Canadian Transportation … Halifax Port Authority and CN announce new representation in India ... appointments at Montreal Gateway ... the World’ is more than just a tagline for

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Transportation&Trade Logistics

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The Grunt Club celebrates 79th Annual DinnerSee Page 29

FEATURE

At the Heart of Global Supply Chains

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43 Shippers’ Handbook 57 Career Centre

62 Index of Advertisers 62 Upcoming Events

43-55

CONTENTSMARCH 24, 2014

R E G U L A R F E A T U R E S

29 Grunt Club celebrates 79th annual dinner

32 Leading women in logistics come together to celebrate International Women’s Day and to inspire change

32 Viterra completes acquisition of Lethbridge Inland Terminal Ltd.

33 Inadequate icebreaking capability harming the economy

33 New research from MIT highlights critical importance of supply chain & logistics skills and expertise to corporate results

34 Halifax Port Authority and CN announce new representation in India

34 CargoM releases study conducted by KPMG-SECOR

35 Learning from the success of one’s competitors: CargoM invites delegation from Savannah, Georgia

36 Liner reliability set to decline in 1Q14

37 Report on Borden Ladner Gervais 2013 Maritime Law Seminar

40 Nanaimo Port Authority addresses concerns over lower cruise traffic

40 Lake Carriers Association reports U.S.-flag Lakers fleets to invest more than $70 million in vessels this winter

41 New CEO and management appointments at Montreal Gateway Terminals

42 New blow for carriers as Shanghai-Europe box rates fall below ‘break-even’ $1,000

56 True cost of restructure means Damco is the new black sheep of the Maersk family

56 EDC: Agricultural Bonanza

57 UPS invests in propane for U.S. delivery fleet

58 Largest truck ever in N.B. delivers power plant turbine rotors

59 TransForce announces results for 2013

59 Algoma Central Corporation releases 2013 results

60 Court approves Vitran’s Plan of Arrangement with TransForce

60 OOCL profits swamped in the wake of cascading after arrival of bigger ships

61 Untold lost revenue hidden in inaccurate ocean freight invoices

Feature 6 Port of Montreal at the heart of global supply chains

9 Montreal an important port for Chrysler

11 ‘Port+’ strategy complements core activities with value-added services

16 Post-Panamax-type ships now sailing to Montreal

18 Canada-EU trade accord to provide significant benefits 20 Market diversification efforts pay dividends for port

23 Port well prepared to handle more traffic

25 Cruise business sails full steam ahead

27 Port handles 28.2 million tonnes of cargo in 2013

All editorial contents for the above Port of Montreal section were provided by Montreal Port Authority.


March 24, 2014 • Canadian Sailings • 5

Conveniently linked to Mediterranean and North European transhipment ports. Strategically located 1600 km inland. Offering access to 40 million North American

consumers within one trucking day, and another 70 million within two rail days. No wonder the Port of Montreal is connecting with partners across the globe.

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Port of Montreal at the heart of global supply chainsA facilitator of world trade that connects clients to international markets

Trading with the World’ is morethan just a tagline for the Port ofMontreal. It defines the port’sidentity and its positioning as a

key component of global supply chains anda major international port that trades withthe world.

“Freight transportation decisionstoday are being made in the larger contextof supply chain management,” said SylvieVachon, president and CEO of the Mon-treal Port Authority (MPA). “Globalizationis redefining the rules of the game and howquickly ports must adapt. Ports must befacilitators of world trade.

“As a core element of the supplychain, the Port of Montreal wants to beseen as the engine that leads trade growth.Within this role, we act as a catalyst for eco-nomic development for the city and theentire country. We drive business growthfor our clients by connecting them to theirmarkets. And we facilitate supply chain per-formance for our partners.”

Montreal is well positioned at thecentre of a truly integrated marine, rail,road and pipeline network. It is a majorhub for freight transportation and a diversi-fied port that welcomes more than 2,000ships annually carrying all types of cargo toand from all parts of the world.

Advantages

The Port of Montreal’s success onglobal markets is anchored in a number ofstrategic advantages.

Montreal is on the shortest direct routefrom Europe and the Mediterranean toNorth America’s industrial heartland. BrianSlack, a geography, planning and environ-ment professor at Concordia University inMontreal and an expert on maritime trans-port and intermodality who has conducted astudy on transit times to Canadian ports,said: “Regarding transit times from Europeto East Coast ports, it was clear that Mon-treal stood out well. Shorter transit timescompared to New York or Norfolk are a par-ticular advantage that Montreal possesses.

SYLVIE VACHONPort a core element of supply chain

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Montreal is well positioned at thecentre of a truly integrated marine,

rail, road and pipeline network.



“Transit times are one component. Inaddition, there is transit time to the cus-tomer. Historically, Montreal has anadvantage landside.”

With its strategic location 1,600 kilo-metres inland, Montreal is the closestinternational container port to NorthAmerica’s industrial heartland. Its marketreach is impressive: the port providesaccess to 40 million consumers within onetrucking day and another 70 million con-sumers within two rail days. It hasexcellent highway connections to the hin-terland, and it is directly connected toCanadian National and Canadian Pacificrailways.

“Montreal has rail right on dock.Block trains are assembled for direct move-ment daily to Toronto, Detroit andChicago,” Mr. Slack said.

“If you consider total transit time –ocean transit time to Montreal and thendoor-to-door delivery – the port does verywell.”

“I don’t think there is any questionthat Montreal is the most strategicallylocated port for access to North Atlanticand Mediterranean destinations fromCanada’s heartland, to say nothing of theU.S. Midwest,” said Christopher Gillespie,president and CEO of Gillespie-MunroInc., a full-service Canadian freight for-warding firm based in Montreal.

Thanks to its advantageous transittimes, Montreal is a leader on the marketbetween Europe and Central Canada andthe U.S. Midwest.

European markets, including theMediterranean, represent close to 65 per

Montreal is the closestinternational containerport to North America’sindustrial heartland.

Montreal is a diversified port that welcomes more than 2,000 ships annuallycarrying all types of cargo to and from all parts of the world.


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DELIVERING PEACE OF MIND



cent of container traffic moving through the port. Ninety-eight percent of Quebec importers and exporters and 93 per cent of Ontarioimporters and exporters choose the Port of Montreal to reachEuropean markets.

Moreover, one container in four moving through the port hasits point of origin or destination in the U.S. The Midwest is ahighly coveted and huge consuming market. In addition, Chicagois the only location in North America where the six Class 1 NorthAmerican railways cross; it’s a distribution point that reaches theentire continent.

Beyond its strength on the North Atlantic, Montreal has suc-ceeded in increasing its cargo volumes with other regions of theworld. It benefits from traffic moving through the Suez Canal andthe Panama Canal thanks to the direct services that shipping linesnow provide between Montreal and transshipment ports in North-ern Europe and the Mediterranean, and in the Caribbean. (Seeseparate article in this Port Feature.)

Leading global carriers

Many of the world’s leading global container shipping lines –CMA CGM, Hapag-Lloyd, Maersk, MSC and Maersk – providededicated weekly or twice-weekly services through the Port ofMontreal.

“At the Port of Montreal, schedules are generous,” Mr. Slacksaid. “Shipping lines have time in port to adapt and to make up forany unavoidable delays. This is beneficial for both shippers andcarriers.”

Montreal is a one-stop port where carriers do not make anyintermediate calls before arriving in Montreal. “For a shippingline, being the only port of call is one big advantage,” Mr. Slacksaid. “It is easier to arrange stacking and ship-offloading opera-tions. So there is an operational advantage to call Montreal.”

Cost efficiency is another advantage. Vessels are completelyunloaded and loaded in the port, meaning equipment flows arebalanced.

“In Montreal, trade is balanced, unlike the West Coast wherethere are a lot of empties, and where balancing full and empty con-tainers is a problem,” Mr. Slack said.

Port users can also count on supply chain collaboration wherecontinuous communication among the MPA, terminal operatorsand railway companies ensure short dwell times for containers andseamless operations.

“There are simply no other ports with the facilities, frequencyof direct services, and rail and truck service infrastructure that cancome close to the Port of Montreal’s capabilities in these regards,”Mr. Gillespie said.

How does the Port of Montreal position itself moving forwardas a key component of global supply chains and a facilitator ofworld trade?

“The port has to show customers and shipping lines that it isefficient,” Mr. Slack said. “Performance is the number one objec-tive. It has to be cost efficient. It has to be innovative. It has tohave room for expansion; this is where Contrecoeur comes in.”

The Port of Montreal owns land along four kilometres ofwaterfront at Contrecoeur, located about 40 kilometres down-stream from its facilities on the island of Montreal. This land willbe used to increase the port’s container-handling capacity onceland on the island of Montreal reaches full capacity.

“The port has a dynamic team in place to respond to cus-tomers and lines. It is efficient and it is cost competitive,” Mr.Slack said. “The mood is upbeat.”

The Chrysler Group moved some 13,100 import andexport TEUs (20-foot equivalent unit containers) through thePort of Montreal in 2013. These boxes carried automotiveproduction and service parts along with empty racks that arereturned to suppliers for shipping.

Through Montreal, Chrysler receives parts from itsEuropean-based suppliers, primarily from the ports ofAntwerp, Genoa, Lisbon and Hamburg. Shipments out ofNorth America originate at Chrysler’s U.S. Midwest plantsand consolidation centre for export to European suppliers,parts distribution centres and assembly operations inVenezuela and Egypt. The major ports of entry are PuertoCabello, Genoa, Cairo and Antwerp.

Advantageous transit times are one reason whyChrysler relies on the Port of Montreal.

“The short transit time between Europe and NorthAmerica is a fundamental reason the Port of Montreal isimportant in this segment of the Chrysler supply chain,” saidJoe Heck, Chrysler’s manager of international procurementand Mopar, based in Auburn Hills, Michigan. “The directocean service and the rail connection to the Detroit area foronward delivery of containers to our assembly and parts oper-ation are excellent.

“The export flows to offshore Chrysler operations andparts distribution centres from Montreal are afforded thesame advantages as the imports with the rail and direct serv-ice.”

The Port of Montreal’s strategic location and marketreach are also important to Chrysler.

“Montreal allows us to expedite by truck a critical con-tainer to a Midwest plant or, conversely, from a Midwestlocation to make a sailing for export when rail will take toolong,” Mr. Heck said. “The terminal will work with ourocean carrier to ensure a critical container will be processedeven after hours.”

Reliability is also a key part of Chrysler’s decision to usethe Port of Montreal.

“The weekly dedicated service provided by our coreocean carriers and their relationship with the Port of Mon-treal and the rail provider allow for a streamlined process forthe import and export of Chrysler shipments,” Mr. Heck said.“The port operations are maintained even in the severewinter weather, which assures the cargo will continue tomove without interruption.”

Montreal an importantport for ChryslerAuto giant relies on port forefficient delivery of production and service parts


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‘Port+’ strategy complements core activities with value-added servicesPort working to build partnerships, further enhance fluidity and reliability

Port+’ is a differentiation strategyin which the Port of Montrealwill complement its core activi-ties with value-added services.

“Ports today must set themselves apart bycreating value for their clients and for thesupply chains that they serve,” said SylvieVachon, president and CEO of the Mon-treal Port Authority (MPA). “Our Port+strategy does just that.”

Containerization facility

A new facility on port territory thatwill specialize in the cleaning and con-tainerization of agricultural productsdestined for local and international mar-kets is “a perfect fit with our Port+strategy to offer value-added services toour users and to attract new clients,” Ms.Vachon said.

CanEst Transit Inc. will operate thenew containerization facility. The com-pany has signed a long-term lease with theMPA to operate out of the port’s formerGrain Elevator No. 3 annex. The centre isscheduled to open July 15 upon comple-tion of a $22-million modernization

project, including the installation of newconveyors, scales and other equipment.

CanEst Transit will receive by railand truck, and store, clean and container-ize bulk agricultural products fromQuebec, Ontario, Western Canada and theU.S. Midwest. It will also offer baggingservices. Once agricultural products arecleaned and ready for loading, trucks willproceed to one of three chutes – two forcontainers and one for bags to be loadedinto containers. CanEst Transit will beable to load eight containers per hour aswell as two different products simultane-ously.

Containers will be transported bytruck to local markets or directly to thePort of Montreal’s container terminals foronward transit by vessel to the interna-tional markets that the port’s containerlines serve, including Western and EasternEurope, the Mediterranean, North Africaand Asia.

“The proximity of port facilities is amajor advantage in the agri-food indus-try,” said Réal Bélanger, general managerof CanEst Transit, in reference to the Port

Sketch of CanEstTransit facility.

of Montreal’s strategic geographic loca-tion. “Montreal has always been a majorshipping and receiving centre for agricul-tural products from Quebec, Ontario,Western Canada and the U.S. Midwest.With this facility, we will be able to offer anew service right on the port for the clean-ing and containerization of agriculturalproducts.”

The facility will bring greater vol-umes of dry bulk traffic into the port,which handled 6.55 million tonnes ofcargo in this sector in 2013, its best yearin this traffic category in almost a decade.

CanEst Transit was founded by agri-food group La Coop fédérée, holdingcompany Transit BD Inc., and MGT Hold-ings S.A.R.L., which operates twocontainer terminals in the Port of Mon-treal.

The new facility will have an initialstorage capacity of 68,000 tonnes, dividedamong 56 silos of 900 tonnes each and 35silos of 300 to 500 tonnes each. This willbe ideal for identity preservation of all prod-ucts handled at the complex. The facilitywill be able to receive up to 50 railcars.

Clients will include leading agri-busi-ness companies. “With the assortment ofshipping lines and two railway companiesserving the Port of Montreal, our newservice will be able to offer competitivecosts,” Mr. Bélanger said. “The fact thatwe can receive railcars and store productimmediately will eliminate any demurragecharges.”

Electronic navigation

A new tool that allows shipping linesto maximize their use of the water columnin the St. Lawrence River navigation chan-nel to Montreal is another importantvalue-added service in the Port of Mon-treal. With the assistance of key partners,the MPA has developed a portal that pro-vides in real time the available watercolumn in the channel. With real-timeinformation and computer simulations,ships leaving Europe eight days beforearriving in Montreal will now have better-quality information, which will allowthem to optimize vessel loading.

The project involved the MPA and


TERMONT MONTREAL INC.450 de Boucherville St.Montreal, QuebecTel: 514-254-0526Fax: 514-251-1952

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terminal equipment with direct access to

both CN and CP rail lines. With the use of

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control with EDI capabilities, and

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major partners including the Canadian Coast Guard and the Cana-dian Hydrographic Service.

