Logistics Service Centre and Energy Super Hub Vision To make and the 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 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? (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- Economic Development Authority Emerging Opportunities: • Doug Maley, Assistant Deputy Minister, Economic Analysis Western Economic Diversification 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, GHK / RMAT Consulting

Module 3 Transportation: infrastructure & policy requirements 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 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 is being re-worked and connected to goods but a leading technology exporter. China’s more spatially distributed sources of knowledge outward foreign direct investment flows have also and talent. This has placed major strains on our signaled a desire to move up the value chain and transportation networks to handle this increased improve access to markets. The drive to acquire international traffic. and capture greater knowledge is increasingly evident in China, India, Brazil and other emerging Some believe that two forces will lead to more economies. “near-sourcing”, where production is done closer Technological Changes

Technological changes in transport equipment and information systems have had dramatic effect. Information technology has enabled shippers to carefully track movements of goods, supporting just-in-time production methods. Larger aircraft and ships and longer trains have lowered unit costs of shipping. Improved range of aircraft brings northern Alberta within non-stop range of key Asian points. Navigation and weath- er systems, as well as equipment improvements have increased the reliability of all modes. These technological changes have improved transportation services and lowered transportation Gateway Competition costs, facilitating global production, distribution and consumption and making new gateways and Many communities, within Canada and abroad, distribution hubs viable alternatives to traditional attempting to take advantage of these increased centres. trade flows, are initiating marketing programs and developing new facilities to generate new jobs and stimulate economic growth. The Knowledge Economy Transportation providers and shippers have many The global economy is increasingly a knowledge options to route their traffic. Regions must ensure based economy and the race to knowledge is that their transportation networks and business more important than the race to low cost produc- environment are as competitive as possible to tion, especially in North America and . The attract incremental activity. race to knowledge in the 21st century can be characterized by: Airport Cities • Convergence. Emerging technologies are at the interface of traditional disciplines, Many airports around the world are developing professions and businesses. The distinction into major centres of international trade and between manufacturing and services is blurred. commerce. Land is being developed at or near airports to generate important sources of non- • Collaboration. Collaboration aeronautical revenues. amongst businesses, government and nongovernmental social groups, and between innovation ‘hotspots’ around the Climate Change globe, defines the way in which the new knowledge economy works. R&D has been Another big driver is climate change and how the internationalized; outsourcing is common, world’s energy needs are sourced and managed. open innovation and creative networks are As the 2008 U.S. National Intelligence Council examples of initiatives that characterize report Global Trends 2025: A Transformed World collaborative innovation strategies. highlights, “By 2025 the world will be in the midst • Concentration. Building critical mass in a of a fundamental energy transition – in terms of defined sector or technology platform is vital both fuel types and sources.” Alberta has recog- for success in today’s global economy. The nized the benefit of evolving its role as a supplier world is not flat; it is spiky; and the global of energy resources as well as a developer of new knowledge economy, and in particular key energy technology. Port Alberta can help facilitate economic clusters of activities, appear to this goal. be concentrating in a limited number of very powerful city regions spread around the world. The key is connecting to these value chains. • Attracting and Retaining Talent. Talent, and the creative outputs produced by talent, is a key driver of the knowledge economy of the 21st century. Technological sophistication demands highly skilled people, and such people are mobile and communities must offer the amenities to attract them.

Port Alberta can play an important role in better positioning the region in this changing world where global transportation and value chains are so critical.

Logistics Service Center and Energy Super Hub • 5 While the energy sector remains the single largest The Situation Today contributor to Alberta GDP, the Alberta economy has diversified and the proportion of GDP repre- sented by energy declined between 1998 and 2008. Other key sectors are growing, as shown The Alberta Economy by the capital projects underway or planned for the region: Alberta has outperformed Canada as a whole in a number of measures since 1998: Sector # of Projects Project Cost ($millions) Agriculture 3 175

