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Small B.C. Port Seeks to Create Container Mega-Hub

By MarEx 2016-10-30 15:58:12

Port Alberni, a small port with deep water on the west coast of Vancouver Island, has a huge vision: it wants to build a 3.5 million TEU terminal for ultra large container vessels, with enough room to grow into one of the busiest container hubs north of San Francisco.

Its value proposition is simple. Right now, vessels arriving from Asia travel through the Strait of Juan de Fuca to Seattle/Tacoma, then up to Vancouver, B.C., then back out the Strait again. Dillon Consulting, a Canadian management and infrastructure consultancy, estimates that the round trip takes 480 nm, three days and about $600,000 in costs for the largest container ships. But what if a ULCV could call at Port Alberni, skip the journey inland and drop off all of its Pacific Northwest-bound containers at one place? All in all, port president and CEO Zoran Knezevic believes that using a terminal at Port Alberni would save carriers about $1 million per vessel per call.

The only catch is that Port Alberni does not have a large hinterland by road or rail. Almost all of the containers deposited at its wharves would have to be reloaded onto barges for short-sea shipping to Seattle or Vancouver. This would mean additional container moves at each end, with the attendant cost of longshore operations, plus dozens of tug trips to and from destination ports. 

The short sea component would impose costs, but Knezevic says that this could be offset through savings from a high level of automation at the new terminal, by reducing pilotage fees, and by a wrinkle in the operations of Vancouver's Deltaport container terminal, which is Canada’s largest. Many containers leaving that terminal go by truck to distribution centers near downtown Vancouver, and limited highway capacity out of the port has led to a costly traffic problem. With short-sea barges, containers could arrive directly at wharves adjacent to distribution centers on the Fraser River, bypassing Deltaport altogether – eliminating the costs of trucking. In addition to the financial benefits for shippers and carriers, Knezevic suggests that this would have a positive social impact as well, reducing road congestion and emissions.

The port completed its feasibility study for a container hub last year, and it is seeking investors to move ahead. Its larger neighbors also have expansion plans – Port of Vancouver is seeking a second container terminal adjacent to Deltaport, and the Port of Seattle is applying for the permits to upgrade its Terminal 5 to handle ULCVs – but if Port Alberni can build a business model like the successful transshipment ventures at Tanjung Pelepas or Colombo, it might reshape the landscape of container traffic in the Pacific Northwest.