Partnership

The Port of Montreal is also working to build new partner-ships. It has played a key role in the creation of CargoM, theLogistics and Transportation Cluster of Metropolitan Montreal.Ms. Vachon is the chair of the board of directors of CargoM.

The mission of CargoM is to gather all stakeholders fromlogistics and goods movement, whose operations make GreaterMontreal a hub, to work on shared goals and take concertedaction to strengthen cohesion, boost competitiveness and extendinfluence. More precisely, CargoM will promote Montreal as alogistics and freight transportation hub. It will introduce bestpractices and leading-edge technologies.

CargoM launched three working groups in 2013. “CargoMworking groups are dedicated to advanced thinking and develop-ing actions on the cluster’s priority issues,” said MathieuCharbonneau, executive director of CargoM. “They support theboard of directors by recommending the most appropriate strate-gies and ensuring their implementation.”

Most recently, the Logistics and Transportation DevelopmentOpportunities working group held a workshop on logistics parkson February 18. “It was a huge success with 90 participants,” Mr.Charbonneau said.

The Communications and Outreach working group unveiledin January a profile of Greater Montreal’s logistics and transporta-tion industry prepared by KPMG-Secor. The study will allowCargoM to identify priority action areas and develop specific proj-ects.

The working group entitled Access and Fluidity for TruckTransportation in Greater Montreal is working, among other proj-ects, on the Ottoview pilot project, in partnership with TransportCanada, to equip trucks with digital recorders that collect data ontruck movements in order to develop strategies to improve trafficflows in the region.

CargoM will launch three new working groups in 2014: Best Practices and Technology, Regulations, and HumanResources/Workforce.

Fluidity and reliability

The port is also working to further enhance its services. Fol-lowing agreements that the MPA signed with Canadian Pacificand Canadian National railways and its terminal operators toimprove supply chain efficiency, the average dwell time forimported containers at the Port of Montreal has decreased by 40per cent in the past five years.

The port has been working closely with terminal operatorslately to enhance the quality of its data, moving ahead with a newpartnership aiming to create a more open data-exchange environ-ment. This continuous improvement process has enabled the portto recently restate its import dwell-time performance based onbetter information and visibility on container movements at itsterminals. The average container dwell time for rail imports(elapsed time from vessel discharge until loaded to railcar) in2013 averaged 2.0 days, just within its set target of 48 hours.“This is considerably less than North American East Coast stan-dards, thanks to our unique rail model,” Ms. Vachon said.

“Containers are in and out of the port quickly,” added BrianSlack, a geography, planning and environment professor at Con-cordia University in Montreal and an expert on maritimetransport and intermodality. “Historically, the port has operated



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on a very constrained site, which hasforced it to operate at high levels of effi-ciency. However, the port cannot rest onits laurels in this regard.”

Meanwhile, the MPA, the QuebecTransport Ministry (QTM) and the City ofMontreal have worked collaboratively ontwo major projects that will improve truckaccess at the Port of Montreal. The QTMannounced last May the signature of a col-

laborative framework with the City ofMontreal for the extension of L’Assomp-tion Boulevard, a new transportationroute that will connect with SoulignyAvenue and thereby allow trucks leavingthe port to directly access the highwaynetwork. A port exit will be built to jointhis new stretch of road.

The QTM also announced the con-struction of a Highway 25 exit ramp

leading south that will allow trucks todirectly reach the port’s common truckentry portal located at the corner of Notre-Dame and De Boucherville streets.Meanwhile, the reconfiguration of theentrance ramp leading north on Highway25 will provide trucks leaving the port atthe Louis-Hyppolyte Lafontaine Bridge-Tunnel with direct access to the highwaynetwork.

Two major projects will improve truck access at the Port of Montreal.




Post-Panamax-type ships now sailing to MontrealCarriers able to increase capacity on their services through port

Numerous vessels already have benefited from a decisionallowing post-Panamax-type ships to sail to Montreal. TheCanadian Coast Guard (CCG) authorized last May the pas-sage of vessels up to 44 metres wide in the

Quebec-Montreal section of the St. Lawrence River navigation chan-nel. The previous authorized width was 32.1 metres withoutrestrictions.

The CCG made the provisions following a study commissionedby the Montreal Port Authority (MPA) and conducted jointly withTransport Canada, the CCG, the Laurentian Pilotage Authority andthe Corporation of Central St. Lawrence Pilots.

“This decision is good news for the port, for our shipping lines,and for the shippers who move cargo through Montreal,” said SylvieVachon, the MPA’s president and CEO. “It will allow the Port of Mon-treal to strengthen its position as North America’s leading port forcontainer traffic with Europe, and it will reinforce Montreal’s strategicposition as a logistics and transportation hub of choice for all types ofcargo.”

Specifically, the new provisions make it possible for all post-Pana-max-type vessels, including 6,000-TEU (20-foot equivalent unit)container ships, to reach Montreal. The port can also now accommo-date oil tankers with a cargo carrying capacity of 500,000 barrels, up

from 350,000 barrels, and dry bulk ships that can transport 65,000tonnes of cargo, up from 35,000 tonnes.

“Shipping lines, no matter what type of cargo they carry, will beable to substantially increase capacity on their services to Montreal,which will inevitably lead to benefits for the port’s broad customerbase,” Ms. Vachon said. “We hope that carriers will take full advan-tage of the fact that the Port of Montreal can now accommodatepost-Panamax-type vessels.”

A total of five vessels, over the course of six different calls,already have benefited from the new provisions. Three of the vesselsare Aframax oil tankers, including the largest petroleum tanker to evervisit the port. The MT Overseas Portland, carrying 475,000 barrels ofcrude oil, docked at the Suncor berth at Section 109 on December 5.It had sailed from St. James, Louisiana, on November 26. Built in2002, the 112,139-deadweight-tonne MT Overseas Portland is 250.2metres long and 44 metres wide.

The two other Aframax oil tankers visited the Canterm berth atSection 94. They are the NS Leader, which arrived on August 12, andthe NS Concept, which called on July 12.

The P-MAX Stena Progress, an oil tanker that also sailed to Mon-treal under the new regulations, visited the Canterm berth on twoseparate occasions, on May 7 and August 18.



The fifth vessel to benefit from the new provisions is the LBCEnergy, a bulk carrier that loaded grain at the Port of Montreal’s grainterminal on October 20.

“The Canadian Coast Guard provision allowing wider vessels tosail to Montreal is a big breakthrough for the port,” said Brian Slack, ageography, planning and environment professor at Concordia Univer-sity in Montreal and an expert on maritime transport and intermodality.“(In the container sector), shipping lines base their operations on slotcosts and how many containers they can load onto a ship. Using largerships allows carriers to benefit from economies of scale, leading togreater profitability.”

With the minimal depth of navigable waters to Montreal currentlyat 11.3 metres, the decision also allows the port to better compete withU.S. rivals that are “dredging like mad” to accommodate bigger andbigger container ships, Mr. Slack said.

“Larger ships should provide economies of scale, which shouldlead to operational efficiencies and hopefully lower costs,” said Christo-pher Gillespie, president and CEO of Gillespie-Munro Inc., afull-service Canadian freight forwarding firm based in Montreal. “But ifthese ships enter a low-demand, oversupplied market where rates arealready depressed, these economies are probably viewed by carriers assimply a way for them to make ends meet under current circum-stances.

“The potential, though, is to enable more commodity cargoes tomove from the Port of Montreal at prices equivalent to those wheresuch higher-capacity vessels currently serve.”

The average size of container ships sailing to Montreal hasincreased by a factor of eight since 1975. The largest ships calling theport back then carried up to 750 TEUs. That number increased to1,800 TEUs in 1981, and 2,800 TEUs in 1996, as container ships wereredesigned. In 2003, OOCL and the former CP Ships built and assignedto their Montreal routes 32.1-metre-wide Panamax-size ships capableof transporting 4,100 TEUs.

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The Aframax oil tanker NS Leadervisited the port last August.



Canada-EU trade accord to provide significant benefitsMontreal strategically located between world’s two largest economic blocs

The new economic and trade agree-ment between Canada and theEuropean Union (EU) is expected toprovide significant benefits for the

Port of Montreal.“We are the leading port on the North

American East Coast for trade between North-ern Europe and North America’s industrialheartland,” said Sylvie Vachon, president andCEO of the Montreal Port Authority (MPA).“With our strategic location between theworld’s two largest economic blocs, the EUand NAFTA, the Port of Montreal is the naturalgateway for Europe.”

Ocean transit time between Montrealand Europe is only eight days. In North Amer-ica, the port provides access to 40 millionconsumers within one trucking day andanother 70 million consumers within two raildays.

European markets, including the Mediter-ranean, already represent 39 per cent of totaltraffic and close to 65 per cent of container traf-

fic moving through the port. Moreover, theprovince of Quebec accounts for 35 per cent ofCanadian exports moving to Europe. Theseexports, in particular those transported by con-tainer, move for the most part through the Portof Montreal.

Additionally, 98 per cent of Quebecimporters and exporters and 93 per cent ofOntario exporters and importers choose thePort of Montreal to reach European markets.

Canadian Prime Minister Stephen Harperand European Commission President JoséManuel Barroso announced on October 18 anagreement in principle on the ComprehensiveEconomic and Trade Agreement betweenCanada and the EU. One week later, Interna-tional Trade Minister Ed Fast and PublicSecurity and Emergency Preparedness MinisterSteven Blaney, accompanied by representativesof the business sector, participated in a pressconference at the MPA administration buildingto discuss the accord.

The federal ministers said that workers

and companies from the major sectors ofQuebec’s economy will benefit greatly from thedeal.

Among the main exports that will benefitfrom the new agreement are agri-food productssuch as pork and beef, and certain finished andsemi-finished products such as aeronauticparts, and pulp and paper.

“This agreement looks fantastic for thePort of Montreal,” said Brian Slack, a geogra-phy, planning and environment professor atConcordia University in Montreal and anexpert on maritime transport and intermodal-ity. “Europe is the Port of Montreal’s mainoverseas trading partner, and the port is alreadyreaping the benefits of trade with this market.The contacts, the sales teams, the infrastruc-ture already are there.

“This agreement can really only benefitMontreal. It will be a plus for attracting typesof goods – western beef, for example – thatcould be exported out of Montreal.”



International Trade Minister Ed Fast (centre) and Public Security and Emergency Preparedness Minister StevenBlaney (third from left) joined MPA President and CEO Sylvie Vachon (fourth from right) and representatives of thebusiness sector to discuss the accord.

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Market diversification efforts pay dividends for portTransshipment services make Montreal a viable option for reaching Asia

The Port of Montreal is working to further diversify the inter-national markets it serves. Traditionally, the port servedmarkets on the North Atlantic, but over the past 10 years itsoverseas scope has widened considerably.

Today, one container in three leaving or arriving in the Port ofMontreal is transshipped. For example, an export container leavingthe port aboard a medium-sized vessel might be transshipped at aNorthern European port such as Antwerp or Liverpool, or a Mediter-ranean port such as Valencia, for onward movement aboard amega-ship via the Suez Canal to markets in Asia or the Middle East.Or it might be transshipped at Freeport, Bahamas, for a final destina-tion in South America.

“Ten years ago, who would have thought that the Port of Mon-treal would one day compete with West Coast ports for shipments toand from Asia?” said Sylvie Vachon, president and CEO of the Mon-treal Port Authority. “Thanks to transshipment services via the SuezCanal, the Port of Montreal today is a viable alternative to West Coastports for reaching the Pacific Rim.”

In 2000, Northern Europe was the point of origin or final desti-nation for 77 per cent of the containers moving through the port,followed by the Mediterranean at 19 per cent, and Latin America andAfrica at 1 per cent.

Today, Northern Europe still remains the leading trade routewith Montreal. It was the point of origin or final destination for 44.4per cent of the containers moving through the port in 2013, followedby the Mediterranean at 20 per cent. But Asia, at 13.8 per cent, theMiddle East, at 8.3 per cent, Latin America, at 6 per cent, andAfrica/Oceania, at 4 per cent, are all now part of the port’s containermix. China alone now accounts for 7 per cent of the port’s container-ized cargo traffic, and it is about to surpass dominant traditionalmarkets such as the United Kingdom.

“It is interesting to see how Montreal has begun to get trade withAsia,” said Brian Slack, a geography, planning and environment pro-fessor at Concordia University in Montreal and an expert on maritimetransport and intermodality. “With transshipment, I see opportunitiesin Montreal from South Asia – India and Pakistan – and the MiddleEast.”

On the import side, Montreal is a viable option to West Coastports for Asian products, in particular for seasonal commodities withearly production schedules, said Peter Sancho, senior vice-president ofTotal Logistics Partner (TLP) Ocean Consolidators Inc. TLP is a Cana-dian wholly owned freight forwarder specializing in import freightfrom Asia to North America. One of the platforms it has offered overthe years is the concept of alternate gateways through varied gateway



entry ports.“This type of cargo is not time sensi-

tive,” Mr. Sancho said. “The longer transittime (to Montreal) shortens inventory shelftimes. There are additional cost savings tousers.”

From an operational standpoint, railrequirements are not necessary for importerslocated in the Quebec region. “For otherparts of Canada, Montreal is a major Cana-dian hub with multimodal optionsavailable,” Mr. Sancho said. “Certainly forEastern Canada, these multimodal serviceswould be much less costly than movingthrough Canadian Western ports.”

While transit times to Montreal fromAsia are longer than mini-landbridge servicesthrough the West Coast and comparable tosome all-water services to the EasternSeaboard, “the sailing times and, by exten-sion, transit times to Montreal areconsistent,” Mr. Sancho said. “For mini-land-bridge services, transit times can vary greatly.Winter 2013-14 has served as a perfectexample, with regular delays exceeding oneweek. Adjusted rail capacity for the wintermonths, the occasional system breakdown,and by extension port congestion are verysignificant factors.

“The Port of Montreal, meanwhile, iswithin a six-hour radius of Canada’s manu-facturing hub, with access to Canada’s twomajor railways and a wide selection of short-or long-haul carriers.”

Mr. Sancho said many major retailersenhanced their distribution networks signifi-cantly during the contract dispute at U.S.West Coast ports in 2002. “To minimize theimpacts of future contract disputes, the

major retailers expanded distribution centresacross the Eastern Seaboard, which has hadits challenges with both contracts and con-gestion,” he said. “I believe Montreal canposition itself to be a very viable addedoption.”