Chemicals/Petrochemicals 2 85

Commercial/Retail 17 1,240

Infrastructure 49 4,250

Oil, Gas & Oil Sands 4 13,918

Tourism / Recreation 25 811

Other 35 4,906

Total 135 25,385

Source: Alberta First, Finance & Enterprise

As of mid-2009, the inventory of commercial Transportation Supply Assessment and resource-related projects planned for 2009 to 2019 is about $235 billion. This is for all Port Alberta will be served by transportation in sectors, though it is principally driven by oil and all forms an inland port region can expect – road, gas and oil sands developments. Of this total, rail, air, and intermodal. The current situation for the majority of projects totaling $180 billion are each can be summarized as follows: planned for Greater Edmonton and the northern parts of the province (see inset map). Thus, Trucking. Truck transportation is of critical impor- Edmonton’s role as a Gateway to the North will tance to the North American logistics system. become increasingly important and with it, more Increases in consumption, production, trade and investment will be needed to ensure safe, efficient distribution are expected to generate significant and reliable movement of goods, people and increases in trucking volumes. information in eco-friendly ways. Consultations indicated that other than some current and future congestion issues (which are discussed later) the road system is working well. Alberta is also well served by the trucking industry and there are a number of trucking firms with significant Alberta-based operations that are well positioned to capitalize on the current trends. This puts Port Alberta in an immediate position to successfully handle traffic increases.

The trucking sector is focused on productivity, cost control, driver shortages, security and the environment. Port Alberta provides a platform to assist the industry through infrastructure advocacy, facilitation of cargo consolidation, and a focus on efficiency and integration in its own development plans. Rail. Alberta is well served by CN and CP. An demand for both inbound and outbound traffic, engineering analysis uncovered no major defi- Port Alberta has all the constituent parts for an ciencies, and both railways have plans to further effective inland hub. improve intermodal services and make additional investments in terminal and track infrastructure in the region. Distribution Centres Development of Distribution Centres (DCs) by Consultations with shippers indicate an oppor- North American importers is an important trend. tunity to facilitate development of a container DCs developed by major U.S. retailers pull large reload facility that could capitalize on containers volumes of cargo into an area, driving the need currently returning to the west coast empty. for efficient supporting logistical networks. These and other freight receivers have generally estab- Air. Air cargo has been a beneficiary of the lished regional import DCs in areas that represent globalization process, with air cargo generally the emerging mega-regions on the continent. growing faster than GDP as trade expanded. The air cargo market has witnessed significant Another major trend in the U.S. is the correspond- changes in technology with larger and more ing development of inland intermodal industrial efficient aircraft able to extend market reach parks that combine rail intermodal yards with (range) and in the regulatory frameworks govern- warehousing, DCs and in some cases manu- ing the industry that determine not only access facturing. Based on discussions with potential but also environmental performance and operat- users, there is potential for an inland terminal type ing parameters. These trends make the develop- of facility in Edmonton to improve supply chain ment of non-traditional inland air gateways more management by providing better cargo rotation. feasible than it has been in the past. In particular, users indicated that this can serve as a buffer where containerized consignments can Although air cargo is not a primary focus of Port be cheaply stored en route to their final destina- Alberta, air cargo opportunities via Edmonton tions. International Airport (EIA) can supplement other distribution activities. Shippers have indicated The commitment to continued investment in the they see growth opportunities that support region by both railways shows Port Alberta has increased air cargo capacity at EIA. Furthermore, an opportunity to work with either or both CN and enhanced air cargo capacity helps set the stage CP to facilitate such a development. for enhanced value-added activity to take place in the region. Goods can be brought into the region in bulk, stored for later processing, and Sectoral Transportation Assessment shipped on an as-needed basis. This activity would provide employment and economic activity Findings include: beyond the pure distribution model and support the region’s diversification goals. • Edmonton has cost advantages over Calgary and Vancouver for select inbound retail Intermodal Container Services. Intermodal distribution; container services represent one of the funda- • Oilfield products tend to be time-sensitive mental success ingredients for Port Alberta. The rather than cost-sensitive, offering carriers supply of intermodal transportation services in opportunity on a number of trade lanes; North America is a function of increasing contain- • Interest in containerization of forest products erized traffic driven by the continuous growth of appears to be increasing; and imports. • Consolidation of export food products could With its transportation service by both major significantly improve the economics of service. Canadian railways, a good road network, good trucking services, and significant and growing

