What a Real Port Announcement Looks Like

My judgement of port announcements has been forever damaged by what passes for them at the Port of Sydney (where the word “partner” is applied so broadly it has lost all meaning) but Tuesday’s announcement by the Port Authority in Québec has the ring of actual development about it:

The Québec Port Authority (“QPA”) is proud to announce the signing of a long-term commercial agreement with Hutchison Ports, the world’s leading port network, and CN (Canadian National Railway), the leading North American transportation and supply chain company, to build and operate the new container terminal, known as project Laurentia (previously Beauport 2020).

Even I, with my compromised judgement, can see that the inclusion of CN and Hutchison makes this an announcement with more heft to it than the latest from our port “developer” Albert Barbusci, who sent out a press release to announce he’d teamed with a new private equity firm with no port expertise and no projects of any kind under its belt.

Hutchison Ports, according to the release:

…plays a strong role in the maritime industry worldwide and handles close to 85 million TEU (twenty-foot equivalent unit) per year, representing approximately 11% of the global containerised cargo trade.

The firm operates 51 ports in 27 countries.

CN needs no introduction, other than to say it is not Barbusci’s rail “partner,” Genesee & Wyoming, the American short-line operator chomping at the bit to abandon the Truro to Sydney portion of the Cape Breton and Central Nova Scotia Railway (CBNS) and sell it for scrap.

The QPA is even claiming it has the financing lined up:

The $775 million project will be financed primarily through the joint investment of the three partners. The QPA also has ongoing discussions with the federal and provincial governments to complete the financing. The new terminal facility will support hundreds of new jobs at full operations.  Hutchison Ports was selected after a competitive process in which QPA invited the leading international port operators to provide proposals to participate in the project. HSBC acted as QPA’s sole strategic and financial advisor throughout the process.

Imagine, a “competitive process” to choose a port operator.

A “strategic and financial” adviser with input into the process.

Two levels of government in talks to provide additional financing.

No mention of a Chinese sister city, a Montreal real estate developer or an Ontario-based marine repair outfit anywhere to be found.


Interesting dynamic

Despite what seemed rather compelling evidence, I decided not to trust my own judgement on this, but to do what I always do in these cases — ask the opinion of Neil Davidson, a senior analyst in the Ports and Terminals practice at Drewry, the the maritime research and consulting firm.

He told me:

This is significant news — it would mean the entry of Quebec into the container market (it has no volume at present) and a direct challenge to Montreal’s dominance in particular. The inclusion of CN in the [Joint Venture] is significant given the importance of intermodal rail in the North American container market.

It will create an interesting dynamic. Montreal is further upriver and has shallower draft, but closer to the larger hinterland markets – and it is long-established and has critical mass. Plus it has its own plans to build a new terminal (Contrecoeur). Quebec would have deeper water (allowing it to handle bigger ships) and is closer to the sea. Ice limitations on shipping might be less too. The big ship question is central here, as Montreal occupies a successful niche served by relatively small ice-class vessels.

So my judgement has not been utterly destroyed — I was correct to think this announcement meant something.

And in case you’re wondering about the absence of a shipping line, Davidson noted that projects like Sydney and Melford:

…could only really get off the ground with shipping line backing (unlike gateway ports like Halifax, Montreal — and now Quebec)


But wait…

Interestingly, the QPA release also claims the new terminal will be:

…the most environmentally and technologically advanced cargo-handling facility in North America…one of the terminals with the smallest ecological footprint in the world.

(Novaporte, you may recall, has been billed as “the greenest port in North America once completed.” Could it be Barbusci’s “competitors” actually are stealing his “strategies?”)

But those opposed to any expansion of the Québec terminal aren’t buying any of this small ecological footprint stuff, which is why I am not leaping to the conclusion that the Laurentia terminal is a done deal.

The QPA press release notes that:

The deep-water container terminal project is currently under an environmental assessment process with the Canadian Environmental Assessment Agency.

That process has been underway since 2015 and according to environmental organizations opposed to the expansion of the port, the delay is due to the QPA’s inability to justify the project in the face of the major negative impacts outlined by its opponents.

Impacts like a significant encroachment into the St. Lawrence River; the dredging of 1 million tonnes of sediment, some of it highly contaminated; the destruction of wildlife habitat — including spawning grounds for the Striped Bass, a species only recently returned to the river; a significant reduction in the size of the only riverfront beach in the City of Québec and the increase in truck traffic required to move an estimated 500,000 TEUs per year.

The groups argue that rather than building a new terminal, the Port should focus on decontaminating its industrial wastelands and modernizing its existing facilities. They say it should revive an earlier, $300 million modernization plan which would be more in keeping with another of the City’s projects — that of transforming the docklands into a green, high-tech industrial zone.

So don’t count on shovels meeting ground tomorrow.

But do have a look at the QPA announcement and see, for yourself, how it compares to the latest from Novaporte — think of it as pressing the reset button on your press release-evaluation system.