Barry Prentice
Transcript of Barry Prentice
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Churchill and Prince Rupert: A Tale of Two Grain Ports
Barry Prentice, PhD Professor, I.H. Asper School of Business
Dept. Supply Chain Management, Transport Institute University of Manitoba
December 12, 2011
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How do we effectively use the ports of Churchill and Prince Rupert?
• What are the incentives for the private sector to utilize these ports?
• What is the likely impact on these ports of CWB change?
• How much will grain sales through these ports change?
• Are there profitable strategies for using these ports?
• Are there policy initiatives that would be desirable for the grain marketing, handling and transportation system?
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Port Nelson or Port Churchill? Bay route began the fall 1910 completed September 1929. By 1920, $13.9 million spent on the rail line and $6.3 million on Port Nelson. Churchill was selected as the port in 1927.
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Hudson Bay Railway
Length: 627 miles
Fleet: 25 locomotives 80 railcars
Traffic: 19,500 carloads
Perishables Automobiles Construction material Heavy and dimensional equipment Scrap Hazardous materials Kraft paper Concentrates Containers Fertilizer Wheat/grain
VIA Rail
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Port of Churchill Bulk Shipping program 2011
Traffic: four berths 90-95 percent of all traffic is grain 50 million litre petroleum terminal 82,000 sq. ft. warehouse
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140,000-tonne elevator Unload rate 100+ railcars per day Load out rate 1,200 tonnes per hour Panamax vessels
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Viability of Churchill Grain Terminal?
• Small catchment area (need for cross-hauling)
• Dependence on Board grains for majority of traffic
• Non-grain company ownership terminal • Competition with Thunder Bay-Montreal route • Dependence on high-cost short-line railway
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Source: Jean-Marc Ruest, Richardson International, 16th Fields on Wheels, Winnipeg, 2011
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Prince Rupert Strategic Advantages
• Closest North American Port to Asia
• Deepest natural harbor in North America
• Safe, sheltered & efficient access from international shipping lanes
• Exceptional community & labor support for expansion
• Best crossing of Rocky Mountains from west coast (rail grade under 1%)
• Trains run longer, faster (less urban congestion)
• Reliable - Fewer weather-related interruptions
• No congestion on main line (<25% utilization)
• CN invested in capacity expansion and upgrades
Marine Rail
Source: Andrew Hamilton, Prince Rupert Port Authority “Welcome to North America’s Leading Edge” 15th Fields on Wheels, Winnipeg, 2010
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Source: Andrew Hamilton, Prince Rupert Port Authority “Welcome to North America’s Leading Edge” 15th Fields on Wheels, Winnipeg, 2010
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Viability of Prince Rupert Grain Terminal?
• Board grains account for 85- 90 percent of the traffic in most years
• Ownership, financing, and legal structure of elevator is complicated
• Financed by Alberta Government, losses added to outstanding principal – due 2035
• Grain companies have incentive to use PRG as a surge terminal
• Revenues to CN Rail ~ $100 million annually Source: Brian Hayward, Aldare Resources “Back To The Drawing Board” 16th Fields on Wheels, Winnipeg, 2011
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Prince Rupert 1 Facility
209,000 MT Storage 4.6 MMT Avg. Annual Movement
Inventory Turns ~ 22
Churchill 1 Facility
140,000 MT Storage 0.5 MMT Avg. Annual Movement
Inventory Turns ~ 3.6
Vancouver 6 Facilities
954,290 MT Storage 14.6 MMT Avg. Annual Movement
Inventory Turns ~ 15.3
Thunder Bay 8 Facilities
1.25 MMT Storage 5.9 MMT Avg. Annual Movement
Inventory Turns ~ 4.7
Grain Terminals and Inventory Turnover
Source: Derived from - Mark Hemmes, Quorum Corporation, “Where Are We Going? - A Supply Chain Perspective” 16th Fields on Wheels, Winnipeg, 2011
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Port of Prince Rupert versus Port of Churchill
• Year round operations
• Asian market focus • Bulk and
containerized freight • CN mainline • Mix of grain, coal,
forest products, containers, potash
• July to October season
• European-African market focus
• Bulk freight only • HBR short-line • Grain dependent
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Churchill Strategic Advantages
• The Arctic has the largest undeveloped reserves of minerals in the world. • Churchill is the only deepwater Arctic Port in Canada and the shortest route. • The Northwest Passage could be a significantly shorter global trade route
Tourism, Mining and Defense are
growth industries
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New airships under construction
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How do we effectively use the ports of Churchill and Prince Rupert?
• What are the incentives for the private sector to utilize these ports?
• What is the likely impact on these ports of CWB change?
• How much will grain sales through these ports change?
• Are there profitable strategies for using these ports?
• Are there policy initiatives that would be desirable for the grain marketing, handling and transportation system?
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Conclusions
Port of Churchill: - The port will never close because of its strategic military value - Climate change presents positive and negative potentials - Tourism should continue to grow - Grain traffic will require enough volume to pay variable costs - Resource development and transshipment could replace grain
Port of Prince Rupert: - Positive future in general - Grain terminal needs ownership change - Containerized wheat shipments could become new traffic