Logistics Service Center and Energy Super Hub • 7 facilities. The anticipated growth in this key The Opportunity economic cluster will lead to 6-9 million tonnes of production a year by 2030, and will be a key There is an opportunity to build on Edmonton’s driver of Port Alberta growth. existing role as a northern gateway and supply centre. Several opportunities were identified and Logistics Park. An intermodal container termi- considered during consultations and analysis nal could improve access to and efficiency of regarding additional production and exports. container movements and serve as the anchor This pertains to local companies seeking to tenant of a logistics park to support metal, wood expand into new global markets as well as global pulp, chemical, agri-foods and manufacturing companies using Edmonton as a distribution and exporters. It is believed that a logistics service processing centre. These include: centre represents the greatest opportunity in the short term and an energy super hub in the longer Retail Distribution Centres. Edmonton is a term. cost-effective location to serve , with a critical mass of local cargo and an excel- lent transportation network, serving a dynamic Logistics Service Centre consumption market. The opportunity is to provide an arms-length Food/Agri-Foods. With the shift to higher value independent “broker” to consolidate shipments products and the extensive existing production of small/medium sized shippers and other manu- capabilities in Alberta, there is excellent expan- facturers to reduce their transportation costs and sion potential for additional traffic from this $11 improve their competitive position. This would billion industry. A world-class Provincial Food provide a mechanism to improve the visibility and Research Centre is located in Leduc. management of loaded and empty containers within the region. Cargo Consolidation. Currently, there is a lot of traffic which is being trucked to various other This would move Northern Alberta up the value airports to take advantage of more air cargo chain by addressing current logistics market gaps capacity and lower rates. The Leduc and Nisku to provide container services and consolidated Business Parks, the largest North American services for air cargo and trucking. It would build petroleum services agglomeration outside of on existing market demand for container manage- Houston, generates significant cargo and offers ment and intermodal services to generate a major the ability to consolidate traffic to support centre for managing containerized traffic between increased air cargo capacity. Several of these Northern Alberta and North American and Asian businesses indicated that they could expand into markets. additional geographic markets and new sectors if they could obtain better rates and services. The Logistics Service Centre would exploit current needs for intermediary services and position Port Container Reload. Reload centres are being Alberta as both a service centre and physical developed in some cities where containers return- cargo hub. It would design scalable systems, ing empty stop at a terminal and are filled with including physical and technological platforms to commodities such as specialty grains or forest improve cargo management through fully inte- products. grated logistics software and other services.

Petrochemical Manufacturing. Expansion of The main markets that would be served include Alberta’s petrochemical industry is a key compo- agri-food and food products, petrochemical nent of the Government of Alberta’s value-added producers, manufacturers in Leduc and Nisku as strategy. Dow Chemical in Fort Saskatchewan well as other areas in Northern Alberta, industrial is one of the largest petrochemical production shippers in Alberta’s Industrial Heartland, and the facilities in Canada. Other companies including oil and gas sector. Agrium and Sherrit International also have major The development of a logistics service centre Energy Super Hub could involve three stages. Initially, it would likely require about 50 acres of land in the Greater The key long-term opportunity is to develop criti- Edmonton Region. cal mass and foundation of specialized services that will be in high demand for the future energy sector, including engineering, procurement, construction and ongoing operations. It would support all aspects related to bulk commodity flows in rail, pipeline and the associated truck transport of containerized cargoes.

The Energy Super Hub would move Alberta up the value chain by levering the demands of the emerging energy and chemical sectors for logis- tics support and infrastructure development and innovative transportation solutions that meet the needs of industry. Strategic initiatives would be focused on infrastructure development across all modes, productivity and economic development The service centre could lead to improved cargo to support efficient logistics, and the develop- capacity and rate levels which could create ment of the energy sector. opportunities for many of the other items previ- ously identified. In particular, the Logistics Service Centre can play a key role is assisting Small and Logistics Service Centre Medium Enterprises that often do not have large traffic volumes individually, but combined repre- Stage 1 sent a key part of the economy. “virtual” cargo consolidation logistics service centre

Stage 2 container depot to address transport inefficiencies

Stage 3 logistics park

Other Opportunities

The development of a Logistics Service Centre and Energy Super Hub would support the emer- gence of other processing industries that require effective logistics support. It would build on expe- rience and success from container consolidation and shipper services to lever its energy-oriented focus and would establish a long-term strategy to support equipment manufacturers in serving new and developing markets.

Logistics Service Center and Energy Super Hub • 9 Realizing the Vision

The following tables outline a five year strategy to achieve the logistics service centre and energy super hub.

