Barry Interesting

Barry Sheehy — “author, historian, businessman and veteran” — barged into my summer on Tuesday, via one of his trademark screeds for the Cape Breton Post.

Although his bio acknowledges he is “involved with Sydney Harbour Investment Partners, which is marketing the port [of Sydney] for development,” he writes the piece from his preferred vantage point, that of the objective observer. The only man in Nova Scotia who sees what “we” (he identifies very strongly with us) must do to increase our exports and raise our per capita income.

And what “we” must do, per Sheehy, is follow the example of the Port of Prince Rupert (PPR), BC, a hinterland port established to handle over-flow from the Port of Vancouver as part of a “coherent west coast strategy.”

Prince Rupert, writes Sheehy, has:

…achieved an enviable balance between imports and exports by exporting raw materials, much of it in bulk. In fact, more than half of Prince Rupert’s exports are raw materials such as coal, grain, and logs, and semi-processed materials such as wood pellets and wood products, propane, LNG and plastic pellets.

Sheehy’s argument (which he’s been making since he first appeared on our scene in 2014) is that we need an Atlantic Gateway strategy that mirrors this west coast strategy, with Sydney playing the role of Prince Rupert (although he doesn’t actually mention Sydney in his op-ed, leaving people free to believe he’s supporting the terminal project at Melford.)

Sheehy has been living rent-free in my head since I read the thing, so consider this my attempt to evict him.

 

I see the future?

His reasoning begins with some unsourced statistics:

Twenty-one million additional containers are forecast to come to the eastern seaboard over the next 20 to 25 years. Bulk cargo will double and roll-on-roll-off traffic will increase 160 percent.

Will any of this actually happen, though?  I would you point you to this March 2021 New York Times article by economist and historian Marc Levinson, author of The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Levinson was writing about the Ever Given, the container ship that got stuck in the Suez Canal, which he viewed as a metaphor for the problems with long-distance supply chains:

Meanwhile, the ultralarge container ships like Ever Given that have entered the world’s fleet over the past few years have made long value chains even more problematic. These vessels, some carrying as much cargo as 12,000 trucks, steam more slowly than their predecessors. The complexity of loading and unloading often puts them behind schedule, and the sheer number of boxes moved on and off a single ship tangles ports and delays deliveries.

So long-distance trade is slower and less reliable than it was two decades ago…

In globalization’s next stage, ships carrying metal boxes full of stuff will no longer be at the center of the story.

Presumably, this “next stage” of globalization will arise within the next 25 years, meaning it’s worth questioning Sheehy’s assumptions about increased container volumes (at the very least it’s worth asking what he’s basing them on).

 

Climate considerations

Climate change, although clearly not a factor in Sheehy’s thinking, is an undeniable factor in the real world and its impacts on international shipping could take many forms.

The wildfires now burning in British Columbia, for example, have disrupted train service to the point where the Canadian Mining company Teck Resources is predicting third-quarter steelmaking coal sales would be reduced by 300,000 to 500,000 tonnes.

Many of the world’s busiest ports are at risk from rising sea levels. This 2018 report from the New York Academy of Sciences, for instance, looked at what Los Angeles, a port city with 74 miles of coast, must do to fortify itself against rising seas:

One scenario is that the neighboring ports of Los Angeles and Long Beach will get knocked offline by storm surges from future nasty weather events—and could eventually stop functioning completely if waters rise high enough. Together, these ports handle half of the containers coming into the United States, infusing the California economy with more than $60 billion a year and the national economy with $230 billion. Losing them to sea level rise would have staggering economic effects, so the only option is to adapt.

Efforts to reduce the shipping industry’s contribution to greenhouse gas emissions will also impact the industry.

And  I’m struck by how many items on the list of raw materials being shipped out of Prince Rupert — coal, coke, LPG and wood pellets — would be less in demand in a world where climate change was taken seriously.

 

Bulk exports

But let’s allow Sheehy his growth in marine traffic over the next 25 years. His argument, if I’m understanding it correctly, is that the Port of Halifax will “max out” because of it, opening an opportunity for an “overflow” port in NS.