On the export side, “Canada isresource rich and by extension exports pri-marily raw materials,” Mr. Sancho said.“The competition is global. Cost is critical.Supply chain efficiency is one cost factorthat can be influenced, unlike currency val-uation, for example.

“Montreal offers a competitive optionwith the major carriers offering direct calls.

EUROPE

Medov Shipping Agency

Giulio Schenone

ChairmanTelephone: +39-010-5490254Email: [email protected]

Alessandro BarberisManaging DirectorTelephone: +39-010-5490260Email: [email protected]: www.medov.it

UNITED STATESDonald Finnerty

Director, Growth and Development, USATelephone: 313-600-6600Email: [email protected]: www.knightglobalsolutions.com

ASIAJeremy Masters

Director, Growth and Development, AsiaTelephone: 852 2824 8846Mobile: 852 6692 2798Email: [email protected]: www.shippingmastershk.com

PORT OF MONTREAL REPRESENTATIVES

This is a huge factor in the availability ofequipment. Again, with links to Canada’stwo major railways, it has a solid supportinfrastructure. For shippers in Canada, partic-ularly in the eastern half, and for the easternand Midwest U.S., Montreal offers majorshippers access to world-class carriers andservices, covering key global destinations,and Asia is certainly not an exception.”

As part of its business developmentstrategy, the Port of Montreal added in 2013a Hong Kong-based representative in Asia toits representation in the United States andEurope. Jeremy Masters is working todevelop markets in Southeast Asia and India.

Mr. Masters was president of CanadaMaritime and worked for CP Ships prior tofounding Shipping Masters (HK) Limitedeight years ago. He lived in Montreal for 14years and is extremely well acquainted withthe port.

In Europe, Giulio Schenone andAlessandro Barberis, of the Genoa-basedMedov shipping agency, represent the Port ofMontreal. Their mandate is to develop theEuropean market not only for cargo but alsowithin the cruise industry.

The port’s representative in the U.S. isDetroit-based Donald Finnerty, of KnightGlobal Solutions. Mr. Finnerty has more than25 years of experience in international trans-portation. Most notably, he has held seniorpositions with CP Ships and Canada Mar-itime. He was also president of AsecoContainer Services.




The Montreal Port Authority(MPA) maintains its infrastruc-ture to the highest standard inorder to provide its tenants with

first-rate facilities. It invested a record$55 million in its infrastructure in 2013,surpassing the previous record of $41 mil-lion set in 2009.

The new economic and trade agree-ment between Canada and the EuropeanUnion, an increasing amount of trafficmoving on transshipment services via theSuez and Panama canals, and opportuni-ties in the dry and liquid bulk sectors areexpected to bring more traffic to the Portof Montreal in the years ahead. And theport is well prepared to handle these addi-tional volumes of cargo.

“We are continuing to work on proj-ects to attract clients in all sectors ofactivity – containers, dry and liquid bulk,and cruise,” said Sylvie Vachon, the

Port well prepared to handle more trafficInvests record $55 million in its infrastructure in 2013

The port has completely redevelopedland in the Viau sector.

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MPA’s president and CEO.The port has increased its container-handling capacity by 13

per cent to 1.7 million TEUs (20-foot equivalent unit containers)by completely redeveloping land in the Viau and Maisonneuvesectors.

The Viau sector site is 16.5 hectares. Its annual containerstorage capacity stands at 150,000 TEUs following the redevelop-ment project. Railway tracks were relocated and sewer and watersystems, lighting and the underground electrical network wereredeveloped in order to fully optimize operations at the site. Asoil recovery and reuse project employed a soil encapsulationtechnique that allowed the MPA to reuse 44,000 tonnes of poorsoil that had been extracted at the site. The extracted soil wasmixed with cement to increase solidity and then re-deposited atthe bottom of excavated areas.

At the Maisonneuve sector, space for another 50,000 con-tainers was added at the site. The port also built a newlongshoremen’s hall and a new parking area and maintenancegarage for equipment and vehicles used by longshoremen.

Transport Canada contributed $14.8 million to the Viau andMaisonneuve projects.

The Port of Montreal also owns land along four kilometres ofwaterfront at Contrecoeur, located about 40 kilometres down-stream from its facilities on the island of Montreal. This land willbe used to increase the port’s container-handling capacity onceland on the island of Montreal reaches full capacity.

“Within the context of the new free-trade agreement withthe European Union and transshipment opportunities via theSuez Canal, our vision to expand the port to our land at Contre-coeur takes on added significance,” Ms. Vachon said.

The Port of Montreal has also been working to developopportunities in the liquid bulk sector. The port handled 9.55 mil-lion tonnes of liquid bulk traffic in 2013, its third-best year everin this cargo category. “We are looking to increase traffic in thissector by taking advantage of opportunities related to the growthof Canada’s petroleum products industry,” Ms. Vachon said.

The MPA is redeveloping an area of the sector where petro-leum products are handled, in accordance with an agreement ithas with Valero Energy Corp. The MPA is repairing berths andberth walls and increasing berth depth at Sections 101, 102, 105and 106. It is also extending the length of the berth at Section102 so that it can accommodate larger vessels.

In the dry bulk sector, CanEst Transit Inc. will operate a newfacility on port territory starting this summer that will specializein the cleaning and containerization of agricultural products des-tined for local and international markets. CanEst Transit hassigned a long-term lease with the MPA to operate out of the port’sformer Grain Elevator No. 3 annex. The centre is scheduled toopen July 15 upon completion of a $22-million modernizationproject, including the installation of new conveyors, scales andother equipment.



Cruise business sails full steam aheadMontreal welcomes record number of passengers in 2013

The cruise business continues togrow at the Port of Montreal,which welcomed a record 55,611passengers over the course of 47

calls in 2013.The Montreal Cruise Committee suc-

ceeded in its efforts to attract more cruisepassengers to Montreal while encouragingthem to spend extra time in the city beforeor after their cruise. “The cruise industrybrings some $14 million to the local econ-omy annually,” said Nathalie Gaudet,project manager for the Montreal CruiseCommittee.

Supported by Tourism Quebec, theMontreal Cruise Committee is an initiative

in which the Montreal Port Authority (MPA)and Tourism Montreal have teamed up withthe City of Montreal and five local associa-tions and organizations – Aéroports deMontréal (Montreal airports), the HotelAssociation of Greater Montreal, MontrealCasino, the Old Montreal Business Develop-ment Corporation and the Old Port ofMontreal – to promote Montreal as a cruisedestination of choice. Among the projects ithas undertaken is the creation of a microsite– www.cruisesalamontreal.com – dedicatedto providing key information to the cruiseand travel trade industries.

Tourism Montreal has also produced aseries of videos that showcase Montreal to

Jean-Charles Côté is the port'scustomer service and cruisecoordinator. He is responsible forthe quality of customer serviceprovided to cruise passengersarriving in Montreal and ensurescoordination among all partnersinvolved in the cruise sector.

cruise enthusiasts and travel agents. Thevideos are available on Tourism Montreal’sYouTube account and on the www.cruis-esalamontreal.com microsite.

In addition to welcoming an increasingnumber of passengers, the port is preparingitself to welcome larger cruise vessels follow-ing an announcement by Hydro-Québec lastfall that it will raise two power lines abovethe St. Lawrence River. The decision meansthat cruise ships carrying up to 3,000 pas-sengers will soon be able to reach Montreal.The largest cruise vessels currently sailing tothe port can accommodate up to 2,500 pas-sengers.

Following a request from the MPA,Hydro-Québec will tighten power cables inlate 2014 at Trois-Rivières and Boucherville,located downstream from Montreal, provid-ing a clearance of 52 metres under the wiresfor vessels sailing to the port.

The power lines are lower in heightthan the Laviolette Bridge in Trois-Rivières,

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the lowest insurmountable obstacle on the St. Lawrence River forvessels prior to arriving in Montreal. The bridge has 52 metres ofclearance under its structure.

Air draft – the height of the part of a ship that is out of the water– is vital for vessels, especially cruise ships that are built higher thancargo ships because of their multiple passenger decks.

“I commend Hydro-Québec for committing to take action,” saidSylvie Vachon, the MPA’s president and CEO. “This is excellent newsfor the cruise sector in Montreal, which has continued to evolve overthe past three years thanks to the work of our marketing and opera-tions teams and the support of Montreal Cruise Committeepartners.”

For its part, the MPA revamped its Iberville Passenger Terminallast year. It painted the interior walls and added new eye-catching sig-nage so that cruise passengers can easily find their way around theterminal. It painted the outer walls light grey. On the parking side, itpainted the outside wall Port of Montreal blue, overlaid with an ele-gant, stylized white ship.

Nevertheless, the MPA is currently evaluating an improvementproject for the cruise terminal that it would like to develop in concertwith Montreal’s 375th anniversary in 2017.

The port further enhanced its cruise services last year with theappointment Jean-Charles Côté as customer service and cruise coor-dinator. He is responsible for the quality of customer service providedto cruise passengers arriving in Montreal and ensures coordinationamong all partners involved in the cruise sector.

The port also won an award for its cruise operations from theprestigious Cruise Insight magazine for a fifth consecutive year in2013. The port took home the prize for Most Efficient Port Services.The award recognizes the port’s efficient combination of port agencyand customs services and its strong working relationship with cruiseline operations departments.

The port also welcomed in 2013 the largest cruise ship to evervisit Montreal. The 253-metre-long AIDAbella, operated by AidaCruises, can accommodate 2,500 passengers and close to 650 crew.She will return to Montreal twice in 2014.

“The 2014 season is looking very good,” Ms. Gaudet said. “Weare expecting to see some 60,000 international passengers and crewmembers between May 17 and November 11.”

Indeed, the port will welcome for the first time cruise shipsduring the month of November. Montreal’s cruise season has tradi-tionally ended in mid to late October.

Also new this year, more German ships, most notably the luxu-rious MS Europa, will visit the port.

“For its part, the Montreal Cruise Committee will increase itsefforts to ensure that cruise lines include Montreal on their itinerariesand that they offer pre- or post-cruise packages to their clients,” Ms.Gaudet said. “Furthermore, we will launch an extensive advertisingcampaign geared to travel agents in an effort to position Montreal asa destination of choice for passengers cruising the St. LawrenceRiver.”

The port welcomed in 2013 the 2,500-passenger AIDAbella to its Iberville Passenger Terminal, which now featuresnew eye-catching signage that allows cruise vacationers to more easily find their way around the facility.



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Port handles 28.2 million tonnes of cargo in 2013

The Port of Montreal handled 28.2million tonnes of cargo in 2013,down only slightly from the pre-vious year and from its

record-setting year of 28.5 million tonnesin 2011.

“Considering the weak economicgrowth in developed countries, we can sayin all honesty that 2013 was a good yearfor the Port of Montreal,” said SylvieVachon, president and CEO of the Mon-treal Port Authority. “The total volume oftraffic was down by less than 1 per centcompared with 2012.”

The port handled 11.9 million tonnesof containerized cargo in 2013, down 1.1per cent from the previous year. Some 1.4million TEUs (20-foot equivalent unit con-tainers) moved through the port in 2013.“The economic slowdown in Europeanand North American markets affectedtrade,” Ms. Vachon said. “But the impacton the Port of Montreal was offset by the

strength of new, growing markets in Asia,the Middle East and the Mediterranean.”

Non-containerized general cargo traf-fic was up 22.7 per cent to 159,677tonnes thanks mainly to increased volumesof metal products.

Close to 9.55 million tonnes of liquidbulk cargo moved through the port lastyear, down 1.7 per cent from 2012.Nonetheless, it was the port’s third-bestyear ever in this cargo category.

Dry bulk traffic was up 0.2 per cent to6.6 million tonnes due mainly to increasedmovements of iron ore, fertilizers andscrap metal.

“Looking ahead, the economic recov-ery seems to have taken hold in the UnitedStates, and Europe should experiencesome growth this year,” Ms. Vachon said.“The declining Canadian dollar shouldhelp our exports. Although we mustremain prudent, we expect our total trafficto increase in 2014.”

The port handled 1.4 million TEUs in 2013.

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GRUNT CLUBcelebrates

79th

Annual Dinner

From left to right: Wendy Zatylny, President, Association ofCanadian Port Authorities; Jean-François Bilodeau, President,

The Grunt Club; and Betty Sutton, Administrator, Saint Lawrence Seaway Development Corporation.


GRUNT CLUBcelebrates

Grunt Club President Jean-François Bilodeau presentsdonation cheque to Carolyn Osborne, Mariners’ House ofMontreal General Manager.

HEAD TABLE GUESTS

Grunt Club President Jean-François Bilodeau(right) with Daniel Dion of the Institut maritime duQuébec.

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Grunt Club President Jean-François Bilodeaupresents cheque to representative of the Fondation de l’Hôpital Sainte-Justine.

Grunt Club President Jean-François Bilodeau presents cheque to representative of the Montreal Children’s Hospital Foundation.

GRUNT CLUB PRESIDENTS PAST AND PRESENT

u

More than 1,100 people – members of shipping/mar ine commu-nity and transportation industry and their guests – attended the GruntClub’s 79th Annual Dinner in Montreal on December 6.

Grunt Club President Jean-François Bilodeau presided over theevent.

Among the highlights of the evening was the presentation ofcheques to Mariners’ House of Montreal, the Montreal Children’s Hos-pital Foundation, the Fondation de l’Hôpital Sainte-Justine and theInstitut maritime du Québec.

Proceeds from the Annual Dinner and other social activitiesthroughout the year go toward the financial support of these organiza-tions.

79th

Annual Dinner




Leading women in logistics come together to celebrateInternational Women’s Day and to inspire change

For more than a century, InternationalWomen’s Day (IWD) has recognizedthe enormous economic, social and

political contributions of women around theworld. This year’s theme ‘Inspiring Change’was the focus of UPS Canada’s ‘The Futureof Women in Logistics’ panel discussionwhich took place on March 7. The event wasan opportunity to gather women and menalike to discuss the changing industry oflogistics and how women in particular canbuild their career in this field. Valuableinsights from thought leaders from across theindustry were shared with local businesses,government officials, UPS senior staff as wellas the UPS Women’s Leadership and Devel-opment (WLD) committee.

