Officials at Port Days event make case for Sydney Harbour container terminal
Company has rights to market the port and attract financiers, builders, shippers and operator to get $1.5B plan started
May 19, 2016 8:26 PM by: Tom Ayers
Barry Sheehy of Harbour Port Development Partners says a feasibility study on a proposed container terminal and adjacent logistics park for Sydney Harbour will be completed this summer. A study on the economics isn't finished yet, he said. (TOM AYERS / Local Xpress)
SYDNEY – Speakers at the Port of Sydney Development Corp.’s Port Days event on Thursday were mostly preaching to the converted, but one after another laid out the case in favour of a container terminal and logistics park in Sydney Harbour.
One fact remained clear, though: a shipping company has yet to sign on to the proposal, and in order to get one on board, several officials said the port needs to demonstrate that a container terminal in Sydney Harbour can be financially viable.
Cape Breton Regional Municipality has tasked its port authority with working on the plan and has given a private company – Harbour Port Development Partners – exclusive rights to market the port and attract a consortium of financiers, builders, shippers and an operator to get the $1.5-billion plan off the ground.
Despite falling shipping prices, volume is rising, industry officials say, and the next generation of ultra-large ships now have nowhere to dock on the eastern seaboard.
James C. Evans, Port Days keynote speaker and a former United States shipping manager, said the time to build a new container terminal with deepwater access is now, and Sydney Harbour is perfectly positioned to fill that void.
With a shovel-ready greenfield site available for development of a container terminal, and with more than 500 hectares available for an adjacent logistics park, “this is like heaven,” Evans said.
“It’s an ideal location.”
Jonathan Wener, CEO of Montreal real estate developer Canderel, said having a large logistics park next to a container terminal will make Sydney Harbour one of the most competitive locations in North America for shippers to do business.
Ultra-large ships can’t go up the St. Lawrence Seaway, he said, and no other East Coast port in North America can handle them.
As well, said Wener, logistic parks are kilometres away from most other ports, driving up the cost of transshipment.
In a promotional video he played for the audience of nearly 200 local government and business leaders, as well as government regulators and other shipping industry representatives, the proposed Novaporte container terminal and Novazone logistics park were billed as “the future home of the most efficient port on the eastern seaboard” and “the most cost-efficient container port on the Atlantic coast.”
Canderel was enlisted by Harbour Port Development Partners in February to help market the port infrastructure.
Despite those claims, Barry Sheehy, a Cape Breton resident and one of the partners in Harbour Port Development, said a technical feasibility study being conducted by China Communications Construction Co. is expected to be completed this summer, and an economic feasibility study won’t be finished until sometime after that.
No one knows yet whether the numbers will persuade shipping lines to develop a financially viable project in Sydney Harbour, Sheehy said. “I think by the summer we’ll know the feasibility study (and) I would expect that we’ll have a good handle on our economic model about that time.”
The port has access to a rail line – although it needs investment – connected to Canadian and U.S. markets, he said.
And port support businesses such as McKiel Marine and Canadian Maritime Engineering are already working out of Sydney Harbour.
As well, financing and builders are lined up to develop the main port infrastructure, said Sheehy. Port officials just need to persuade a shipping line to commit to using Sydney Harbour for transshipping goods into and out of the St. Lawrence and along the U.S. East Coast.
Further boosting the port’s claim as a potential shipping hub, the federal government announced last week the municipality is now a foreign-trade-zone point, which helps foreign and domestic import-export companies access tax and tariff programs.
Business Cape Breton will handle the trade zone.
Yvon Pellerin, a former federal customs official and current program adviser with the consulting firm Drawback Experts Canada, told the crowd at the Joan Harriss Cruise Pavilion that only six other trade-zone points exist in Canada, and the designation will provide an advantage to local businesses looking for government help with imports, exports, duties and taxes.
“Every Canadian is allowed to apply for a passport, but there isn't a passport office in every Canadian city,” Pellerin said.
“With foreign-trade zones, it's the same thing. Every Canadian business is allowed to apply for programs, but there isn't a foreign-trade-zone office in every city.”
Peter Gillis, president of International Longshoremen’s Association, Local 1259, in Sydney, said U.S. union representatives attended the Port Days event and were expected to meet with port officials later Thursday to discuss the proposed container terminal.
The union has expressed concerns in the past about plans to make the terminal highly automated, which it says will reduce the number of workers needed.
Gillis said the union wants development in Sydney Harbour, but he reserved comment about the specific plans until after meeting with port officials.
“We are fully behind this,” he said. “We’re fully enthused. ... We’re just waiting to see how it rolls forward.”
An architect's rendering of the proposed Sydney port terminal.
Sheehy said he expects the union will come on board with the proposed developments, in time.
“They have their concerns,” he said. “Their concerns are legitimate, and our needs are legitimate, and there’s got to be middle ground in there somewhere.
“They’ve expressed a keen interest in this project from the beginning, and where there’s a will, there’s a way.
“There’s common ground. They want the port built, and we want the port built. It’s just a question of we have to get our economics in line. Otherwise, we won’t get a shipper.
“And, by the way, labour is just a small piece of that. You’ve got billions in capital and ... hundreds of millions in shipping.
“You’ve got huge operating costs.Labour is only part of the mix. But everyone is going to have to work together if we’re going to come up with a set of numbers that will attract a shipper.
“That’s common ground.”
Port corporation CEO Marlene Usher said the Port Days event attracted a larger crowd than it has in the past, in part because of the momentum the development plans are creating.
Usher said the economic study into the viability of a container terminal is taking longer than anyone expected, in part because officials need to get a handle on rail fees and they need a shipping company to commit to a certain volume of traffic.
“We want to see a shovel in the ground within a year, and I think that’s everybody’s expectation,” she said.
“If we don’t, the longer this goes on, the more somebody in the world will come up with another solution in the Caribbean, or maybe something that competes with our port.
“Right now, we feel that we don’t have any competition that we know of, but that’s not going to last.”