Creating the Extraordinary | Prince Rupert Port Authority: A radical idea turned success story

A press release this Valentine’s Day received little notice. COSCO and its CKYH consortium partners just had their 100th container ship arrival at Prince Rupert.

Just a few years earlier, Prince Rupert Port Authority President Don Krusel was promoting the radical idea of creating a major container terminal in the small Canadian port city. After all, Prince Rupert, with a population of just 14,000, is only a few miles from the Alaska border and hundreds of miles from the nearest metropolitan area.

However, on a globe, a very different picture emerges. Prince Rupert is directly on the Great Circle route across the North Pacific, 400 miles closer to Asia than Seattle and 1,000 miles closer than Los Angeles.

COSCO Container Line, in partnership with the Prince Rupert Port Authority, Maher Terminals, and Canadian National Railway (CN) has made the idea both a reality and a success. In 2008, the first full year of Fairview Container Terminal’s operation, it handled 181,890 TEUs on one weekly call during the first six months and two calls per week during the final six months of the year.

Prince Rupert Steps Onto the Scene

A small port’s incredible transformation

Success Within Reach in 1914

Prince Rupert, both city and port, was founded as the western terminus of the Grand Trunk Pacific Railway, completed in 1914. However, before Prince Rupert and the railway could taste success, the railway’s driving force, Charles Hayes, was lost in the wreck of the Titanic.
A few months later, World War I broke out in Europe and the dream faded. With the rest of the Grand Trunk system in Canada and the United States, the line to Prince Rupert became part of Canadian National Railway as a secondary line.

Responding to a Need

Coal exports from northeast British Columbia and grain exports from Canada’s prairie provinces revitalized the port in the 1980s, prompting an upgrade of the rail line to full mainline standards, including 136 pound continuous welded track.

As these commodities ebbed and flowed, Krusel noticed increasing problems at other ports (most-especially on the rail links with the ports) while his port was sitting at the doorstep of a wide-open rail line that handled only a handful of trains per day.

As Prince Rupert was preparing to move forward, COSCO was becoming increasingly frustrated with congestion and delays all along the West Coast. Problems arose at different ports at different times. Sometimes, ships were forced to wait at anchor, at other times, containers piled up on docks awaiting rail service. Reliability slipped.

Building a Solution

The port embarked on a two-year-long rebuilding of an underutilized general cargo dock, turning it into Fairview Container Terminal. The complex project involved doubling the strength of the dock’s pavement to support the higher weights of containers.

A 60-foot wide addition to the dock face pushed it out into deeper water to provide a depth alongside of 61 feet, far deeper than any other North American container terminal. An on-dock intermodal yard was included.

Investing in the Future

Maher Terminals Inc., in its first investment outside its huge New Jersey complex, signed a long-term lease to operate the container terminal and supply all of the terminal’s equipment, including three super-postpanamax container cranes, a Cdn$60 million ($45 million U.S.) investment.

CN was an early partner in the project, contributing Cdn$25 million ($18 million U.S.) to build the on-dock intermodal yard and additional holding tracks.

Prince Rupert Port Authority used bank loans and government financing for the balance. Opening a new container terminal and a new trade corridor required a total investment of just Cdn$170 million ($136 million U.S.) by all partners.

In addition, to handle double-stack cars along what it calls the B.C. North Line, CN only needed to improve clearances on seven small bridges and tunnels and extend four sidings the entire route east.

The radical idea had become reality.

Prince Rupert Opens for Business

COSCO arrives October 31, 2007

After extensive negotiations with the Port of Prince Rupert in 2007, Maher, CN, and COSCO announced the big container line would call at the port.

The first ship, the 5,455 TEU COSCO Antwerp, arrived at the terminal October 31, 2007. Since then, COSCO has taken a measured long-term approach to develop a high-quality, reliable service through Prince Rupert.

The initial focus was on two U.S. destinations, Chicago and Memphis served by weekly calls of the PNW-S Loop (Pacific Northwest-South). Virtually all of the traffic was destined for the intermodal yards of these two cities, while most of the Canadian cargo was retained on board for Vancouver. These weekly calls continue using ships in the 5,400 to 5,800 TEU range.

In July 2008, Prince Rupert was added as port of call on the CEN (North China Southwest Express) service now using 7,400 TEU ships such as COSCO Yokohama.

As Prince Rupert is the only Canadian port of call on the CEN service, Canadian importers began moving cargo through Prince Rupert to Toronto and Montreal. Since then, they have routed some of their Toronto and Montreal cargo on the PNW-S loop through Prince Rupert as well.

Efficient and Economical Route

Tim Marsh, vice president of sales for Cosco Container Line in New Jersey, says the route has worked out “extremely well.” He points out that a highlight for customers “is the reduced sailing time, which in turn leads to environmental benefits” as two days shorter transit means less fuel has been burned getting their goods to market.

Los Angeles is getting increasingly difficult and expensive, Marsh says, pointing to recently imposed truck fees, Alameda Corridor rail charges, and the added burden of the harbor maintenance fee. Shipping via Prince Rupert has financial advantages as well as time savings.

Marsh adds that he has been to Prince Rupert with customers and potential customers to tour the terminal and inspect the port.
According to Prince Rupert Port Authority President Don Krusel, “The seamless service is also the most secure routing in North America with 100 percent of the containers scanned through radiation portals on dock at Prince Rupert, and 100 percent (of the U.S-bound) containers go through a VACIS system entering the United States at International Falls, Minn.”