The panellists included Dr. K. KellieLeitch, Ontario Minister of Labour and Min-ister of the Status of Women; RomaineSeguin, President, UPS Americas; Joy Nott ,President, Canadian Association of Importersand Exporters; Debra Dinger, trade and com-pliance Manager, Supply Chain, Ericsson;and Julia Kuzeljevich, Associate Editor, Cana-dian Shipper (moderator).

“Our Government is committed to pro-moting the recruitment and advancement ofwomen in all sectors and at all levels of theeconomy,” said the Honourable Dr. K. KellieLeitch. “I encourage all organizations to sup-port women through ongoing mentorship,leadership and skills training. This is good forwomen, good for business and good forCanada.”

UPS leaders within different functionsof the business attended the event to sharetheir personal stories - challenges and suc-cesses - working in the logistics industry.

Be it freight, operations, procurementor logistics, a 2012 study by the Van HorneInstitute titled Women in Supply Chainfound that women are presently under-repre-sented within the industry. The study

concluded that attracting and retaining morewomen was the overarching solution toaddressing the growing Canadian labourshortage. The Van Horne Institute mostrecently reported 26,852 vacant supplychain positions across Canada , growing toabout 356,747 vacancies by 2017.

The UPS WLD program was launchedin 2007. It was designed to provide an inte-grated series of tools and practices to bringtalented women from the hiring phase,through skills development and into higherlevels of responsibility within the organiza-tion.

In its seventh year, the WLD Program isfocused on fostering change and expandingstrength in talent through diversity byimproving retention of women at supervisorand manager levels, by developing womenon the management team to enrich thepipeline of talent for higher level positions,and by positioning UPS for future businessgrowth opportunities with women entrepre-

neurs.“International Women’s Day represents

the global effort to ensure there are opportu-nities for all and to inspire change,” saidMichael Tierney, President, UPS Canada.“It’s incredibly important to celebrate andsupport women’s advancements not onlyonce every 365 days, but year-round. In2013, the UPS WLD committee in Canadahosted nearly 100 events with 1,000 partici-pants - a success worth celebrating. As anorganization, we are committed to creatingan environment where our employees canimprove their skill sets and share theirstrengths through continued training, men-torship programs and thought leadership.”Designed around leveraging networks andbusiness connections, UPS runs its WLD pro-gram across its International operations. Thetraining, development and networking aimsto support a positive step forward for womenworking in logistics around the globe.

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To celebrate International Women’s Day, the UPS Women’s Leadership Developmentcommittee hosted a panel event in Toronto discussing the future of women in logistics.

Viterra completes acquisition of Lethbridge InlandTerminal Ltd.

Viterra Inc. announced that it hascompleted its acquisition of certainassets of Lethbridge Inland Terminal

Ltd. (LIT), including a high throughputgrain elevator with a capacity of 42,000tonnes. The agreement was originallyannounced in December, and has receivedall pertinent shareholder and regulatoryapprovals.

Kyle Jeworski, Viterra’s President andCEO for North America said, “We areexcited to integrate this high quality termi-nal into our operations, and welcome itsemployees to the Viterra team. Together, welook forward to providing area customerswith trusted advice and tailored service,backed by Viterra’s expansive asset networkand connections to world markets.”

Over the last several years, Viterra hasmade a series of infrastructure investmentsin its asset network to promote the efficientmovement of agricultural commodities.Most recently in Alberta, Viterra announcedit is spending over $34 million through anexpansion and upgrade to its facility inGrassy Lake, as well as building a highthroughput terminal in Grimshaw.



New research from MIT highlights critical importanceof supply chain & logistics skills and expertise tocorporate resultsThe MIT Forum for Supply Chain Innovation recently released a

landmark research study in collaboration with Pricewaterhouse-Coopers LLP (PwC) on Supply Chain and Risk Management and

Making Right Decisions to Strengthen Operations Performance. The Canadian Institute of Traffic and Transportation (CITT) says

this study, which examined 209 manufacturers operating in a numberof different sectors, adds pivotal evidence to support the argument thata company’s most important metrics actually hinge on the abilities andexpertise of people who are able to run flexible, uninterrupted supplychain and logistics operations—and not the host of other, less control-lable factors that often get the attention of management.

Previously, CITT has shared other research that studied hundredsof companies with global operations and linked corporate performancemost closely to uninterrupted supply chain operations. CITT character-izes the new MIT research as the missing link industry needed to provethat profitability and uninterrupted supply chains are more sensitive topeople’s professional abilities than anything else.

"Taken together, these studies send businesses a clear message—having the logistics expertise is the biggest factor in a resilient,uninterrupted supply chain, and a resilient supply chain is the biggestfactor for profitability," says Catherine Viglas, President of CITT.

Walk the halls of any business with significant supply chain oper-ations and chances are you'll hear familiar gripes about profitability.Commodity pricing is unpredictable. Currency rates are on a rollercoaster ride. Fuel costs are soaring. Margins are razor thin and eventsof all kinds are causing disruptions.

Yet the MIT study shows that profitability hinges on people andwhat they know. The research concluded that supply chain operationswere most sensitive to skill set and expertise, a factor well within thecontrol of businesses, not fickle factors such as commodity pricing andfuel costs.1 Further, MIT and PwC found that the 'companies withmature capabilities in supply chain and risk management do better

along all survey dimensions of operational and financial performancethan immature companies.'1

"The findings should come as great news to businesses who oftenfeel vulnerable to uncontrollable factors," says Viglas. "Supply chainand logistics is often an afterthought for top-level executives becauseit's relatively invisible until something goes wrong." Viglas added.

"If there's ever been a wake-up call to invest in professional devel-opment and certification for your supply chain and logistics people, thisstudy is it," said CITT’s Viglas, citing the study's findings that only 41per cent of the companies in the study had the mature expertiseneeded to effectively address incidents and only 9 per cent weredescribed as being fully prepared to manage the disruptions commonin today's increasingly complex global supply chain ecosystem.1

The MIT study illustrated that companies with mature supplychain logistics capabilities in place to avoid or manage supply chaininterruptions had significant impact on key operating performance indi-cators, such as:

• Total supply chain lead-time variability• Total cost• Order fulfillment lead time• Inventory turns• Supply chain assets utilization• Total supply chain lead-time• Customer service level or fill-rate• Sales revenue• Market-share• Market value"CITT’s specialized logistics courses are a proven way of setting

your logistics professionals, and your business, up for better perform-ance. The skills and expertise developed through CITT courses lead tomore sustainable, invulnerable supply chain and logistics operations,"Viglas said.

Inadequate icebreaking capability harming theeconomy

With the Great Lakes and St.Lawrence Seaway facing thethickest and broadest ice cover in

years, the Canadian Shipowners Association(CSA) is concerned that Canada's ice-break-ers are unable to create and maintain theroutes needed to move key cargo to Cana-dian and American industries. The CanadianCoast Guard is doing its utmost to workwith resources across a large geographicalarea subject to heavy ice, but this situation isrippling into Canada's transportation andeconomic system.

Concerns over ice conditions and theability of the Canadian Coast Guard to pro-vide sufficient ice-breaking has delayed theopening of the St. Lawrence Seaway pastopening dates achieved in recent years.

Despite Canadian government efforts toencourage the movement of Canadian grain,it will remain stored in ports such as Thun-der Bay until ice-breakers open ports andsupport ship movements. Not only are Cana-dian grain movements threatened byinsufficient ice-breaking, so too are otherindustries with already low stocks of com-modities such as iron ore, constructionmaterials, salt and petroleum productswhich are moved by ships.

CSA and its members have advised theCanadian Coast Guard of the need toemploy three ice-breakers to support theopening of the Great Lakes - Seaway system.Disappointingly, the Canadian CoastGuard's effort to commit the necessaryresources appears to be late as it manages

challenging winter conditions in manyregions.

The Canadian Coast Guard's fleet ofice-breaking ships is aging and too few innumbers to support the economic and envi-ronmental benefits of short-sea-shipping inCanada. CSA calls on the Canadian CoastGuard to fulfill its support to maritime com-merce immediately by deploying threeadditional ice-breaking assets to supportshipping throughout the Great Lakes - St.Lawrence Seaway system while also meet-ing obligations to support navigation in theSt. Lawrence River and Maritimes. Further-more, CSA encourages the Government ofCanada to find a longer-term solution to aug-ment assets.



CargoM releases study conductedby KPMG-SECORBY BRIAN DUNN

Anew study conducted by KPMG-SECOR for CargoM, Montreal’slogistics and transportation cluster,

revealed the industry’s importance to the localeconomy and some of the challenges it facesin the Greater Montreal Area (GMA).“Obtaining the most accurate informationavailable on our sector is key to CargoM’s mis-sion. It makes it possible for our members torally around common objectives and con-certed actions,” said Madeleine Paquin,President and CEO of Logistec Corporation

contend with competition from other easternhubs such as Norfolk and Savannah wherelabour and land costs are comparable, accord-ing to the study. More competition could alsocome from the opening of an expandedPanama Canal this year, it added.

On the plus side, the free trade agree-ment with the EU could present newopportunities both on the import and exportfronts, while a potential alliance betweenMaersk, MSC, and CMA-CGM currentlybeing discussed could result in greater fre-quencies and lower costs for containershippers.

A number of recommendations werecontained in the study, including the need toimprove road congestion by having deliveriesmade outside of morning and afternoon rushhours, introducing reserved trucking lanesand by reviewing overall trucking restrictions.

It was also suggested the role of the Portof Contrecoeur should be increased while therole air transport can play in Montreal’sgrowth should be “demystified.” In addition,an alliance of firms and transportation compa-nies to adopt some commonality for themanagement and transport of goods should beencouraged. And finally, CargoM should worktogether with other local clusters to promotethe GMA.

and Vice-Chair of CargoM’s Board of Direc-tors.

One of the main findings of the studywas that the sector contributed more than$4.2 billion to the GMA economy or 40 percent of the total volume of transportation andlogistics activities in the province. The ship-ping industry accounted for close to $300million of the total. The study also revealedthere are close to 1,200 local companies in thelogistics and transportation sector in the GMAwith five or more employees accounting for53,000 related jobs. If logistics functions inmanufacturing, retail and other industrieswere included, another 70,000 jobs would beadded to the total. About 142 million tonnesof cargo is handled in the GMA each year,with trucking accounting for 67.7 per cent,shipping 19.3 per cent, rail 12.8 per cent andair cargo less than one per cent.

The study identified five key factorsaffecting competitiveness in the GMA, namelylabour costs, the quality of road infrastructure,government regulations, fluidity of transporta-tion and the quality of the port’sinfrastructure. A crucial industry concern is anaging workforce, particularly when thenumber of jobs is expected to grow over thenext three years.

“Identifying these competitiveness fac-tors confirms the relevance of various workinggroups we implemented since the creation ofthe CargoM cluster,” said the cluster’s Execu-tive Director, Mathieu Charbonneau.“Therefore, these preliminary results allow allpartners to agree on CargoM’s priority actionsover the coming weeks and months.”

To maintain or improve its position as aNorth American logistics hub, Montreal must

Halifax Port Authority and CN announce newrepresentation in India

Halifax Port Authority (HPA) and CNRail have hired Crest ContainerLines to work in India to promote

the port of Halifax and CN’s rail network asa gateway into North America. The agree-ment took effect March 1, 2014.

Crest Container Lines is based inMumbai, with nine branch offices through-out India. Fouze Farrhan, its President andCEO, has over two decades of proven ship-ping and freight experience in the IndianSubcontinent and North American market.

Crest Container Lines is a member of FFAI,FIATA and is NVOCC licenced by the Fed-eral Maritime Commission.

“There are many opportunities in thisfast growing marketplace, and we are fortu-nate to have two very strong partners in CNand Crest to help promote our businessdevelopment efforts in India,” said GeorgeMalec, Vice-President of Business Develop-ment and Operations for HPA. “Fouze’sexperience combined with the expandingCrest network will be an excellent partner-

ship to grow the flow of cargo between theIndian Subcontinent and North America.

“CN is pleased to continue to workclosely with Port of Halifax to pursue cargogrowth opportunities in the Indian Subconti-nent,” said Keith Reardon, CNVice-President, Intermodal Services.“Through this partnership we hope toimprove the effectiveness of our customers’supply chains and in turn draw more busi-ness through the Port of Halifax and CN’sNorth American rail network.”

Madeleine Paquin



Learning from the success of one’s competitors:CargoM invites delegation from Savannah, GeorgiaBY BRIAN DUNN

In an effort to learn from other jurisdictions, CargoM, Montreal’stransportation and logistics cluster advocate, is holding a series ofworkshops that highlight the experiences of various port authori-

ties. The first workshop featured Georgia Port Authority (GPA) that hasseen tremendous growth since 2000, spurred in part by a general strikeon the U.S. west coast in 2002 that saw GPA volume grow by 21 percent that year. “We are not an overnight success,” said John Petrino,Director of Business Development, Georgia Port Authority, which rep-resents the Ports of Savannah and Brunswick. “In 2000, we had lessthan one million TEUs throughput. Now, we are over three millionTEUs.”

GPA consists of the Garden City Terminal for containers, andOcean Terminal for breakbulk, Ro/Ro and project cargo, which sup-port more than 350,000 jobs annually and feature clusters fordistribution centres and manufacturing, said Mr. Petrino.

GPA is located upriver from downtown Savannah, close to Inter-state Highways 95 and 16, to achieve the 5-55 maxim for truckers (fiveminutes to reach highway speeds of 55 miles per hour after leaving theport). “We collaborated with the Georgia Department of Transport tobuild a beltway to connect with I95 and I16 which will be ready in2015,” said Mr. Petrino. His department works closely with projectmanagers to attract new business around its Garden City Terminal, andwelcomed nine new companies last year, including Shaw Industries,Hankook Tires, Nordic Cold Storage and OHL, a third-party logisticssupplier.

“There are over 250 port-dependent distribution centres in Geor-gia. We go overseas to meet with (potential) customers. The importantquestion we are asked is what type of business climate do you have?Site Selection magazine chose Georgia as the number one state withthe best business climate last year.”

GPA is building for the future and will max out its current capac-ity of 6.5 million TEUs by 2022 as it strives to keep capacity 20 percent ahead of demand through long-term planning, noted Mr. Petrino.It is currently undertaking a harbour expansion project to increase itsdraft, as it is the shallowest port of any major U.S. port. “The four-yearproject will cost $650 million with the federal government picking up60 per cent of the tab and Georgia 40 per cent, another example ofcooperation.”