He also argues that Halifax  lacks the space to handle bulk and semi-processed goods so Nova Scotia must a) increase its bulk exports and b) invest in the infrastructure to move them.

In case you’re wondering what we should be exporting in bulk, Sheehy provides a  handy list: coal, fly ash, copper, gold, cobalt, graphite, lithium, marble, fresh water and our “abundant forests and biomass.”

(I like to think the Saltwire layout person was trolling him by placing his story directly above one about a report calling for a ban on the bottling of BC water for export.)

Sheehy seems to be suggesting that we, as a province, could produce enough exports to make a Prince Rupert-type port viable. But Prince Rupert is not just exporting products from British Columbia — much of what it’s exporting comes from the Western provinces. Coal, for example, comes mainly from Alberta and Saskatchewan. Look at CN’s map:

And consider the sources for the main agricultural products shipped via Prince Rupert, starting with barley:

Canola:

Wheat:

I’m not sure how, short of packaging the entire province up and sending it to Asia, Nova Scotia could match the exports of Manitoba, Saskatchewan, Alberta and British Columbia combined.

 

CN

There’s a final difference between Prince Rupert and Sydney that needs to be mentioned and that’s this: CN believed in the business case for Prince Rupert.

This needs to be emphasized, given that, very early in the game, Sheehy and his partner, Albert Barbusci , struck out with CN, as I discovered in materials FOIPOPed from the CBRM.

They were told the rail operator had “put quite a bit of focus on Sydney in past years” but that “the economics didn’t work, particularly with Halifax not operating at capacity.” They were also asked if they had “a real live shipper” ready to commit “new traffic.” They didn’t. Which is why they are now trying to convince the provincial and federal governments to build them a rail line.

This is very different from Prince Rupert’s experience with CN which, according to this 2009 report on PPR prepared for the US Department of Transportation, played a key role in the development of the port:

On January 23, 2009 the US Surface Transportation Board approved CN’s acquisition of the Elgin, Joliet and Eastern Railway Company (EJ&E), with a cost of C$300 million, thereby allowing trains to bypass Chicago with destinations for other US cities. CN has also developed a new Prince George Intermodal/Transload Terminal, an 84,000 square transload operation and intermodal rail and marine intermodal in Prince George, British Columbia. CN spent C$20-million on building renovation, and to extended two tracks that are used for transferring containers to and from the two trains that pass through Prince George each day to and from the Port of Prince Rupert. This complex also has room to extend the tracks to meet the growing demand that is expected at the Fairview container terminal at Prince Rupert during its second phase of development.

As part of that second phase of development (which didn’t work out as planned — Maher Terminals  sold Fairview to DP World in 2015 and DP World has expanded total capacity to 1.35 million, not 2 million, TEUs), CN spent:

…an estimated C$400 million to prepare the new trade corridor, purchasing new trains and equipment, and enhancement of rail lines and expansion of tunnels. This resulted in a dedicated rail line west to Chicago with a rail line capacity of 4 million TEUs.

The rail operator is now proposing to build a new rail bridge and causeway to service a proposed new logistics park on Ridley Island. The federal government is supporting these developments with an investment of $150 million (another difference between Prince Rupert and the Port of Sydney — PPR is a Canadian Port Authority and, as such, is eligible for federal funding.)

 

Private investment?

I mention all this just to show you the extent of CN’s commitment to the Port of Prince Rupert, although it’s worth noting, even successful ports don’t always live up to their hype — Prince Rupert has yet to reach 2 million TEU capacity; it now expects to hit 1.8 million TEUs by 2023. Last year, it handled 1.14 million TEUs:

 

But I also record this for the light it sheds on Sheehy’s concluding statement:

Money is not the key constraint. The world is awash in capital, in part because of record-low interest rates. It is not a lack of private investment but the absence of needed infrastructure and a welcoming regulatory environment that stands in the way of increasing exports…and raising per capita income.

CN is a private company that has invested hundreds of millions in infrastructure to service the Port of Prince Rupert. Why? Because it made economic sense.

If the business case for the Port of Sydney is equally compelling, why isn’t Sheehy making it to CN or to the new owner of the Cape Breton and Central Nova Railway? Why is he trying to convince Nova Scotians that building the rail line to service his port is our responsibility?