Table 1: Logistics Service Centre Strategies & Value Chain Rationale Sectors/Markets Served

Provides an arms-length independent “broker” to consolidate • Agri-food and food products shipments of small/medium- sized shippers and other • Shipper manufacturers in Nisku and other areas in manufacturers to reduce their transportation costs and Northern Alberta (currently using LTL truck services) improve competitive position. Provides a mechanism to • improve the visibility and management of loaded and empty Industrial shippers in Alberta’s Industrial Heartland containers within the region. • Oil and gas sector

Value Chain Progression Synergy Address current logistics market gaps to provide container Exploit current needs for intermediary services and position services and consolidated services for air cargo and trucking. Edmonton region as both a service centre and physical Build on existing market demand for container management cargo hub; design scalable systems (including physical and and intermodal services to generate a major centre for technological platforms to improve cargo management through managing containerized traffic between Northern Alberta and fully integrated logistics software and other services). North American and Asian markets. Oppurtunistic Initiatives Tactical Initiatives Strategic Initiatives (1-2 year horizon) (3-5 years) (5 years) Stage 1: Virtual Cargo Consolidation Stage 2: Intermodal Container Depot Stage 3: Logistics Park Logistics Service Centre • Develop a “one-stop” IT based system for shipper manufacturers to • Expand logistics management consolidate air cargoes sufficiently systems to include 3rd party to attract scheduled air freighter intermediaries services at EIA • Develop support for empty • Develop a “one-stop” IT based container management for system for shipper manufacturers maintaining a supply of empty to identify and select truck carriers containers for export and rate packages for domestic • Develop and market point-of-sale • Create scalable “Logistics Estates” and trans-border shipments data collected with management concepts based on European (includes fully integrated logistics systems and other value-added Logistics Parks” and US “Freight management system and other services Villages” services such as customs clearance • Develop logistics estates that and bonding) include traditional warehousing as • Develop “smart” distribution centres well as services and manufacturing (DCs) to support retail/commercial opportunities cargo shipments in Northern Alberta • Scale-up container service and • Identify and market support for volumes to include backhaul backhaul container cargoes; support opportunities for agricultural and with program to promote favourable forest products for Asian markets rates and logistics services Action Items Action Items Action Items • Develop inland port/service • Develop “flexible” air/land cargo protocols and arrangements with • strategy linking truck/air services Identify a suitable location for a Vancouver and Prince Rupert ports terminal, perhaps to the northeast • Pursue cargo co-terminalization and • Define and provide opportunities for of Edmonton and possibly in transshipment expansion to foster rail service that mirror emerging rail conjunction with existing operator efficient use of YEG operating models Table 2: Energy Super Hub Strategies & Value Chain Rationale Sectors/Markets Served • Oil, gas and chemical manufacturing activities Develops critical mass and foundation of specialized services • Shipper manufacturers in Alberta’s Industrial Heartland, that will be in high demand for future energy sector, including other parts of Northern Alberta and the engineering, procurement, construction and ongoing • Industrial shippers in the oil and gas sector operations. Supports all aspects related to bulk commodity • Hub to support the construction and development of flows in rail, pipeline and the associated truck transport of upgraders, petrochemical plants/other facilities containerized cargoes. • Air passengers for specialists such as engineers, consultants, researchers, etc. Value Chain Progression Synergy Lever the demands of the emerging energy and chemical sectors for logistics support and infrastructure development Evolving energy/chemicals sector over the long term based and supplying innovative transportation solutions that meet on the emergence of the residual processing industries that the needs of industry. Strategic initiatives are focused on require effective logistics support. Use experience and success developing the ability to support infrastructure development from container consolidation and shipper services to lever (across all modes), productivity and economic development energy-oriented focus. Establish long-term strategy to support to support efficient logistics and development of the energy equipment manufacturers in serving new and developing sector. Support technology and innovation and increasing markets in , and deep-water U.S. Gulf potential for intermodal transportation as petrochemical cluster projects. development proceeds. Oppurtunistic Initiatives Tactical Initiatives Long-term Strategic Initiatives (short-term) (medium-term) • Develop staging and project support • Support the service-oriented for construction materials and oil field requirements of a logistics • Lever initial non-energy container development (e.g., specialty pipe and hub serving the Energy Cluster management and consolidation machinery) with integrated logistics and centre into services and systems • Support emerging polyethylene manufacturing services to support energy-based materials exports in containers (outbound) • Establish trucking/energy support • exports Provide capacity to support inbound intermodal hub for staging of • Develop logistics management rail capacity for up-graders materials delivery to Fort McMurray • systems specifically designed for Establish multimodal platform to and other northern development addressing oil field development support product exports, including • and outbound residuals shipping pipelines for both interconnections Provide specialized shipment logistics and export services for specialty chemicals/ • Link chemical and agricultural bitumen products as markets and materials producers output develops