Georgia works very hard to create a business friendly environ-ment, according to Peggy Jolley, Coastal Regional Manager,

Community and Economic Development for Georgia Power. “GeorgiaPower has a large economic development department, because if Geor-gia doesn’t grow, we don’t grow. We’re trying to diversify our economybeyond textiles and agriculture. We have a resource team, researchteam and business development team.”

To build momentum following the Atlanta Summer Olympics in1996, a partnership between the state and private corporations wascreated called Georgia Allies which funds marketing events and brandsGeorgia worldwide.

“We leave our name at the door (at marketing events). We’re aGeorgia company, not Georgia Power. We help identify the clustersGeorgia wants to emphasise,” said Ms. Jolley which includes aero-space, logistics, energy, agribusiness, health sciences and internationalinvestments.

With 159 counties, it was difficult to market each one individu-ally, so all sites are listed on the site selectgeorgia.com with all theiradvantages such as proximity to the Port, airport, available land, laboursupply and driving time to nearby cities among other attributes. “Thisway, we can narrow down potential counties based on a customer’srequirements and generate a county report that can make a decisioneasier,” explained Ms. Jolley, who added it has been a long haul toreach the success that the Port Authority currently enjoys. Twenty

John Petrino, Director of Business Development, Georgia Port Authority.

Alyce Thornhill, Georgia Department of EconomicDevelopment, Region 12, Project Manager.

Mike Grier, Corporate Director, Global Logistics, Dorel.

Phot

os: B

rian

Dunn



years ago, the port and economic develop-ment department never talked to each other,there was no industrial park and the portnever focused on containers from Asia.

“Now, the port and economic develop-ment work closely together and the industrialpark which was developed for manufacturingis primarily used for warehousing and distri-bution.”

The emphasis on collaboration and part-nerships was the common theme throughoutthe workshop which continued with AlyceThornhill, Georgia Department of EconomicDevelopment, Region 12 Project Manager.Sixteen years ago, Georgia created 13 regionalProject Managers to promote the state, andeach region receives tax incentives or taxbreaks based on its prosperity, with a bonus ifa business in a region uses the port. If a com-pany expands it business by 10 per cent ormore in a year, its payroll tax credit is doubled.

Another innovation is QuickStart, a part-nership between companies and state collegesthat helps companies get employees trained asquickly as possible at no cost to employers,said Ms. Thornhill. Two more institutions thathelp the state attract new business are theGeorgia Centre of Innovation and the GeorgiaCentre of Innovation for Logistics, which sup-port innovation and professionalism inlogistics. Ms. Thornhill estimates that ten percent of corporate revenues relate to logistics-related activities, which translates into overone million logistics jobs in the state, accord-ing to Ms. Thornhill.

The workshop also heard why Montreal-based Dorel Industries was attracted toSavannah where it has built a new 472,000sq.ft. warehouse for its juvenile, home fur-nishing and bike products. While only eightper cent of its U.S. shipments come inthrough Savannah, it covers the 38 per cent ofits business which is generated in the south-eastern U.S. “Georgia Port Authority is anever-growing port with low real estate costs

and low labour costs, and we’re able to passon savings to our customers,” explained MikeGrier, Corporate Director Global Logistics atDorel. “That’s why Savannah is so successful.It combines a public and private partnershipwhich is strategically aligned with municipal,state and federal governments. Their long-term planning looks 10-25 years down theroad. It’s a generational vision.”

Asked what were the key factors thatneeded to improve the business climate inMontreal, Mr. Grier listed the elimination ofred tape, fewer permits and lower taxes. Hesaid the completion of Highway 30 has beena big improvement for traffic flows. “It’s calledHighway 30 because that’s how many years ittook to develop,” he joked, although not tooinaccurately. “None of us will be in business30 years from now when Montreal is as goodas Savannah, because that’s how long ittakes.” When asked after the workshop howfar Montreal is behind Savannah in terms ofcollaboration, technology, logistics and inno-

vation, Port of Montreal President and CEOSylvie Vachon said she was inspired by Savan-nah’s success. “With Cargo Montreal, we’vetaken a major step forward. In our heads,we’re connecting the dots. Five years earlier, ifwe had heard their presentation, we wouldfeel we’re way behind. But today, we believewe can catch up.” Ms. Vachon said all thenecessary players are on board, including uni-versities, transportation and logisticscompanies, but there needs to be more partic-ipation from the logistics and governmentsectors. “But listening to the presentations thismorning, I’m very optimistic, because theyhad the same difficulties that we had, andthey now have a model that works and wehave the same objectives.”

Madeleine Paquin, President and CEOof Logistec Corporation echoed that senti-ment, saying the GPA workshop coupledwith the creation of CargoM are “clear indi-cations that we are moving in the rightdirection.”

Liner reliability set to decline in 1Q14Liner shipping is becoming less and less reliable as operators

ignore service standards in the rush to cut costs. The bad newsfor shippers is that the situation is only going to get worse,

according to Drewry’s newly published Carrier Performance Insightreport.

Containership reliability worsened in every quarter of 2013,with the fourth-quarter decline taking the on-time average below 64per cent; the lowest it has been for two years (61 per cent in 3Q11).Compared to the same quarter in 2012 when the all trades averagereached a peak of 75.2 per cent, the fourth quarter result was downby a hugely disappointing 11.4 points.

The weaker performance coincided with a raft of skipped voy-ages. With more planned for the first couple of months of 2014, theshort-term outlook for reliability is not great.

“The focus on reliability seems to have been lost in the currentcost-cutting environment. Shippers are now paying more for poorerservices,” said Simon Heaney, senior manager of supply chain

research at Drewry.“Shippers know that lines are saving money, so they will be

unwilling to accept further rate increases. This could provide anopportunity for more reliable carriers to secure better rates.”

Maersk Line maintained its position as the most reliable majorcarrier in the industry in a generally poor fourth quarter when mostof its competitors suffered a free-fall in on-time ship arrivals.

Maersk achieved 80 per cent on-time reliability in the fourthquarter, improving its all-trade reliability by 0.8 points. It was one ofonly eight carriers to improve on their third-quarter performance. Athree-point improvement was enough to see Evergreen rise from11th to second place with a 74 per cent on-time result. Despite afour-point decline, Yang Ming ranked third with an on-time averageof 73 per cent.

At the wrong end of the table, the worst performing carrierswere MSC (48 per cent) and CSAV (51 per cent), according to thereport.



Report on Borden Ladner Gervais 2013 Maritime LawSeminarBY BRIAN DUNN

Are freight forwarders merchantsand if so, what are their liabilities?

That was one of the topics presented atBorden Ladner Gervais’ 25th Annual LawSeminar in Montreal on December 6.

Since carriers, particularly those in theliner trade, deal with a number of partieswho have an interest in cargo, includingshippers, consignees, receivers and freightforwarders, who is bound by the Bill ofLading? asked BLG Partner Jean-MarieFontaine. More specifically, what is the posi-tion of the freight forwarder who plays anumber of roles such as ship agent, logisticsprovider and customer of the line, poten-tially leading to conflicting interests, hepointed out.

Carriers will attempt to bind as manyparties as possible to the Bill of Lading via a“Merchant Clause,” said Mr. Fontaine,which typically includes the shipper, con-signee, owner of the goods, holder of theBill of Lading and anyone acting on behalf ofsuch a party (like a freight forwarder). Andall parties considered “Merchants” arejointly liable for freight, demurrage, storagecharges, damage caused by cargo and penal-ties.

“Freight forwarders often respond thatthey act solely as agents, are not a party tothe Bill of Lading and incur no direct liabilitytowards the Line,” said Mr. Fontaine, who

gave the following example of a problemthat occurred in a recent Canadian case.

DHL had booked with CMA CGM’sCanadian agent the carriage of 68 contain-ers between Montreal and Ho Chi MinhCity. Booking confirmations were issued byCMA CGM to DHL. In its Bill of LadingInstructions, DHL named its client, HSB, asthe shipper, Tan Mai as consignee and itselfas a “Forwarding Agent.” The Bills of Ladingwere issued and released to DHL. DHL paidthe freight to CMA CGM and the 68 con-tainers were carried to destination wherethey were discharged. Unfortunately, theshipper did not pay DHL. DHL, in turn,invoked a freight forwarder’s lien andrefused to release the CMA CGM Bills ofLading to the shipper without payment. As aresult, the containers sat in Vietnam accu-mulating demurrage and storage charges.

CMA CGM took proceedings in Franceagainst the shipper, consignee and DHL (as“Forwarding Agent”). DHL responded withan action in Canada seeking a declaration ofnon-liability. In the context of a motion for astay of the Canadian proceedings in favourof the French proceedings, the Court had todetermine whether DHL was a party to theCMA CGM Bills of Lading and thus boundby the jurisdiction clause in that contract.

The Court considered both the termsof the Booking Confirmations and the defini-

JEAN-MARIE FONTAINE

GILLIAN GRANT

Costa Concordia



tions of “Merchant” and “Holder” under the CMA CGM Bills ofLading, as well as the fact that it held the Bill of Lading, and that itacted “on behalf of the shipper”. Accordingly, the Court concludedthat DHL was bound by the terms of the CMA CGM Bills of Lading.

The Court decision means that freight forwarders are morelikely (though not in all cases) to be held jointly liable with the ship-per and consignee for all the liabilities of the Merchant, such asfreight, demurrage and storage charges, particularly if the costs aredirectly related to their behaviour (such as refusing to release a Bill ofLading).

While the above matter was settled between the parties,“whether you’re the shipping line or freight forwarder, you shouldlook closely at the terms of the booking confirmation,” suggested Mr,Fontaine as a way to avoid any confusion. “If you want to clarifypotential exposure, a long-term contract might be the solution.”

Responding to the risks inherent in increased tankertraffic

Ottawa has developed a number of initiatives to improve pres-ent regulations concerning the transportation of oil by ship, GillianGrant, Senior Counsel, Transport Canada, said in another presenta-tion.

She outlined two major initiatives in her presentation entitled“Update on International and Canadian Maritime Law Initiatives.”They are the proposed World Class Tanker Safety System and legisla-tion introduced in Parliament in October that amends portions of theCanada Shipping Act in Bill C-3 that deals with preparedness andresponse for oil spills as well as to the Marine Liability Act.

On the World Class Tanker Safety System, Ottawa has beenworking on a strategy that includes three components, namely pre-vention, preparedness and response and liability and compensation.It has proposed measures to improve Canada’s performance under

each of these three areas. These include enhanced requirements forplanning and reporting on oil handling facilities or marine terminals,increased inspections to ensure all foreign tankers are inspected ontheir first visit to Canadta and annually thereafter, while funding willbe boosted for the National Aerial Surveillance Program that con-ducts monitoring of ships in Canadian waters to ensure they do notpollute or if they do, takes enforced action against them.

On the Preparedness and Response side, the Canadian CoastGuard will adopt an Incident Command System for oil spill responsein order to integrate its operations with key partners and respondmore effectively.

Another component of the World Class Tanker Safety strategyrelates to liability and compensation in the event that there is a spill.The government is committed to maintaining the principles of pol-luter pays, international uniformity and shared financialresponsibility between shipowners and cargo interests.

The second major development on the marine front is the intro-duction in Parliament of Bill C-3 also known as the SafeguardingCanada’s Seas and Skies Act. Bill C-3 includes amendments to theMaritime Liability Act to compensate for damages caused by haz-ardous and noxious substances carried by sea.

On the international scene, it has been a relatively quiet year,although there are three things that are worth mentioning, said Ms.Grant. First, the Marine Safety and Marine Environmental Protec-tion Committees of the International Maritime Organization (IMO)and their subcommittees have been trying to negotiate a Polar Codethat would set mandatory ship construction, equipment, crewingand environmental protection requirements for ships operating inpolar regions. The negotiations are almost finished and the Code isexpected to be finalized in 2015.

In terms of the International Oil Pollution CompensationFunds, the IMO has decided to wind up the 1971 Fund which was

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The world’s most expensivesalvage operation to date.

The 150 who attended the seminarwere also given a glimpse into the salvageindustry and the challenges of refloating theCosta Concordia, one of the biggest andmost complicated wreck removal opera-tions ever, with a price tag that could top $1billion by the time it’s refloated thissummer.

Prior to 1969 in the salvage business,the owner’s liability was limited to the valueof a shipwreck, according to Lindsay Malen,Director, Business Development, Titan Sal-vage/Marine Response Alliance, Houston,

TX, which, alongside Italian partnerMicoperi, are leading the Costa Concordiarecovery operation. But the businesschanged following the wreck of the TorreyCanyon in 1967 with 120,000 tons of oilspilled, the largest wreck at the time. Thatcasualty led to the creation of the Civil Lia-bility Convention which increased theliability of the shipowner, resulting in higherinsurance premiums, but making morefunds available for wreck removals.

“The environmental risk in wreckremoval is very high which adds to thecosts,” said Ms. Malen during her presenta-tion entitled “The escalating costs of wreckremovals and why it’s not the salvorsfault...most of the time.” Other factors con-tributing to escalating costs include thevessel’s size and technical characteristics ofa wreck, location of the wreck, depth ofwater, weather, media pressure and anincreasing requirement for a successfulremoval by third-party stakeholders, addedMs. Malen.

While the Costa Concordia is relativelysmall at 290 metres, compared to thebiggest ship at sea, the 396 m Marco Polo,it contains hundreds of rooms on13 decksversus regular cargo holds, adding to thecomplexity and cost of the salvage opera-tion. It capsized on January 13, 2012.

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Nanaimo Port Authority addresses concerns over lowercruise traffic

Bernie Dumas, President & CEO, Nanaimo Port Authority, com-mented on the number of cruise ships to be hosted in Nanaimoin 2014. “While we are disappointed with the number of calls

scheduled for 2014, we are focusing our efforts on increasing futurecruise ship calls to meet our stated expectations and those of the localand mid-island communities. 2015 is already encouraging and movingin the direction that is more in line with our expectations, and to datewe have already received five nominations.”

Since 2005, 68 large cruise ships have come to Nanaimo carryingover 134,000 passengers. The cruise business represents a significanteconomic contribution to the community around Nanaimo. Since 2011,when the cruise ship terminal opened, Nanaimo has hosted 33,908 pas-sengers plus crew generating a direct economic impact of $2.14 million,for local and mid-island communities based on cruise industry studies.

