Port Metro Vancouver shakeup a victory for everyone everyone

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Port Metro Vancouver shakeup a victory for everyone
Railways, terminal operator gaining from collaboration at Deltaport


VANCOUVER -- The public rehabilitation of Port Metro Vancouver began in earnest on Oct. 29, 2010.

Claude Mongeau stood before the Vancouver Board of Trade, BlackBerry in hand, and announced that Canadian National Railway was fully on-board with a plan to turn Port Metro Vancouver into one of the world’s best-performing and most reliable movers of goods.

The BlackBerry was a symbol, the president and CEO explained, of his railway’s commitment to a new relationship among the port’s primary stakeholders — one in which CN, Canadian Pacific, the port authority and the cargo terminal operators would work in harmony to hasten the movement of containers through the port.

Mongeau said his mobile device gave him access to daily information about how this vital supply chain was performing — and that he was watching it intently.

For anyone who had been tracking the port authority’s turbulent efforts to deliver on the promise of maturing as Canada’s western ‘gateway,’ Mongeau’s enthusiasm for this enterprise was welcome but unexpected, considering recent history.

Port Metro Vancouver is Canada’s largest port, moving containers and other goods with an annual value of about $75 billion. More than 2.5 million containers arrived or departed here last year, carrying lumber, household goods, wood pulp, food, construction materials and other trade goods for markets in Asia, Eastern Canada, the U.S. and elsewhere.

But it is only since last year that the port has begun to take full advantage of the opportunity at its doorstep.

The Vancouver port is optimally located. A ship departing from China arrives in Vancouver two days faster than one travelling to Los Angeles. Rail links to Eastern Canada and even into Chicago are faster than L.A.’s.

Six years ago, that advantage meant nothing. Western Canada’s largest container port hit rock bottom in January 2005 with a public acknowledgment that it was in a state of “gridlock.”

It was taking two weeks to move a container through the port.

There were 5,000 containers stalled on the docks and a backlog of work that would take two months to clear. It was an international black eye.

There was no shortage of culprits — all of whom had been warned weeks earlier that a Chinese ‘cargo tsunami’ was approaching with the Jan. 1, 2005 cessation of World Trade Organization quotas on clothing and textile imports from China, India and 38 other nations.

The port authority looked like a stereotypical government agency: ineffectual.

The terminal operators looked overwhelmed, and blamed CN for failing to maintain a sufficient supply of rail cars to support the flow of goods onto and off the docks.

CN blamed the weather and other technical issues slowing its trains — but also pointed to what it described as “productivity issues” besetting terminal operators.

Some lessons were learned.

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TSI Terminal Systems Inc., the operator of Deltaport, announced “storage fees” on containers stuck in port more than five days — and backed that up with a $60 million investment in new cranes and rubber tire gantries to show it was committed to greater efficiency in its own operations.

The railways, CN and CP, found ways to harmonize freight movements. CN announced a $450-million investment in rail infrastructure projects in Western Canada, following one underway at CP.

The port authority pushed along its plan to build a third berth at Deltaport that would create more capacity for the terminal.

But it also pressed the federal government for a regulatory solution — suggesting there would be no permanent improvement until CN, CP and the terminal operators were straitjacketed into new federal regulations that would leave them no recourse except to improve their performance.

In an April 2010 submission to a federal panel reviewing Canadian rail freight service, Port Metro Vancouver reported that a survey of rail customers, conducted between November 2008 and February 2010, found that 84 per cent were either dissatisfied or very dissatisfied with rail service within the port.

Four out of 10 containers were delayed four days or more, compared to a North American minimum standard for three days of ‘dwell time’ in a port. Dwell time is a standard measurement the global port sector uses to measure the amount of time a specific item such as a container waits on a dock, between the time it arrives by ship and the time it leaves again by rail or truck for example.

The railways responded to the federal panel that they preferred negotiation over federal regulation to address the problem — CN noted it was already voluntarily signing commitments with port authorities across Canada to make operations more efficient.

The port’s tough approach worked.

In fact, CN, CP and the terminal operator now say the system has never worked better, and they believe the improvement is permanent.