Action Items Action Items Action Items • Identify potential sites and provide logistics development plans (including on-site and near-site • Develop working relationships, model manufacturing and service estates) rates and best practices with rail and to support integrated Northern truck carriers • Establish criteria and agreements Alberta energy logistics network • Develop strategies and partnerships for unit train service (hopper cars/ • Review other successful initiatives to attract “third-party” sites containers) and other cost-effective such as Singapore – Jurong rail-based services for emerging • cluster/port; Port of Antwerp – Capitalize on Logistics Park energy/chemical markets chemical cluster intercompany developed by Port Alberta integration; sectoral synergies (see: http://www.portofantwerp.com/)

Logistics Service Center and Energy Super Hub • 11 to goods and services for local producers and Realizing the Vision consumers.

(Continued) Engage the Private Sector. The success of Port Alberta will depend on engaging the private The Government of Canada has established sector in co-operation with the public sector. the Asia-Pacific Gateway and Corridor Initiative This will be critical to marshal the resources and (APGCI) to strengthen Canada’s competitive posi- expertise necessary to carry the initiative forward. tion in international commerce. Several western Canadian communities seek to develop as inland Get Closer to Customers. The economic down- ports/terminals in furtherance of this goal. Most turn of 2007-2009 created great uncertainty for proponents claim to be strategically located and companies and investors. The “pause” in growth their objectives are nearly identical – multi-modal in Alberta is welcome to some and an ideal time logistics hubs that link local and international to consider more customer-centric strategies. markets and create jobs and opportunities for the This concept has been gaining traction across a region. Identifying a compelling value proposition number of industries. A customer-focused model that will withstand the litmus test of commercial can have major impacts on business processes, markets is proving to be a big challenge for many. culture, innovation and technology. The goal is not merely to deliver a more satisfying customer For Port Alberta, success in attracting and experience, but to develop insights into custom- retaining business, and promoting the interests of ers to create value. APGCI, will be best achieved by levering the most valuable assets Edmonton has to offer relative to For Port Alberta this means a relentless and others. This means focusing and building on key systematic approach to understand the needs competitive strengths: and new challenges facing cargo owners, ship- pers, manufacturers and the transport service • Energy resources; providers in all modes. • Strong base of petrochemical production; • Role as Gateway to the North; Based on the opportunity and the guiding prin- ciples, there are three actions that need to be • Emerging food/agri-food sector; taken to realize the Port Alberta vision: • Significant consumption market; • Diversity of export cargo potential; 1. Undertake effective marketing • Financially solid and development-oriented and co-ordination; international airport; and • Technological, R&D and manufacturing expertise in niche markets. 2. Address infrastructue issues; and

Three principles will guide the development of Port Alberta: growth, public-private co-operation, 3. Address policy shortcomings. and customer orientation.

Position Transport for Growth. Port Alberta will focus on positioning the transportation system to support the wider economic development goals and initiatives currently being pursued at federal, provincial and local levels in Northern Alberta. Within this context, Port Alberta can provide an institutional framework to facilitate efficient transport and logistics services that provide the critical connectivity to export markets and access 1 Effective Marketing and Although not all of these entities will be market- ing Port Alberta actively, many will play a role Co-ordination in marketing support. This makes co-ordination essential: for Port Alberta to be successfully Marketing. A strategic communications plan has marketed in competition with other prospective been developed. The plan includes key messag- inland hubs requires all the industry and govern- ing, visual identities, branding, website, speech ment stakeholders to impart a common message materials, and presentations. about what Port Alberta is and what it does.

