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Port Alberta Project Update

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Logistics Service Centre and Energy Super Hub VISION To make Edmonton and the Alberta Capital Region a critical logistics service centre and energy super hub for the continent. MISSION Champion the coordinated development of Northern Alberta’s transportation system to maximize the efficiency of freight and passenger services as a platform for long-term economic diversification and value-added production. CONTENTS Message from the Steering Committee 1 Introduction 2-3 The Global Reality 4-5 The Situation Today 6-7 The Opportunity 8-9 Realizing the Vision 10-16 Next Steps 17 The extensive analysis identified several exciting A Message from opportunities. In the short term, there is a need for an integrated logistics which could consolidate the Steering Committee shipments moving to/from the Alberta Capital Region and Northern Alberta. Several local of Port Alberta businesses indicated that they would be able to expand their markets internationally if they had such a service. There are also some opportunities For several years, industry and community leaders to attract some retail distribution centres. have been discussing how Edmonton and the Alberta Capital Region could take advantage of its In the longer term, increased petrochemi- strong economy and strategic position to attract cal manufacturing activity and production of more manufacturing, distribution and logistics value-added agricultural products will generate activity to the area. significant new traffic volumes that will require new transportation services and facilities. Early in 2009, a team of leading economic and transportation consultants were retained There is a lot to do. We must organize a formal to delve deeper into this subject by talking to entity which will develop and implement a potential manufacturers and transportation marketing program. There are some policy service providers. They were asked to address and infrastructure issues which we must also three specific questions: address. 1 How will current and future potential economic and market conditions impact The following summarizes the consulting team’s shipping activities in the region and what findings, along with other discussions underway potential is there for additional value- to bring Port Alberta to life. added activities to and from the Port Alberta catchment area? Yours truly, 2 Are transportation rates and services to/from the region competitive enough Port Alberta Steering Committee Members: to create a value proposition to attract incremental and new traffic moving • Reg Milley, President and CEO, through Port Alberta? Edmonton Airports (Chair of Port Alberta) 3 What transportation infrastructure and • Carman McNary, Vice Chair, policy issues must be addressed to Edmonton Chamber of Commerce realize the Port Alberta vision? • Paul Benedetto, City Manager, City of Leduc • Ron Gilbertson, President and CEO, Edmonton RESEARCH TEAM Economic Development Corporation MODULE 1 • Pat Klak, Executive Director, Existing Industry & Leduc-Nisku Economic Development Authority Emerging Opportunities: • Doug Maley, Assistant Deputy Minister, ECONOMIC ANALYSIS Western Economic Diversification Canada Colledge Transportation • Al Maurer, City Manager, City of Edmonton Consultants / Seaport / Economic • Rick Sloan, Assistant Deputy Minister, Development Research Group Enterprise Division MODULE 2 • Rod Thompson, Executive Director, Strategic Policy, Transportation Analysis: Alberta Infrastructure & Alberta Transportation VALUE PROPOSITION • Doug Wright, County Manager, Leduc County GHK / RMAT Consulting MODULE 3 Transportation: INFRASTRUCTURE & POLICY REQUIREMENTS Stantec Consulting Inc. Logistics Service Center and Energy Super Hub • 1 Introduction Edmonton has one of Canada’s strongest The current development occurring in the Oil economies. In 2007, it was rated as having the Sands has created economic opportunity for best economic potential of any mid-sized city in Edmonton in many industries. North America. Edmonton’s future strength lies not only with The local Edmonton economy has been histori- natural resources and energy but through cally tied to the natural resources of the region. on-going innovation by creating new value- This dependency has created peaks and valleys added opportunities, as well as improving its in the region’s economic cycles. However, while industrial productivity and competitiveness. Edmonton has not been immune to the reces- sionary forces that have affected the world, the Transportation system improvements, such as long-term outlook for the region remains positive. timely and well-coordinated capacity expansion in all modes of transportation, expanded air cargo services, new intermodal freight services, and improved modal integration, will support further development of the energy sector. At the same time, these improvements will generate wider benefits and synergies supporting the Energy development of other sectors of the Alberta economy – agriculture and agri-foods, forestry, pulp and paper, manufacturing and processing, as well as health and pharma-based industry. This will generate new business opportunities and provide a platform for sustained economic development and growth. A more integrated, efficient and competitive transportation and logistics system would allow the region to realize Natural major opportunities by maximizing its natural Resources resource and manufacturing assets, generate new business opportunities and move up the value chain. Edmonton is ideally situated in the middle of EDMONTON several critical corridors. Manufacturing CALGARY major oil sands Port Alberta seeks to enable more pros- While Edmonton currently enjoys excellent perity by creating a globally recognized infrastructure, further improvements would trade and transportation hub in the increase efficiency. These include improvements to four-lane roadway and by-passes along Greater Edmonton region. Highways 16 and 43, as well as Highway 63 to The goal is to lever Northern Alberta’s Fort McMurray, and some local road connectiv- ity within the Greater Edmonton region. The strong economy and energy resources as Federal Government has committed $75 million a platform for long-term economic diversi- in APGCI funds to the 41 Avenue SW overpass; fication and value-added production. funding is still required for an overpass at 65 Ave SW in Leduc. The Greater Edmonton region offers key compet- itive strengths that Port Alberta can build on: The availability and cost of labour has also been raised as an issue, although recent market • Proximity to long-term supply of energy conditions have improved with the global resources and cost-effective production economic downturn. of refined petroleum and petro-chemical products; There are also some current transportation policy issues that represent challenges to • Highly competitive tax regime and positive communities across Canada which are seeking business environment; to build their gateways, including restrictive • Existing roles as a Gateway to the North international air access and Foreign Trade Zone and supplier of goods and services to north- (FTZ) regulations which limit the potential value- central Alberta; added activity that can occur. Port Alberta must • Significant local consumption market that be marketed as an effective FTZ. improves trade lane economics; • First major population hub inland from the Port of Prince Rupert on the Yellowhead Highway route, with virtually unlimited capacity for growth; • Diversity of export cargo potential, including agri-foods, forest products, petrochemical products, manufactured goods; and • Technological, R&D and manufacturing expertise in the energy sector and an increasing diversity in other specialty niche markets. These are solid strengths that can be used to These challenges will require that specific niche distinguish Port Alberta from other regional opportunities are pursued. initiatives across the country seeking to develop inland terminals. Port Alberta also faces several challenges. Despite having an affluent and growing local market, it is relatively far from larger consump- tion centres located in north-central and eastern North America. This means that competitive and efficient logistics are fundamental to its success. Logistics Service Center and Energy Super Hub • 3 The Global Reality Several trends are influencing decisions about supply chains and value-added processing. Globalization Globalization has had a profound impact on trade flows. Global trade currently accounts for more than 60% of total economic activity. Of the G8 countries, Canada is the second most dependent on trade, behind only Germany. to consumption markets: political pressures to Trade as a % of Total GDP protect jobs within their economies; and rising fuel prices which increase transportation costs. The general expectation however is that we will continue to rely on trade for much of our consumption. Transportation still accounts for a small portion of the total cost of manufacturing and marketing finished goods. Markets and companies are becoming more tightly integrated around the world. The view that Asian producers are focused on low cost manufacturing is now being eclipsed by the next wave of creative destruction – a restructuring More and more of the value chain is exposed to of global knowledge value chains. According to off-shoring. Firms have been sourcing goods and the U.S. Council of Competitiveness, China is services from around the world. Even the R&D now not simply a provider of low cost consumer process
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