“The local and regional community continues to be an integralpartner of our cruise initiative. We need community support and uniqueattractions to make this work, a development emphasized by cruiseindustry executives.” says Dumas. “We are working with the NEDC,Tourism Nanaimo, City of Nanaimo, RDN, the DNBIA and local excur-sion operators. A unique hook for our attractive destination willcompliment what passengers enjoy. The Nanaimo Port Authority’s rela-tionships with community partners and participation with support frombusinesses and the public are key elements to the on-going success of

the cruise industry in Nanaimo.”“2010 projections were based on repositioning shoulder season

visits, as well as cruise visits from ships during the regular Alaska cruiseseason.” Dumas stated. “Several developments occurred over the lastthree years that affected Nanaimo: cruise lines restructured itineraries,changed destinations and moved different vessels into various cruisetheatres on the west coast of North America and beyond. Since enact-ment in August 2012, we felt the full impact of the Emission ControlArea regulations requiring all vessels to burn low sulphur fuels within200 nautical miles of the coastland. This dramatically increased fuelcosts for the cruise lines and the regulations were introduced after our2010 projections and 2011 terminal completion. As a result, specificcruise lines decided to reduce their number of repositioning cruises,directly impacting Nanaimo in 2014. Cruise lines are also developingnew cruise markets and need to position themselves into these marketsquickly after the Alaska season, again impacting west coast repositioningcruises and calls to Nanaimo.”

Dumas stated that “Nanaimo Port Authority is working with thecruise industry to feature our first class facilities and to continue withthe development of our cruise business. Our efforts have not divertedfrom our original goals”, and expressed confidence in the Port’s abilityto secure additional cruise calls.

Lake Carriers Association reports U.S.-flag Lakers fleetsto invest more than $70 million in vessels this winterAfter a season in which U.S.-flag lakers will have sailed more

than 2.5 million miles and carried nearly 90 million tonnes ofcargo, a $70-plus million tune-up awaits the fleet.

One ship arrived in Sturgeon Bay, Wisconsin, to undergo conver-sion to a barge in early November, but the bulk of the fleet begantying up at their winter berths starting in late December. Upwards of1,200 shipyard workers then will labour virtually non-stop to readythe vessels for the 2014 season that will begin in mid-March.

Despite the challenges that winter weather presents in the GreatLakes region, the first quarter of the year is the prime time for main-taining and modernizing vessels. Vessels have to operate 24/7 duringthe season to meet the needs of commerce, so the closing of the SooLocks means employment at Great Lakes shipyards is about to peak.

The steel industry is Great Lakes shipping’s largest customer, soit is perhaps fitting that steel is the primary material used in maintain-ing and modernizing the fleet each year.

This winter approximately 1,100 tonnes of steel will be used torenew sections of hulls and cargo holds. The various grades of steel

used in vessels must meet exacting standards set by the AmericanBureau of Shipping and so must be ordered months in advance.While the Lakes freshwater environment is gentle on vessels, U.S.law requires lakers be dry-docked at regularly scheduled intervals sothe U.S. Coast Guard and American Bureau of Shipping can examinethe hull below the waterline. Massive concrete and wooden blocksare positioned in the drydock and support the vessel once the cham-ber has been drained. Several vessels will undergo out-of-waterinspections this winter.

Much attention will be paid to the vessels’ massive engines,some capable of generating nearly 20,000 horsepower. The enginesare shut down only long enough to load and discharge cargo duringthe late March/mid-January shipping season, so must be primed fornearly continuous operation. Navigation, fire-fighting and lifesavingequipment will also be carefully checked.

The major shipyards on the Lakes are located in Sturgeon Bayand Superior, Wisconsin; Erie, Pennsylvania; and Toledo, Ohio.Smaller “top-side” repair operations are located in Cleveland, Ohio;

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Escanaba, Michigan; Buffalo, New York; and several cities in Michi-gan. The industry’s annual payroll approaches $50 million and it isestimated that additional $800,000 in economic activity is generatedper vessel in the community in which it is wintering. Great Lakesshipyards made a number of improvements during the year to betterservice the fleet this winter. One yard in Wisconsin added a 7,000-ton floating drydock. Another in Wisconsin continued to addhundreds of feet of sheet pile berthing dock to allow it to servicemore vessels.

Communities far from the Lakes also benefit from the winterwork program. Hundreds of feet of high-strength conveyor belts forthe vessels’ unloading systems are being manufactured in Marysville,Ohio, and new galley ranges to feed the crew of 23 on a 1,000-foot-long vessel are being produced in Smithsville, Tennessee.

Over the course of the season, about 1,600 men and womenwork on U.S.-flag lakers.

Some will assist with maintenance of the vessels during thewinter. Others will upgrade their skills at classes sponsored by theiremployers and unions.

Lake Carriers’ Association represents 17 American companiesthat operate 57 U.S.-flag vessels on the Great Lakes and carry the rawmaterials that drive the nation’s economy: iron ore and fluxstone forthe steel industry, limestone and cement for the construction indus-try, coal for power generation, as well as salt, sand and grain.Collectively, these vessels can transport more than 115 million tonsof cargo per year. Those cargos generate and sustain more than103,000 jobs in the United States and have an economic impact ofmore than $20 billion.

New CEO and management appointments at MontrealGateway Terminals

Montreal Gateway Terminals Partner-ship (MGT) announced theretirement of Kevin M. Doherty as

President and CEO. Mr. Doherty will take aseat on MGT’s Board and will be replaced byCOO and CFO Michael Fratianni. GuyDesrosiers, currently Treasurer, will becomeCFO. MGT is wholly owned by MGT Hold-ings S.à.r.l., a subsidiary of Morgan StanleyInfrastructure Partners.

An active participant in one of the mostdynamic growth periods in shipping history,Mr. Doherty enjoyed a 51-year career at thePort of Montreal. During his tenure, Mr.Doherty initially held the position of Superin-tendent in 1963, and never stopped takingon new positions with greater responsibility,including stints in Quebec City and Zee-brugge, Belgum. Mr. Doherty’s most recentroles have included heading up MGT opera-tions since 1997 and becoming CEO in2007.

During his tenure, he oversaw modern-ization of the facility, strategic businessinitiatives, and the successful navigation of adownturn in volumes during the GlobalFinancial Crisis. Mr. Doherty’s Board seatwill allow him to continue to contribute hisdeep knowledge and experience to the man-agement of MGT.

Mr. Fratianni has served in crucialfinancial and senior business roles at MGTsince 1986. In addition to his responsibilitiesas CFO, Mr. Fratianni’s extensive back-ground in marine terminal managementincludes business development, the mainte-nance of commercial relationships, andcontract negotiations.

“We are grateful to Kevin for the keyrole he has played in the success of MGT,”said John Watt, Chairman of MGT’s Board ofDirectors and a Managing Director withMorgan Stanley Infrastructure. “We likewisehave great confidence in the talent and abil-

ity of Michael, Guy, and the entire manage-ment team. During the seven years ofMorgan Stanley Infrastructure’s involvementwith MGT, we have seen how nimble, cre-ative, and adaptable they were duringdifficult economic times, and we are confi-dent the company is well positioned tohandle any future challenges and opportuni-ties that may arise.”

In addition to Guy Desrosiers’s assump-tion of the role of CFO, several MGTveterans will assume senior managementpositions, effective April 1st. These includethe promotions of Guy Desrosiers to CFO,Meguerditch Kanondjian to Vice-President ofOperations, Daniel Boyer to Vice-Presidentof Maintenance and Engineering, FredericProvost to Vice-President of Risk Manage-ment, and Carl Laramée to Director ofInnovation.

“I feel I am leaving day-to-day leader-ship of the company in very good hands,”said Doherty. “This is the team that hasimplemented so many of the improvementsin operations at the facility and made suchgreat strides in the relationships with ourcustomers, employees, and other stakehold-ers. It is because of them that MGT is widelyrecognized as an efficient, collaborative, andcustomer-friendly partner.”

Looking ahead, MGT has plans to lever-age innovation for an added competitiveedge. “I feel very fortunate to take on thisnew role at such an exciting time,” said Fra-tianni. “Today we are in the process ofimplementing innovations to expand ourcapabilities and further enhance our technol-ogy and efficiency. We hope to deepen ourgreat working relationships up and down thesupply chain. I have great confidence in thetalent and capabilities of our entire team, andI know that MGT is poised for an evengreater competitive edge as a first choice forcontainer handling services in Montreal.”

MGT’s closer proximity to key Euro-pean ports than terminals along the US eastcoast and service delivery have earned it longterm relationships with the world’s leadingcarriers. In 2013, MGT handled approxi-mately 775,000 TEUs in the Port ofMontreal.

KEVIN M. DOHERTY

MICHAEL FRATIANNI



New blow for carriers as Shanghai-Europe box ratesfall below ‘break-even’ $1,000BY GAVIN VAN MARLE

Sea freight rates on the Asia-Europedeepsea route have continued to fall,and have now dipped below the crucial

break-even level of $1,000 per TEU.The Shanghai Containerized Freight

Index’s (SCFI) route between Shanghai andnorth-west Europe was recorded at $988 perTEU, a fall of $122 per TEU from the weekbefore, and it means rates have declined some44 per cent since the beginning of the year,when they were buoyant in the pre-ChineseNew Year build-up. Sources in the market saidthe decline was due to the usual combinationof poor carrier discipline over-pricing, and con-tinuing vessel overcapacity, exacerbated byweak demand in Europe – none of which issurprising. However, what has surprised for-warders in the trade has been the seemingwillingness by carriers over the last week or soto abandon hope that the March general rateincreases (GRIs) – announced in January andFebruary – would stick.

“Most spot rates on an FAK [freight allkinds] basis are $900-1,000 per TEU out ofChina base ports to Northern Europe, andthey are going to fall further,” one forwarder

told The Loadstar. He added that Hong Kong-based carrier OOCL had sent him an advisorythis week announcing that its FAK spot rateon the route was to be reduced by another$150 per TEU – a discount that would bevalid until the end of this month. “The irony,if you can call it that, is that the line had ear-lier announced a GRI to come in next week,so this completely negates that,” he said.“And that’s just one example – there is totallack of discipline on pricing by all the carri-ers.”

The ineffectiveness of the March 1 GRIhad been predicted by container derivativesbroker Freight Investor Services (FIS), whichhad noted that, following several March GRIannouncements, French carrier CMA CGMhad named 1 April for its next GRI – effec-tively dashing hopes that widespreadincreases would be seen before then. FIS’sRichard Ward said: “As we approach April,liners will no doubt hope for a proportion ofthe planned GRI to come into force; however,currently the forward market is pricing Aprilwith only a 10 per cent premium to March,suggesting the increase will offer little respite.

“This reflects the market’s views for fur-ther declines in the run up to April and theexpectations that the GRI will not be sus-tained due to market fundamentals. Forcarriers, this represents a significant challengeas the April increase is unlikely to ensure theyreturn to profitability for the given month.”

While the use of forward freight agree-ments (FFAs) in container shipping remainsmarginal, compared to the size of the physicalmarket, FFA pricing does bear some correla-tion to actual spot rates, since, because themechanism is used as a hedging tool, the FFAprice is always at a premium to the anticipatedactual rate – all of which points to further rateerosion.

Given that this past week saw 10 percent shaved off the SCFI, there is every possi-bility that rates will be at less than $800 by theend of the month – and even if carriers couldpush through a $450-plus GRI at the begin-ning of next month, that would that givethem a little room to play with, until ratesagain drop below break-even.

Re-printed courtesy of The Loadstar(www.loadstar.com)


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True cost of restructure means Damco is the new blacksheep of the Maersk familyBY MIKE WACKETT

Maersk Line and Damco have clearly not been reading thescript: over the past few years it has been the forwarder thatmade the profit and the carrier that posted losses, not the

other way round.And as Maersk Line stole the limelight in AP Møller Maersk

(APMM)’s annual report, contributing $1.5 billion of its $3.8 billionnet profit for 2013, sickly Damco posted a loss of $111 million afterwhat had clearly been a very disappointing year for the logistics arm.

The negative contribution from Damco is obviously a thorn inthe side of APMM, but at the post-results Q&A session, group CEONils Andersen played down the result from “the small business unit”in the context of the stellar performances in other sectors. He added,however, that beside the one-off costs impacting Damco’s bottomline, the forwarder had “faced a lot of challenges in its daily opera-tion” and he did not expect to see an improved situation until thesecond half of 2014.

Mr Andersen batted away a tricky question about the patienceAPMM would extend to Damco to allow it to put its house in order,and when asked: “Do you think you are the right owner forDamco?”, he replied in the affirmative, but admitted things had notgone very well in 2013 for Damco, suggesting that there had been aloss of focus on daily costs in what he said was a wafer-thin marginbusiness.

The move of the headquarters from Copenhagen to the Haguein February 2013 under the leadership of Rolf Habben-Jansen, wholeft Damco earlier this year to take up the Chair of Hapag-Lloyd, wasproblematic for the logistics company. It has been fighting for busi-ness, and to keep existing business, in a dog-eat-dog freightforwarding market dominated by the likes of Kuehne + Nagel, DHL,DB Schenker and Panalpina, while at the same time losing key staffin the relocation.

Given that Damco posted a $8 million loss in the second quarterof 2013 and a $1 million profit in the third quarter, the full-year lossof $111m means that not only were restructuring costs much higherthan anticipated, but that the costs were probably understated in ear-lier quarters.

This is all far removed from the optimism of Mr Habben-Jansenprior to the move to the Netherlands, who said the relocation wouldput Damco “closer to many of our customers” and within the catch-ment area to recruit new logistics talent.

Putting Damco back on track is perhaps one of the biggest chal-lenges for Maersk’s troubleshooting new CEO, Hanne Sorensen, whonevertheless will have the support of Mr. Andersen and other keyseniors in Copenhagen who will recall that not too many years agoMaersk Line was the bête noire of the group.

Re-printed courtesy of The Loadstar (www.loadstar.com)

EDC: Agricultural BonanzaBY PETER G. HALL, VICE-PRESIDENT AND CHIEF ECONOMIST

Agriculture is rarely found in the wow segments of the media.It typically operates in the economic background, a critical butunsung sector of industry. Until some crisis interrupts its

supply chain, that is. Mere rumours of food shortage are enough toincite panic; grocery store shelves empty instantly when some eventsparks a stock-up of basic foodstuffs. There's a growing sense nowthat this economic second-fiddle could be set to take center stage.Why the sudden stardom?