Some steps are already completed or underway: Marketing Focus. Port Alberta needs to look at three levels of marketing opportunities: • Completion and activation of the website; • Completion of messaging and promotional • Opportunistic Initiatives – targeted to materials; maximize short-term objectives with a high probability of success based on current, • Incorporation of Port Alberta as a legal entity; unmet market demand coupled with • Completion of the Port Alberta governance appropriate investment, a well-conceived structure including the mandate, membership business proposition supported by private and board structure; industry, and access to adequate financial • Development of key industry partnerships; backing; and • Tactical Initiatives – designed to create • Securement of full project funding through medium-term opportunities that build on the 2011 and development of a long-term funding existing industrial or infrastructure base, that model to include sustainable funding from provide for introducing new, improved, or industry and governments. higher value-added processes or services for key industries supported by Port Alberta; and Coordination. An important element of Port • Strategic Initiatives – focused on building Alberta is its many stakeholders within both long-term value and returns on investments the public and private sectors. Key proponents that complete a vision for the region, build are the City of Edmonton, Edmonton Economic on tactical initiatives and lead to sustainable, Development Corporation, the County of Leduc, long term objectives that are “championed” the City of Leduc, Leduc-Nisku Economic by a mix of private and public investments. Development, Alberta Transportation, Alberta Infrastructure, Western Economic Diversification Canada, Edmonton Airports, and the Edmonton Chamber of Commerce. Critical stakeholders include service suppliers (CN, CP, the trucking industry, airlines, air cargo handlers, the freight forwarding industry, third party logistics providers, customs brokers, etc.) as well as service users (large, medium and small manufacturers, produc- ers, fabricators, distributors, exporters, importers, etc.).

Logistics Service Center and Energy Super Hub • 13 2 Address Policy the government, making it difficult to compete Shortcomings as a gateway to North America.

• Open Skies. Canada’s Blue Sky policy No current policy shortcomings exist that has elements of open skies, but Canada preclude development of Port Alberta. There has not succeeded in reaching many are, however, some current issues that need to such agreements. The U.S., however, has be addressed if Port Alberta is to maximize its open skies agreements with most nations, economic development potential. Port Alberta facilitating development of market responsive will also need to remain vigilant since other air services. issues may arise that impact on the ability of Port Alberta to achieve its vision. Other Government Policies. • Foreign Trade Zone Limitations. Firms Highway Policy. wishing to operate in an FTZ find Canada’s • Highway Weights and Dimensions. rules more limiting and complicated than Variations in provincial and state rules on those in the U.S., making Canada less trucking weights and dimensions impede the attractive for value-added distribution activity. economic and efficient movement of goods. This impacts all jurisdictions. Other Policies. • NAV CANADA Terminal Fees. Although Rail Policy. this is not a government policy issue, the • Rail Policy Review. A rail freight service corporate policies of NAV CANADA have led review is currently underway. Given the to a fee structure that encourages refueling importance of rail, Port Alberta needs to be and transshipment activity to take place at prepared to review the findings and undertake U.S. rather than Canadian airports. strategic advocacy in conjunction with its interests.

Marine Policy. • Container Cabotage. The use of foreign marine containers for domestic moves is more limited in Canada than in the U.S., giving U.S. shippers more transportation options. The policy is currently under active consideration.

Air Policy. • Foreign Air Carrier Access. ’s policy objectives include Canadian air carrier interests. As a result, foreign air carrier access is sometimes limited even where Canadian carriers have no interest in providing a service and foreign carriers do.

• Airport Rent. Edmonton Airports pays rent to Transport Canada, even though the airport facilities were funded by Edmonton Airports or paid for long ago. Competing U.S. airports do not pay rent, and are even subsidized by Port Alberta is well positioned to play a major role 3 Infrastructure Improvements in strategic advocacy on these issues in conjunc- tion with existing stakeholders. To succeed, Port Alberta requires an efficient There are also a number of non-transportation transportation network to ensure the unhindered related policy areas that Port Alberta can play flow of goods, services and people. This includes a strategic advocacy role in support of its key the trade corridors providing access to key stakeholders: markets and the road system within Alberta Capital Region linking Port Alberta to the trade • Northern community and aboriginal corridors. development; Rail Corridors. An engineering review did not • Labour issues; uncover rail infrastructure deficiencies. Both • Environmental sustainability; railways also have plans for further investment in • Canada-U.S. softwood lumber agreement; the region to handle growth. • Bitumin Royalty in Kind policy; • Canada-U.S. border and security initiatives Highway Corridors. Three existing highway and policies; corridors are key: Highway 16 west to the Alberta/ British Columbia border, Highway 43 north and • WTO trade issues; and west to the Peace Region and Highways 28, 28A • U.S. energy policies. and 63 north to the Fort McMurray Region. These corridors are constituent components of two existing national and continental trade networks, namely the National Highway System and the CANAMEX corridor.

While significant portions of the existing Provin- cial highway corridors have been upgraded to an express standard, a number of investments were identified to relieve bottlenecks to traffic.