Partnerships a Vital Component

“It is a system, a partnership right from the start,” says Krusel. “Everybody is working very closely to provide shippers unparalleled speed and reliability that is also reducing inventory carrying costs and variability in their supply chain management.” He notes that containers move from “Shanghai to Chicago in 14 and-a-half days.”

Frans van Riemsdyk, executive vice president sales and marketing of Maher Terminals, says his company is, “very, very pleased with the performance (of the terminal) since the first ship in October 2007.” He explains that the terminal has been well supported by CN, and much of the traffic is “vessel to rail direct transfer,” and “trains often leave before the ship.”

He adds that the workforce, ILWU Local 505 has also been very supportive. “We’ve had nothing but great cooperation. They were active participants prior to start up.”

Industry Taking Note

Dave Bedwell, executive vice president of COSCO Canada Inc. in Vancouver, says customer interest is intense not only from importers, but from shippers in Asia as well.

He recently flew up to Prince Rupert to meet with two shippers from Asia who were traveling independently and had gone to Prince Rupert to see the operation for themselves.

At least one corporate jet, with a group of executives from a major U.S. importer, recently touched down at Prince Rupert airport for a tour of the port and terminal.

According to Bedwell, “Everybody went to work to make it a success. They all work together. CBSA (Canada Border Services Agency) is spot on.”

Connecting the Dots

CN Rail key component to container transport

Rail service beyond Prince Rupert is key to the success of the operation.

CN has been hauling containers through Eastern Canadian ports, to and from the Midwest, beginning in 1967 when the first transatlantic container services began calling at Halifax and Montreal.

100 Years of Service

The route from Prince Rupert brings this cross-border container hauling experience to the Pacific and uses a cross-border corridor owned and operated by the CN both in Canada and the United States since 1909.
The line crosses the Rockies at Yellowhead Pass on the British Columbia/Alberta border. The pass is just 3,720 feet above sea level, by far, the lowest and easiest pass through the Rocky Mountains. The entire route is a low level railroad with easy grades. The steepest climb through the mountains has a grade of less than 1 percent.

Straight Shot to Memphis

From Yellowhead, the CN runs east to Winnipeg. Traffic destined for Chicago and Memphis travels southeast and crosses the border at International Falls, Minn.

Skirting Duluth, the route follows track acquired by CN through the key purchases of Wisconsin Central and the Duluth Missabe & Iron Range, integrated into CN to provide a mainline route to Chicago, now a regular 96 hour transit, and in turn a direct link along CN’s former-Illinois Central line south to Memphis, a 117-hour run.

Adding EJ&E Shaves off Hours

CN recently completed purchase of the 119 mile Elgin, Joliet & Eastern (EJ&E) from U.S. Steel. The line forms a loop around the outskirts of Chicago, providing a by-pass around the tangled web of yards and tracks in metropolitan Chicago.
Tim Marsh, vice president of sales for COSCO Container Line in New Jersey, says the addition of the EJ&E should shave at least 12 hours off the run to Memphis when it is fully integrated and upgraded into the CN system.

No Winter Delays

After 18 months of service, including two colder-than-normal Canadian winters, there have been no winter delays because of snow or storms. Bedwell explains that there was one single significant rail delay of just eight hours following a mudslide last August, east of Prince Rupert.

Glimpse into the Future

Cargo and terminal expansions

While imports are going well, Prince Rupert, like Vancouver, is expected to become a good source of export cargo.

Prince Rupert Port Authority President Don Krusel says, “We have 30 to 40 percent backhaul loads, drawing loads from all over the continent — waste paper from the Midwest, resins from Alberta, and scrap metal from as close as Terrace to as far away as Chicago.” Aluminum from the smelter at nearby Kitimat is also part of the mix.

New Cargo

Dave Bedwell, executive VP of COSCO Canada Inc., says COSCO is studying pulp and lumber exports from Prince George, 400 miles east of Prince Rupert, but still needs to overcome some logistical and cost obstacles.

Fish from Southeast Alaska is also a longer-term goal, but again, Bedwell says there are still some logistical problems, especially related to cold storage capacity in Prince Rupert.

The approach to westbound cargo reflects the similar measured longer-term strategy COSCO is using in developing its import traffic through its new northern route.

Phase 2 Underway

The success of Fairview Container Terminal’s first phase has planning already well underway for Phase 2.

Krusel notes that all of the preliminary engineering work has been done on Phase 2 — the addition of a second berth and 80 acres of additional terminal space, sufficient to boost capacity to 2 million TEUs per year and is projected to cost Cdn$600 million ($500 million U.S.). The Port has started the environmental review of the project and is targeting completion for 2014.

At the same time, the port has also begun planning a logistics park to be located just south of the terminal on nearby Ridley Island where the port owns 1,000 acres of industrially zoned land.

CN is not resting either, investing Cdn$300 million ($225 million U.S.) on 50 new locomotives, additional double-stack cars, plus expanding more sidings and other improvements.

Today, as COSCO’s Bedwell says, the operation is “smooth as silk.”

In This Issue

News, Trends & Analysis
New Items

Glimmer of Recovery

Supply Chain
A Quick Primer on Site Selection

Managing with the Supply Chain in Mind

Compliance Corner: Trade Compliance Requires a Focus on Information Gathering

How to Green Up Your Logistics Operation

Supply Chain product review
Trucking Software

Special Section
Creating the Extraordinary — the Prince Rupert Story

Features
Building a Future from Drayage Wreckage

Gateway at a Glance Pacific Northwest

Ports & infrastructure
Stimulus Bill Has Cash for Ports . . . for the Right Projects

What Shippers Need from Inland Ports

Port Product Review
Lift Trucks

Commentary
New Trends Driving Transpacific Trade

Who, What, Where, When

Final Say