“We’ve got these joint measures that we’ve [all] agreed to, and aligned to, and committed to executing against. That’s the difference,” Paul Waite, CN intermodal vice-president Paul Waite said in an interview. “Maybe we were all just looking at or own little pies selfishly and not looking at the supply chain as a whole — and how, if we worked together and we all kind of stepped up, on average we’d be much better.”

If you go back to January 2010, the average dwell time across the port was about 3.7 days, Port president and CEO Robin Silvester said in an interview. “If we look at May 2011, the average dwell time is about 2.4 days. It’s a 30-per-cent improvement in a year and a half.

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“To put it in context, a train from here to Chicago or Toronto takes about four days. So it’s a significant improvement in the context of how long it takes ultimately for a garment or a flat screen television to get from Asia to the customer.

“The nice thing is that if we look at every six months over that 18-month period it has been steadily stepping down and improving in time. It’s not as if we suddenly hit 30-per-cent better. It’s a good, strong, solid trend.”

Silvester believes the improvement gives Vancouver an edge in competing for business with other North American ports.

Silvester also put himself in the middle of contract negotiations between the main terminal operator, Global Container Terminals (formerly TSI, now owned by the Ontario Teachers Pension Fund) and its unionized longshoremen — calling for long-term contract agreements that would give prospective Port Metro Vancouver customers confidence that there was labour peace at the port.

In May 2011, Global and the International Longshore and Warehouse Union announced a stunning eight-year, 22.85-per-cent deal contract for its Vancouver and Deltaport workers.

CN’s Paul Waite said the railway’s business at the port is up 18 per cent compared to a year ago.

They’re better prepared for winter conditions, and they’re diligent about a tracking potential ‘reputation killers’ — that one container out of 50 that somehow gets off track and drags down overall performance.

“I don’t believe this is just a flash in the pan, because we’re all seeing the benefits of it, the [shipping] lines, the terminals, and the railroads,” Waite said.

It is also, Waite allows, “pretty powerful when your CEO can stand up there with his BlackBerry and share with you on a real time basis what’s happened in the last 12 hours of the port.

“And he does look at it every day. It’s pretty motivating, as you can imagine.”

Jane O’Hagan, chief marketing officer and executive vice-president for CP, noted that the system in Vancouver is running well despite the fact that container ships themselves find it difficult keeping to their own schedules.

“Although only 40 per cent of the vessels were on time at the container terminals that we served by May of this year, our dwell improved 38 per cent versus May of 2010,” O’Hagan said.

“That’s a really powerful example of how the supply chain is collaborating — and dealing with the issues related to bunching [of ships at the terminals], and how the supply chain works. To see us improve our dwell by 38 per cent tells you that this coordination, and communication and dialogue is really hitting home.”

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Global Container Terminals Canada president Eric Waltz has worked at ports in Africa and the Middle East, and previously worked in Los Angeles and Tacoma.

“This was the first time I’d seen this kind of collaboration among the port authority, the terminal operator, and the railroad — the first time,” Waltz said during a tour of the port with a reporter and photographer.

“It’s normally relatively adversarial. For me it was exciting to see that, to be part of an industry revolution.”

Waltz points out a row of ‘dual-host gantry cranes’ along the new berth that was added in 2010. Each one has a twin set of lifters that enable it to simultaneously load two 40-foot containers onto a ship.

This is the first North American port to use cranes of this design.

“We need to make sure this is an internationally and globally competitive gateway,” Waltz said. “Almost 70 per cent of the cargo that is imported here goes out on the rail. It has to be globally competitive, so we have to make sure we’re hitting that two days [dwell time target].

“In some cases we will throw in some graveyard shifts that maybe we wouldn’t normally have worked in the past — but we’re doing that because the railroad is saying ‘Hey, the cars are here and either some are early or some are late, but I need to get them turned.’

“In the past we might have said as a terminal operator ‘Well that’s not the best for us, we don’t need it.’”

By contrast, today there are daily performance “scorecards” that track how all the stakeholders are performance against agreed-to standards.

“We’ve taken the dwell time from two years ago where it could easily have been four to eight days. Today our target is under two days and we are consistently making that target.”

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container traffic is making a positive turnaround at Deltaport in Delta.


Eric Waltz notes that container traffic is making a positive turnaround at Deltaport in Delta.



Container traffic is making a positive turnaround at Deltaport in Delta.