Logistics Service Center and Energy Super Hub • 15 Alberta Capital Region Road System. Three Port Alberta - Transportation Infrastructure Improvements major bidirectional traffic flow patterns within the Conceptual Cost Estimates (2009 $) and Priority Rankings 10 Year Planning Horizon (2015 - 2020) Alberta Capital Region connecting with Provincial Conceptual Cost Priority PROJECT / INFRASTRUCTURE COMPONENT trade corridors were identified. (millions $) National Highway System 1 Highway 63 - Twinning, Highway 28 to Highway 55 350.0 2 Highway 28 - Twinning, Highway 825 to Highway 63 100.0 For each of the flow patterns, potential route 3 Highway 16 - Twinning, Highway 40 to Alberta/BC Border 750.0 4 Highway 43 / Highway 16 Interchange Replacement 150.0 5 Highway 43 - Town of Whitecourt Bypass 250.0 options were identified and assessed based Subtotal: 1,600.0 Alberta Capital Region - South to Northeast Route upon existing traffic volumes, lane configurations, 1 Highway 825 - Twinning, Highway 37 to Highway 28 100.0 speed limits and traffic bottlenecks. Improve- Subtotal: 100.0 Alberta Capital Region - South to West Route ments were identified, including connector routes 1 Highway 216 - Widen to Six Lanes, QEII Highway to Whitemud Drive 400.0 Subtotal: 400.0 Alberta Capital Region - West to Northeast Route from the trade corridors to existing and proposed 1 Highway 28A - Twinning, Highway 37 to Highway 28 100.0 2 Highway 28 - Twinning, Highway 28A to Highway 825 250.0 industrial and commercial developments. Subtotal: 350.0 Alberta Capital Region - Local Roadways - East Edmonton Industrial Area 1 Roper Road - 34 Street to Highway 216 50.0 2 Highway 216/101 Avenue Interchange - Construct EB to NB Flyover Ramp 50.0 Infrastructure improvements Port Alberta will seek Subtotal: 100.0 Alberta Capital Region - Local Roadways - South Edmonton Industrial Areas are grouped into a 5-year and 10-year planning 1 QEII Highway/Ellerslie Road - Construct WB to SB Loop Ramp 50.0 2 Highway 216/91 Street Interchange - Construct SB to WB Flyover Ramp 100.0 horizon. These proposed investments can serve 3 Whitemud Drive/91 Street Interchange - Construct NB to WB Flyover Ramp 50.0 Subtotal: 200.0 as the basis for engaging industry to develop a Alberta Capital Region - Local Roadways - Nisku Industrial Area 1 Highway 625 - CPR Grade Separation 50.0 collective voice to influence government decisions 2 Highway 625 - Widen to Four Lanes, QEII Highway to Nisku Spine Road 25.0 3 QEII Highway/Highway 19 & 625 Interchange - SB To EB Loop/Flyover Ramp 50.0 on infrastructure. Subtotal: 125.0 Alberta Capital Region - Local Roadways - West Edmonton Industrial Areas 1 Yellowhead Trail/149 Street Interchange 100.0 2 149 Street - CNR Grade Separation 50.0 3 Yellowhead Trail/142 Street Interchange 150.0 4 Yellowhead Trail/170 Street Interchange - NB to WB Flyover Ramp 75.0 Subtotal: 275.0 Port Alberta - Transportation Infrastructure Improvements Alberta Capital Region - Local Roadways - Alberta's Industrial Heartland 1 Fort Saskatchewan Bypass/RR 215 Interchange 50.0 Conceptual Cost Estimates (2009 $) and Priority Rankings 2 Fort Saskatchewan Bypass/RR 220 Interchange 50.0 5 Year Planning Horizon (2010 - 2015) Subtotal: 50.0

