News stories are circulating in Eastern Canada about a prospective new container terminal at Halifax, Canada, on the Dartmouth side of the inlet. An international transportation consultant has been engaged to evaluate the situation and present alternatives. Several Halifax residents and posted comments about the volume of truck traffic going through their city to and from the present container terminals as well as several railway grade/level crossings within the city.
Problems associated with truck and railway traffic congestion prompted evaluation of future maritime container terminals for mega-ships of over 18,000 TEUs at Mulgrave and Sydney, Nova Scotia.
East Coast Ports
Prior to the opening of the enlarged Panama Canal to transit neo-Panamax size ships of 13,000 TEUs, several North American East Coast ports undertook programs to modify their berths and terminals for the larger container ships. At Newark, the Bayonne Bridge was raised to transit the larger ships at high tide, while the port was dredged to accommodate deeper draft vessels. At Halifax, the Angus L. MacDonald Bridge was raised to 50 meters above sea level to transit larger vessels that could sail into Bedford Basin. Work is underway at Saint John, New Brunswick, to serve neo-Panamax ships.
The opening of Port of Newark for neo-Panamax ships put that port in an unusually competitive situation as it serves a highly populated region in the North-eastern United States with direct railway access to large Canadian cities such as Montreal and Toronto. Dubai Ports (DP Ports) made a wise decision to develop Port of Saint John for neo-Panamax ships, as the direct railway distance to Montreal along Canadian Pacific railway lines, is identical to the Montreal – Newark railway distance and half the railway distance between Montreal and Halifax along CN Rail lines.
Competitive Sailing Distances
While many neo-Panamax ships will sail via the Panama Canal to North-eastern North American ports, several major Asian container ports are actually closer to the north-eastern ports sailing via the Suez Canal. This is the case for Singapore and nearby ports of Tajung Pelapas (across the channel to the west of Singapore), Port of Klang (Kelang – west of Kuala Lumpur), Port of Colombo, South India super port and Port of Salalah (Oman). A trio of nearby Asian ports: Hong Kong, Shenzhen and Guangzhou are an almost equivalent distance via either Panama Canal or Suez Canal.
The volume of trade between north-eastern United States and Europe could warrant the operation of neo-Panamax size ships across the North Atlantic, with Port of Newark being the primary North American port for such trade. On the Canadian side of the border, the largest ships that sail into the Port of Montreal are the Panamax size ships that carry Canadian – European trade. Maersk often sails their 2,200 TEU Pembroke class container ships on the Montreal – Rotterdam route. Panamax size container ships may continue to be viable on the Boston - European service, saving overland transportation costs from Newark.
Newark – Eastern Canada Competition
For neo-Panamax size container ships, the Port of Newark serves a massive market in the north-eastern United States that extends toward Toronto, Canada and the south-western region of the province of Ontario. The railway distance into this region is identical to either Newark or Montreal. Neo-Panamax ships sailing from Asian ports to Port of Saint John have access to a competitive railway distance to Montreal. However, the railway distance between Newark and Boston is shorter than the railway distance between Saint John and Boston. Due to traffic volume, Newark may be restricted from undertaking ship-to-ship transfers of containers.
For container volumes in excess of 1,000 TEUs, maritime could offer much lower transportation costs that either railway or truck transportation between Saint John and Boston. After 14 to 20 days on the ocean, customers may be willing to accept an additional 12 hour transit time in exchange for some savings in transportation costs. If all containers from Asia aboard a neo-Panamax ship are destined for Boston, Halifax would offer a shorter voyage via the Suez Canal than Saint John, with a maritime link into Boston. Halifax will have to prove that they can quickly transfer containers between neo-Panamax and Panamax ships.
Plans are underway at Port of Santos (near Sao Paulo) and Port of Pecem (near Fortaleza) to develop the terminals to berth container ships of 18,000 TEU and greater capacity. These ships will sail the Asia – South America service and possibly the Europe – South America service. There may be scope to sail such ships to Eastern Canada to carry trade to and from South America, southern and south-eastern Africa as well as Western Australia (via interlining) as these ships sail the South America – Asia service. The same ships will also sail the Asia – Eastern Canada (east coast North America) route.
SSA Marine and Cyprus Capital Partners LP have committed to develop a super port near Guysborough, Nova Scotia, for mega ships, while at nearby Sydney the Canderel Group of Companies of Montreal seeks to build a port to berth the same size of mega ships. It is perhaps a forgone conclusion that either port could undertake a transfer of containers from neo-Panamax ships to Panamax size ships that could sail to Boston or to Montreal, except that Canadian cabotage regulations would raise the sailing cost per container to Montreal to the level of railway transportation costs.
Response of the CEO’s
The chief executive officer in any organization formulates future strategy for the organization to serve the target market in an often very competitive environment. The decision to enlarge the Panama Canal was intended to offer competitive maritime transportation costs between Far Eastern Asia and East Coast United States, with four days additional time-in-transit and $85 per container canal transit fee. Competition involves the combination of trans-Pacific ships to West Coast U.S. and railway transportation across the U.S., at an additional $2,000 per container transportation cost. Egypt’s Suez Canal commission responded by reducing their per container transit fees.
DP Ports saw opportunity at Port of Saint John and took action to develop that opportunity. In Eastern Nova Scotia, two companies seek to develop super ports to serve the largest container ships afloat with interlining transportation services carrying containers to numerous destinations across North-eastern United States and Eastern Canada. Both companies may offer ship-to-ship transfers of containers. The announcement about a possible relocation of a container terminal to Dartmouth suggests that Port of Halifax may be considering future options to keep the port commercially operational while being surrounded with competition and potential competition at Saint John, Guysborough and Sydney.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.