It is not immediately evident in the data. Primary agricultureaccounts for a mere 1.1 per cent of Canadian GDP. Add in processedfood, and the total number adds up to 3 per cent of GDP. As a shareof trade, primary and processed food adds up to 11 per cent of mer-chandise exports. Significant, but hardly stardom. So what is it that isvaulting this sector up the popularity rankings?

In short, the world is getting hungrier. It has been said manytimes, but it bears repeating: the rise of emerging markets over thepast three decades is now vaulting millions into the ranks of themiddle class every year. China alone is graduating 40 million a year.India is somewhere between 10 and 20 million, but its goal of 30 mil-lion annually is not far-fetched. These are staggering figures, and it isjust a beginning: Indonesia, Brazil, Mexico, the Philippines, Vietnamand others are also aggressively adding to this income cohort. The sig-nificance of these graduates is their appetite. It grows with theirincomes, and is putting what soon could be inexorable pressure onglobal food supply.

This trend is already affecting agricultural statistics. Is our bread-basket nation participating in this bonanza? Indeed we are. Back in

2002, emerging markets accounted for 14 per cent of Canadian agri-cultural exports, not a small share, but today it has grown to over 30per cent. From 2000 to 2013, growth to OECD nations averaged 4per cent, not a bad pace, but it was more than double that, at 8.8 percent, to emerging markets. As world growth resumes, it is likely thatthe pace will increase.

Isolating the trend to particular countries is not easy. Here,China stands alone, accounting for over a third of our agriculturalexports to emerging markets, and increasing at a hefty 16 per centeach year. Beyond that, it is hard to differentiate for size and growth.The next ten emerging markets are rising by an average of over 10per cent per annum, led by growth to India, Russia and morerecently, Indonesia. But below this level there are up-and-comers, likeVietnam, with staggering annual growth.

Cynics may say at this point that this trade is all in primary prod-ucts, and that again, we are not adding much value to what we ship.True, 65 per cent of this aggressive trade is crop production. But ofcrops, animal products and processed foods, it is the slowest-growingcategory. At the same time, food manufacturing exports to emergingmarkets, 30 per cent of the total, are up on average by 12 per centyearly. Animal production, just 5 per cent of the total, is seeing 18 percent annual growth.

These numbers are nothing if not impressive, and their recordhas been largely unsullied by the global crisis. As the world gets backto growth, it is not hard to imagine this aggressive growth pace pick-ing up even more. Growth alone will further boost middle-classentrants, but next-generation free-trade deals promise further liberal-



UPS invests in propane for U.S. delivery fleet

UPS announced plans to purchase 1,000 propane packagedelivery trucks and install an initial 50 fueling stations at UPSlocations. The investment in propane vehicles and infrastruc-

ture is approximately $70 million.The propane fleet will replace gasoline- and diesel-fueled vehi-

cles used largely in rural areas in Louisiana and Oklahoma with otherstates pending. The vehicles on these routes can travel up to 200miles on a tank of propane. Operations will begin by mid-2014 andbe completed early next year.

UPS, in collaboration with the Propane Education & ResearchCouncil (PERC), a non-profit propane technology incubator, workedwith equipment manufacturers to secure certifications with the EPAand California Air Resources Board. UPS tested 20 propane-poweredbrown delivery trucks successfully this past winter in Gainesville,Ga., and expanded its order with Freightliner’s custom-built chassisfor UPS, and GM engine. UPS uses a “rolling laboratory” approach totest different fuel sources and technologies according to their routecharacteristics. The new propane fleet is expected to travel more than25 million miles and to displace approximately 3.5 million gallons ofconventional gasoline and diesel per year.

“The opportunity to road test new propane vehicles and fuelingequipment with one of the most sophisticated fleets in the country isa major milestone for the propane industry,” said Roy Willis, Presi-dent and CEO of PERC. “This announcement is the culmination ofmany entities bringing together the best in propane technology toachieve the greatest economic and environmental results.”

The UPS deployment this year benefits from propane autogas’wide availability as a result of increased natural gas production in theU.S., and there is more price stability with the accessible supply.

UPS has one of the largest private alternative fuel fleets in thenation with more than 3,150 alternative fuel and advanced technol-ogy vehicles. This includes all-electric, hybrid electric, hydraulichybrid, CNG, LNG, propane, biomethane, and light-weight fuel-saving composite body vehicles. UPS began deploying alternative fuel

ization of global agriculture. For nations like Canada that are netexporters of food, this is on balance great news, and promises evengreater potential gains.

The bottom line? At the dawn of the next global growth cycle,Canada’s agriculture sector is poised to reap huge gains. They maymake Victoria’s feted Jubilee parade look like a tea-party in compari-son.

This commentary is presented for informational purposes only.

It is not intended to be a comprehensive or detailed statement onany subject and no representations or warranties, express orimplied, are made as to its accuracy, timeliness or completeness.Nothing in this commentary is intended to provide financial, legal,accounting or tax advice nor should it be relied upon. Neither EDCnor the author is liable whatsoever for any loss or damage caused by,or resulting from, any use of or any inaccuracies, errors or omissionsin the information provided.

vehicles in the 1930s with a fleet of electric trucks that operated inNew York City. Since 2000 alone, the company’s “green fleet” hastraveled more than 300 million kilometres.

UPS Canada currently operates more than 800 propane-pow-ered delivery vehicles, but plans to expand its fleet to 966 by year-endas more vehicles are converted to operate on propane. With a fleet ofmore than 3,000 vehicles (including package cars, tractors, shiftersand trailers) operated by UPS Canada, more than a third will operateon propane. Propane trucks that were put in service by UPS Canadain the 1980’s were converted from gasoline and diesel to run on alter-native fuels. Propane-powered vehicles are deployed in B.C., Alberta,Ontario and Quebec, but concentrated in the Toronto area.

The newly added propane-powered vehicles feature the latesttechnology in clean-burning propane engines. Propane vehicles emitabout one-third fewer reactive organic gases than gasoline-fuelledvehicles. Nitrogen oxide and carbon monoxide emissions are 20 percent and 60 per cent less, respectively, than emissions from similar-sized gasoline engines.

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Largest truck ever in N.B. delivers power plant turbine rotorsBY CHRISTOPHER WILLIAMS

Hundreds of people were out early on the mornings of Janu-ary 19th and February 2nd to witness the largest vehiclesto ever drive on a New Brunswick highway. Escorted by

police, a 200-foot-long, 19-axle trailer pulled by a transport truck,transported two massive turbine rotors to the Point Lepreau Gen-erating Station (PLGS), 50 kilometers west of Saint John.

“There are only two of these large-scale trailers in NorthAmerica and this job was the first time one was used in NewBrunswick,” said Kathleen Duguay, NB Power head of nuclearcommunications. “The complex moves took months of planningand about a year to get all of the necessary permits.” But the trickylogistics were entertaining for transportation fans, many of whomfollowed the convoy taking pictures. Some residents even doubtedthe trailer could make a particular 90-degree turn where shortertrucks had tipped before.

Transport began when equipment manufacturer SiemensCanada Ltd. shipped the cargo from an overseas plant to the portof Saint John, last July. “Arriving aboard the heavy-lift ship M.V.Merwedegracht, the 130-tonne rotors were discharged with ship’sgear and the port’s two 80-tonne cranes,” explained Bruce Hard-ing, General Manager of Logistec Stevedoring in Saint John. “Asystem of axles and support beams were assembled around the tur-bines allowing the trailer to pick the units off raised woodenmats.”

Highway transportation to Point Lepreau was carried out byOntario-based Equipment Express Inc. which specializes in themovement of heavy cargo, from transformers to machine tools.Last year, Equipment Express transported a replica of the iconicCanadian fighter jet, the Avro Arrow, in Toronto, and also movedthe heaviest load ever permitted on Manitoba’s highways.

From Saint John, each turbine rotor trip took about six hoursat an average speed of 17 km/hr, through West Saint John, alongRoute 1, to Route 790. The second turbine rotor was scheduled tobe moved on January 26th but the day before brought heavy snow,postponing the maneuver for a week. “The equipment made it inperfect condition thanks to all of the stakeholders who pulledtogether,” added Duguay. She said the logistics team included BellAliant, Rogers Cable, police and emergency response organiza-tions, N.B.’s Department of Transportation and Infrastructure,

Transfield Dexter Gateway Services Highway Services, and NBEmergency Measures.

The new turbine rotors are now stored at PLGS until roughly2017 when they will replace two units now in service. Those $10million units are deemed to be unsuitable to perform for thefull 27-year life of the refurbished nuclear plant, having been dam-aged when they toppled into Saint John Harbour in 2008 whilebeing transported to the station by barge.

Fortunately, there is no cost to NB Power for the new equip-ment as Siemens and its insurance company are footing the bill.This comes as a relief to New Brunswickers already faced withrefurbishment cost-overruns at PLGS. In 2000, NB Power esti-mated a reactor re-fit would cost $750 million and take only 18months. But technical problems including damaged calandria tubesin the reactor core extended the project three years longer thanexpected, and final costs are estimated at $2.4 billion.

Point Lepreau is the only nuclear generating facility inAtlantic Canada and began generating power in 1983. It comprisesone CANDU nuclear reactor with installed capacity of 705megawatts. The plant has recently operated at 99.8 per cent effi-ciency and is expected to produce enough electricity to powermore than 333,000 homes per year for the next 25 to 30 years.

A convoy moves the second of two 130-tonne turbine rotorsalong the highway to Point Lepreau Nuclear GeneratingStation.

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Algoma Central Corporation releases 2013 results

Algoma Central reported revenues forits 2013 fourth quarter of $148.8 mil-lion, compared to $148.7 million for

the fourth quarter of 2012. For the year,Algoma reported 2013 revenues of $491.5million, compared to $527.9 in 2012. Thedecrease in reported revenues during 2013is mainly attributable to the domestic dry-bulk business for which volumes shippeddecreased compared to prior years. This wasonly partially offset by strong volumes fordomestic tankers and by improved oceanshipping results tied to dry-docking sched-ules.

After tax operating earnings amountedto $21.6 million during the quarter and$46.1 million during the year, compared to2012 after tax operating earnings during thequarter of $27.9 million, and $59.8 millionduring the year. Strong demand continuedto drive increased revenues and earnings forProduct Tankers; however, these were morethan offset by decreases in revenues andearnings for the Domestic Dry-Bulk seg-ment. Ocean Shipping and Real Estatesegments had minor decreases in earnings

for the quarter. Net earnings of $22.8 million were

reported for the fourth quarter of 2013,compared with $24.2 million for the fourthquarter of 2012, and net earnings of $41.9million were reported for all of 2013, com-pared to $42.2 million for all of 2012.Lower operating earnings were largely offsetby reduced foreign exchange losses and anincrease in interest income. Net earningsfor 2013 include a foreign exchange transla-tion gain of $5,587 compared to a loss of$3,901 for the same period in 2012.

Algoma Central Corporation owns andoperates the largest Canadian flag fleet ofdry and liquid bulk carriers operating on theGreat Lakes - St. Lawrence Waterway,including 18 self-unloading dry-bulk carri-ers, six gearless dry bulk carriers and sevenproduct tankers. Algoma also has interests inocean dry-bulk and product tanker vesselsoperating in international markets. In addi-tion, Algoma owns a diversified ship repairand steel fabricating facility active in theGreat Lakes and St. Lawrence regions ofCanada.

TransForce announces results for 2013

TransForce Inc., a North Americanleader in the transportation and logis-tics industry, announced its results for

the fourth quarter and fiscal year endedDecember 31, 2013. For the year, Trans-Force produced net income of $101.7million on revenues of $3.1 billion, com-pared with net income of $154.2 million onrevenues of $3.1 billion during the previousyear. For the quarter ended December 31,net income of $12.3 million was reportedon revenues of $792.6 million, versus netincome of $36.1 million on revenues of$778.4 during the year-ago period.

“Although the fourth quarter producedlower year-over-year results, factors affectingprofitability were mostly related to harshweather. In addition, initiatives to reduceour costs and our asset base in several divi-sions resulted in additional expenses ofabout $7.0 million. According to our plan,we proceeded with further facility rationali-zation and headcount reduction in thePackage and Courier (“P&C”) and Less-Than-Truckload (“LTL”) segments. In theTruckload (“TL”) segment, fundamentalsremained weak and we continued to proac-tively adjust supply to demand.

In the Energy sector, Canadian oilsands related activity and EL Farmer’s pipehauling business in the U.S. produced satis-factory results, but rig moving activity

remained anaemic and we took aggressivemeasures to reduce our asset base in thisbusiness. Finally, waste management opera-tions had a very profitable quarter driven bycomposting activities at the Lafleche envi-ronmental complex,” said Alain Bédard,Chairman, President and Chief ExecutiveOfficer.

“At the end of 2013, we shut downour Canadian rig moving operations, givenlow prospects for generating a satisfactoryreturn on assets in the foreseeable future,and we further scaled down correspondingU.S. activities due to much lower revenue.This situation resulted in a non-cash $63.1million intangible asset impairment charge.We are orderly disposing of assets and pro-ceeds will be used to invest in projects thatgenerate a superior return and a solid cashflow,” added Mr. Bédard.

Outlook

“Looking ahead, TransForce will bene-fit from greater density following theacquisitions of Clarke Transport and ClarkeRoad Transport, as well as from the pendingacquisition of Vitran. However, we expectmarket conditions to remain mostlyunchanged in 2014. As this challengingenvironment limits organic growth, Trans-Force will pursue its ongoing initiatives tostreamline its asset base and cost structure.

ALAIN BÉDARDChairman, President and ChiefExecutive Officer, TransForce

More efficient networks in the P&C and LTLsegments should also produce a higherreturn on assets and a strong free cash flowgeneration that will be applied to debtreduction and to carry out our disciplinedacquisition strategy. Through a firm commit-ment to its operating principles and preciseexecution of its proven strategy, TransForcewill remain a lasting source of value creationfor its shareholders,” concluded Mr. Bédard.

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OOCL profits swamped in the wake of cascading afterarrival of bigger shipsBY MIKE WACKETT

Hong Kong-based OOCL saw its net profit slashed by 84 percent in 2013, compared with the previous year, to $47 mil-lion, as the influx of ultra-large containerships onto the

Asia-Europe tradelane displaced a number of post-panamax vesselsonto other routes.

OOCL has in the past been protected from most of the ills suf-fered by its peers predominately serving Asia-Europe, as the troubledtrade only represents about 16 per cent of the carrier’s total through-put, compared with 54 per cent for intra-Asia and intra-Australasiaand 23 per cent on the transpacific.

