

THE Alliance operated the AL6 Mediterranean-East Coast North America service with, up until recently, five panamax (5,000 TEU) vessels and a port rotation that included Fairview Cove in Halifax.

In 2016, it began operating the AL6 service in conjunction with the Israeli carrier Zim Integrated Shipping Services. What this meant was that Zim — which also called at Fairview Cove as part of its Zim Container Service Atlantic (ZCA) service — took over three Spanish ports from THE Alliance’s AL6 service and added them to its ZCA service.

In September of this year, THE Alliance shook up the AL6 service again, this time by joining forces with the Oceans Alliance (CMA CGM/Cosco/OOCL) Amerigo Service, switching to six post-panamax (8,000 TEU) vessels and dropping Halifax and Livorno from the port rotation.

Zim, which, as we noted, already calls in Halifax, will add Livorno to its ZCA route, which is now being marketed as the AL7 service.

What this means for Halifax, I have read, is that it will lose one call a week but will probably see no decline in container volumes.

Observers like Ziobrowski are suggesting the decision to drop Halifax from the AL6 route was “likely, in part, due to a move to larger vessels.”

But was it? And does this — and the federal government’s refusal to fund the Halterm expansion — have any implications for Sydney and/or Melford?

I have no idea but as has become my wont in situations where I have no idea about some matter connected to the container shipping industry, I contacted Neil Davidson, senior analyst for ports and terminals with Drewry, the maritime research and consulting firm, who not only studies this stuff for a living, but is gratifyingly prompt in answering email queries from bothersome Canadian journalists.

Neil Davidson

I asked him what he made of these latest developments in Nova Scotia and he said:

I don’t think the port’s ability to handle 8,000 teu vessels is behind the decision by THE alliance to drop this call (as you know, ships of over 10,000 teu have called at Halifax in the past). Halifax has pretty good deep water facilities for container vessels. More likely it is a question of THE’s share of the Halifax/Eastern Canada market, and/or a need to rationalise port calls to optimise transit times and ships deployed on the overall AL6 route.

And…ultimately it is not the ships and the services calling at a gateway port that determines its throughput volume, but it’s the underlying cargo demand that is the driver. So Halifax’s overall teu traffic may well be unaffected.

The decision by the government to reject Halifax’s plan to enhance the port for bigger ships is certainly a blow (although I believe that an expansion of Halterm’s capability is still going ahead?), but it’s important not to create a direct link between this and the potential for Sydney or Melford. These two projects are not simply greenfield mirror images of Halifax. Their rationale is different and for either or both to go ahead, it would almost certainly require the backing of at least one major shipping line, and as part of this, a decision by this/these line(s) to change the way that the ECNA is served in terms of liner networks.

Which seems to suggest that now that the smoke (some of which I’ve generated myself) has cleared, nothing has really changed as far as Sydney and Melford are concerned.

As for Halifax, Davidson seems to believe an expansion is necessary even if President of the Treasury Board does not.