Chairman of parent group OOCL, CC Tung, explained: “Thedeployment of the largest newbuildings to the Asia-Europe trade trig-gered cascading into the transpacific trade, which in turn furtherdisplaced a considerable number of mid-sized ships to other tradelanes. “This cascading effect brought considerable excess capacity tothe intra-Asia and Australasia trades as well as the transpacific trade,and added volatility to the market.”

OOCL’s total liftings for the year increased by 1.5 per cent over2012, to 5.3 million TEUs, with a “steady load factor” of 73 per cent,but revenue declined 4 per cent to $6.2 billion, reflecting the damagecaused by excess capacity across all trade lanes. Revenue declined onevery trade the carrier operated: down 11.4 per cent on Asia-Europe;6.8 per cent on the transatlantic; 3.4 per cent on the transpacific; and2.1 per cent on intra-Asia/Australasia.

Mr Tung added: “Seaborne trade growth for the liner industrywas subdued in 2013. Freight levels were disappointing, especiallyduring the first half of the year. During the second half of the year,both physical cargo movement and sentiment improved, resulting ina slightly better freight market. “Although container shippingdemand growth in 2013 was lower than forecasts, capacity supplygrowth was also lower than forecast, which helped contribute to amuch-needed recovery in rates, albeit mild, during the second half ofthe year.”

OOCL does not expect the container liner industry’s nemesis,overcapacity, to disappear overnight, but took a bullish tone about the

Court approves Vitran’s Plan of Arrangement withTransForce

Vitran Corporation Inc. (Vitran), aCanadian less-than-truckload trans-portation firm, announced that the

Ontario Superior Court has issued a finalorder approving the previously announcedplan of arrangement under the BusinessCorporations Act (Ontario) involving theproposed acquisition by 2400520 OntarioInc., an indirect wholly-owned subsidiary ofTransForce Inc., of its common shareswhich are not already owned by the pur-chaser or TransForce, for consideration ofUS$6.50 in cash per share. Completion ofthe Arrangement is subject to a number ofconditions. Vitran intends to complete theArrangement as soon as possible after all

conditions have been met or waived. Thereis no certainty, nor can Vitran provide anyassurance, that the conditions to the com-pletion of the Arrangement will be satisfiedor if satisfied, when they will be satisfied.The arrangement agreement dated Decem-ber 30, 2013 among Vitran, the Purchaserand TransForce provides that the Arrange-ment will not be completed after April 30,2014 without the mutual agreement of theparties to the Arrangement Agreement.

Vitran suffered losses from continuingoperations in excess of $34 million duringthe first six months of 2013, occasioned bylosses in its U.S. LTL business, which seri-ously eroded its working capital. A

six-month search for a purchaser of its U.S.business culminated with the closing onOctober 7 of the sale of the U.S. LTL busi-ness to a company owned by MatthewMoroun for a nominal sum, which allowedVitran to book an operating profit from itsCanadian business for the three monthsended September 30.

On December 30 Vitran entered into adefinitive arrangement agreement withTransForce Inc. to be acquired for US$6.50per share after it had earlier entered into anAgreement to be acquired by ManitoulinTransport. The latter Agreement was dis-solved by way of mutual agreement

future. Mr Tung said: “In 2014, it is anticipated that further tonnagegrowth will lead to continued overcapacity. It is forecasted, however,that the demand growth in 2014 will outpace that of 2013.

“With the U.S. recovery now a consensus, Eurozone recoveryon more solid ground, and the current Chinese and Japanese eco-nomic growth trajectory, a healthier trade outlook should beexpected despite recent uncertainty on emerging markets. This isespecially true on the major east west trades. “Indeed, such develop-ment should mean improved outlook for the transpacific, Asia-Europeand intra-Asia trades and more positive results for the industry as awhole.”

OOCL, like most of its rivals, is banking on the economies ofscale provided by its ultra-large container vessels to bring it throughthe problems of the past few years, and will receive two more 13,208TEU ships this year to complement the eight delivered in 2013.

“In 2014, the group shall see the full year effect of the mega-class newbuildings delivered in 2013, all of which were developedwith the most advanced design and equipped with the latest technol-ogy. A positive contribution of unit cost reduction and, given morefavourable market conditions, an improvement in margin are there-fore expected in the coming year,” Mr Tung concluded.

Re-printed courtesy of The Loadstar (www.loadstar.com)

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Untold lost revenue hidden in inaccurate ocean freightinvoices BY R.BRUCE STRIEGLER

Inaccuracy rates estimated as high as 30 percent

Soren Skou, CEO of Maersk Line made news last spring with hiskeynote address at the Journal of Commerce’s13th annual Trans-PacificMaritime Conference in Long Beach, Ca. He particularly caught theattention of shippers when he told delegates that 12 per cent of invoicesissued by ocean carriers contain inaccuracies, and volatility in rateswould only make improving on the inaccuracies all the more difficult.

Since the April 2013 conference, shippers both large and small,have examined how they handle back-office operations and, moreimportantly, how they can recoup payments from inaccurate billing.Whether done in-house or by third-party specialists, auditing oceanfreight invoices is a layered process that, done correctly, can help cus-tomers do that. There was a time when freight payment and auditservices were all about billing accuracy, but they now deliver financialinsight through pre-payment auditing, reporting, benchmarking andother analytic tools.

In a follow-up webcast the Journal of Commerce (JOC) puttogether Steve Ferreira, President of Ocean Audit Inc. and 30-year vet-eran of supply chain management, and Peter Moore, adjunct professorat the University of Denver’s Daniels College of Business, and the Uni-versity of South Carolina. Mr. Ferreira observed that in severalsubsequent articles reporting the Maersk Chief’s remarks, two leadingE-commerce providers were quoted saying they thought Maersk wasdoing a good job at 12 per cent, and speculated that real industry errorrates were somewhere closer to between 25 and 30 per cent.“Although I’ve been doing this for over twenty years, there is very littlehard data on how E-commerce or pre-audit solutions correct errorrates.”

For ocean freight vendors, it can be difficult to keep an eye oninvoice accuracy when the focus is on increasing rates and margins andtrying to return to profitability, but for thousands of businesses in theocean freight sector, invoice inaccuracy represents revenue leakage on agrand scale, and Mr. Ferreira notes, “Those in the shipping industry whobenefit from these financial miscalculations have not been quick toacknowledge the situation. E-commerce has been touted as the nextbreakthrough in the ocean freight industry, but I wonder why error ratesstill exist if these solutions are so perfect and they’ve had years to refinethem.”

Improvements needed in complex world of ocean freightinvoicing

Ferreira adds that in his view, the steps to improving ocean auditsand the resulting improved cash flow need to come from an enhancedcampaign that importers, exporters, and 3PL’s can consider best prac-tices. Ferreira points out that ocean freight is the only transportationmode that has a three year statute of limitations for refunds and creditrecoveries. “At the moment, ocean audit is an inconsistent and misap-plied practice. There’s very little insight of enhancement of ocean auditpractices and often, can’t be discussed beyond the E-commerce variety.So the bottom line, in terms of audit quality, is whatever audit solutiongoes live, there is generally little thought to addressing the biggest cash-cow of all, the three years of invoicing that preceded any real-timeattempt at audit.” He continued, saying that if one were to assume 12per cent of cargo was pilfered or lost overboard, it would be an action-able item, and accordingly, inaccurate invoices should be treated thesame way.

In the complex world of ocean freight invoicing, Mr. Ferreira liststhe potential sources of invoice error, saying that errors can originatewith the supplier accounts payable department, the enterprise resource

planning (ERP) system, the individual who is responsible for actuallyapproving the invoice or the logistics team that submits an invoice forpayment and finally, the actual ocean freight vendors themselves. Fer-reira says that the considerable list of issues contributing to invoice errorinclude circumstances of precision timing against contract effectivedates or relying on third parties, noting that only a small percentage ofinvoices are audited internally by the vendor prior to release.

“Why,” asks Ferreira, “has invoice accuracy not improved with E-commerce platforms, despite claims that is has?” He points out that theanswer is simple, explaining that there is no industry standard bench-marking for E-commerce providers that they can turn to and say,“We’ve really cut your error rates down substantially”. Even thoughleading electronic commerce platforms have noted that the invoice errorrate was 25 to 50 per cent in 2010, electronic data interchange (EDI)transactions from vendors often requires cleansing, lack consistency orhave issues related to charge codes. Steve Ferreira says, “No matterwhen you insert some type of corrective action in the pre-audit or auditprocess, it does nothing to stem negative cash flow that existed for theprevious three years, as I noted regarding statute of limitations.” He con-tinued explaining that pre-audit tools don’t necessarily identify duplicatebilling when invoice and amounts are different.

Accounts payable systems not all up to the task“What we often see is that at the end of the day, clients capture six

of twelve per cent of errors, and the client’s perception is that the mis-sion has been accomplished. “That’s all there is, we got it all”. He notesthat less than 40 per cent of companies audit their ocean freight spend-ing. Among the reasons that audit number may be so low Mr. Ferreirasuggests that beneficial cargo owner (BCO) systems may not be robustenough to discern potential duplicates (a different invoice number anddifferent amounts on the invoice may actually cover the same set of con-tainers), there can be feelings of immunity from mistakes due to systemsor approaches to those systems as well as a reliance upon others.“Clients don’t really perceive the audits as a service because they thinkthere may be little potential return, thinking it’s so simple there’s noth-ing there.”

Supply chain specialist Peter Moore interjects that with respect tothe need for audits, shippers need to look inside their company, “A lotof our accounts payable systems lack any kind of sophistication and con-tain little space for variability, but in real terms, there is a degree ofcomplexity with ocean invoicing. Nevertheless, it doesn’t take thatmuch of an error to pay for the training and sophistication on the ship-per’s side in order to have the accuracy we need to have.”

Mr. Moore also says that the team negotiating ocean rates is notalways the same team tasked with auditing. “It’s difficult to expect per-sonnel without ocean freight skills to successfully audit invoices andpayments. It really behooves us to get somebody to help us at a reason-able cost, and this is really where ocean audits have grown, due to theincreasing volume, but as Steve has noted, it is still a minority of com-panies that are doing this. The evidence suggests that it really needs tobe taken seriously on the shipper’s side.” He adds that audits have notbeen demanded by clients since, generally, they are unaware of theextent of the leakage.

Steve Ferreira concluded, saying, “Even after thousands of audits,I’ve seen very few formalized error dispute management processes, theyare virtually non-existent. Shippers must have a dispute managementprocess other than email, as payments many of you have made to oceanfreight vendors are much larger than you may have thought, and havingmultiple ocean freight vendors makes striving for accuracy even morechallenging.”



Contact WENDY HENNICK [email protected] • 514-556-3042 Ext. 2

Canadian Sailings is not responsible for errors. Please verify with event organizers for possible changes or cancellations.

March 24-25AMERICAN ASSOCIATION OF PORT AUTHORITIESSpring ConferenceThe Renaissance Washington, Washington, DCcontact: 703-684-5700, Colleen O’[email protected]

March 26CANADIAN INSTITUTE OF TRAFFIC ANDTRANSPORTATIONWebinar – Road Transportation12:00 – 12:45contact: 416-363-5696, Jennifer [email protected]

March 27THE TRAFFIC CLUB OF MONTREALAnnual Gala DinnerHotel Omni, Montreal, Quebeccontact: 514-874-1207, Richard [email protected]

April 1HUMAN RESOURCES SECTORIAL COMMITTEE OFTHE MARITIME INDUSTRY Human Resources Training SeminarAuberge Godefroy, Trois Rivieres,Quebeccontact: [email protected]

April 2CANADIAN INSTITUTE OF TRAFFIC ANDTRANSPORTATIONMontreal Area Council Lafarge Canada Tour Lafarge, Saint-Constant, Quebeccontact: 416-363-5696, Jennifer [email protected]

April 8-10AMERICAN ASSOCIATION OF PORT AUTHORITIESPort Finance SeminarNew Orleans Marriott, New Orleans, Louisianacontact: 703-684-5700, Colleen O’[email protected]

April 10HUMAN RESOURCES SECTORIAL COMMITTEE OFTHE MARITIME INDUSTRY Human Resources Training SeminarAuberge Godefroy, Trois Rivieres,Quebeccontact: [email protected]

April 10CANADIAN INTERNATIONAL FREIGHT FORWARDERSASSOCATIONCentral Division Forwarders Choice Awards GalaDinnerMississauga Conventure Centre, Mississauga, Ontariocontact: 416-234-5100, Nick [email protected]

MSC (Canada) mscgva.ch .................................................... 3, 44MAERSK maersk.com................................................................15McKEIL MARINE LIMITED mckeil.com .................................... 14MONTREAL GATEWAY TERMINALS PARTNERSHIP mtrtml.com .... 16MONTSHIP montship.ca........................................................... 54NIRINT nirint.ca ....................................................................... 34NUNAVUT EASTERN ARCTIC SHIPPING INC. ........................ 19OCEAN groupocean.com ........................................................... 22OCEANEX oceanex.com ............................................................ 23ODYSSEY SHIPPING odysseyshipping.com .............................. 53PORT OF MONTREAL port-montreal.com .............................. 5, 45PROTOS SHIPPING protos.ca .................................................. 38SEABOARD MARINE seaboardmarine.com ................................ 42SEA PROJECTS seaprojects.com .............................................. 40TERMONT MONTRÉAL INC. termont.com ................................ 12ZAC-TRANZ INTERMODAL zac-tranz.com ................................ 18

ATS CONTAINERS atscontainers.com ........................................ 57BORDEN LADNER GERVAIS blg.com ...................................... 25CANADA STATES AFRICA LINE csaline.com ............................ 24CANFORNAV INC. canfornav.com........................................... OBCCHINA SHIPPING chinashipping.ca .......................................... 39CIFFA ciffa.com ....................................................................... 13CHARTERED INSTITUTE OF LOGISTICS AND TRANSPORT ciltna.com ... 28CN cn.ca.............................................................................. 2, 63 EMPIRE STEVEDORING empirestevedoring.com ....................... 20FEDNAV fednav.com ................................................................... 8 GILLESPIE MUNRO gmunro.ca ................................................ 26GROUPE LAFRANCE groupe-lafrance.com..................................27K+S WINDSOR SALT LTD. windsorsalt.com.............................. 17LOGISTEC logistec.com............................................................ 16




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