Conceptual Cost Grand Total - 5 Year Planning Horizon: 3,200.0 Priority PROJECT / INFRASTRUCTURE COMPONENT (millions $) National Highway System 1 Highway 63 - Twinning, Highway 55 to Highway 881 1,000.0 2 Highway 43 - Twinning - Sturgeon Lake First Nations 125.0 3 Highway 43 - Grande Prairie Bypass (Incl. Interchanges) 150.0 4 Highway 43 - Twinning and Town Bypasses - Alberta/BC Border to Hwy 724 200.0 5 Highway 16 - Town of Edson Bypass 50.0 6 Highway 16 - Town of Hinton Bypass 75.0 7 Highway 63 - Widen to 6 Lanes and Access Management, Fort McMurray 500.0 Subtotal: 2,100.0 Alberta Capital Region - South to Northeast Route 1 Highway 15/ Crossing Twinning 150.0 2 Highway 15/825/37 Interchange 50.0 Subtotal: 200.0 Alberta Capital Region - South to West Route 1 Highway 16 - Access Control, Highway 44 to Highway 216 25.0 Subtotal: 25.0 Alberta Capital Region - West to Northeast Route 1 Highway 28A - Twinning, Highway 15 to Highway 37 50.0 2 Highway 15/Highway 28A Interchange 50.0 Subtotal: 100.0 Alberta Capital Region - Local Roadways - East Edmonton Industrial Area 1 Highway 216 - Highway 16 to Highway 15 (Incl. N. Sask. River Crossing) 250.0 2 Whitemud Drive -Grade Separation at 17 Street 25.0 3 Sherwood Park Freeway/17 Street Interchange Modification 25.0 4 Highway 216/Sherwood Park Freeway Interchange Replacement 150.0 5 Aurum Road - 34 Street NE to Highway 216 50.0 6 Roper Road - E. of 50 Street to 34 Street 25.0 Subtotal: 525.0 Alberta Capital Region - Local Roadways - South Edmonton Industrial Areas 1 Whitemud Drive/Terwillegar Drive Interchange Replacement 200.0 2 Parsons Road - Widen to Four Lanes, 21 Avenue to Ellerslie Road 25.0 3 Ellerslie Road - CPR Grade Separation 25.0 Subtotal: 250.0 Alberta Capital Region - Local Roadways - Nisku Industrial Area 1 QEII Highway/41 Avenue SW Interchange 250.0 2 Nisku Spine Road/Parsons Road - Highway 625 to 25 Avenue SW 100.0 Subtotal: 350.0 Alberta Capital Region - Local Roadways - West Edmonton Industrial Areas 1 137 Avenue & 184 Street - Connectors to Highway 216 25.0 2 184 Street - Widen to Four Lanes, 107 Avenue to Highway 216 50.0 3 137 Avenue - Widen to 6 Lanes, 156 Street to 170 Street 50.0 4 170 Street - CNR Grade Separation 25.0 Subtotal: 125.0 Alberta Capital Region - Local Roadways - Alberta's Industrial Heartland 1 Fort Saskatchewan Bypass (Incl. Interchanges at Highway 21 & 15) 350.0 Subtotal: 350.0

Grand Total - 5 Year Planning Horizon: 4,100.0 Several different models have been explored. A Next Steps – Creating new not-for-profit corporation under Part IX of the a New Organization Alberta Companies Act is being established. Some remaining issues are being addressed Today, several government bodies and industry as the incorporation process is completed associations are working cooperatively as and the governance model is finalized. members of Port Alberta. These include:

Port Alberta Sponsors: • Mandate (e.g. marketing, lobbying, operating facilities or owning equipment); • City of Edmonton • Overall budget and funding strategy • City of Leduc for the next few years (especially how • City of Edmonton matching funds will be generated – through • Edmonton Economic Development membership fees or grants); Corporation • Membership criteria (attracting private sector); • Edmonton Airports and • • Edmonton Chamber of Commerce Board composition • number of directors • Government of Alberta: • appointment process (nominating enti- Finance & Enterprise ties, a nominating committee or some Infrastructure other mechanism). Transportation • Leduc County This new corporate entity will be charged with turning the “Port Alberta” concept into reality! • Leduc-Nisku Economic Development Authority • Western Economic Diversification Canada

This coalition has been successful in obtaining government support and financial grants to pursue various initiatives.

The next step is to establish a new, more formal corporate entity to implement the action plan required to achieve the Port Alberta vision.

The new entity must achieve several critical objec- tives: • Attract more industry participation from business leaders; • Secure long-term funding sources; • Optimize marketing and business development capabilities; and • Generate sufficient profile and credibility to influence regional and national policy discussions.

Logistics Service Center and Energy Super Hub • 17 Current Port Alberta Sponsors:

• Edmonton Airports

• Edmonton Chamber of Commerce

• City of Edmonton

• Edmonton Economic Development Corporation

• Western Economic Diversification Canada

• Government of Alberta - Alberta Infrastructure & Alberta Transportation

• Leduc County

• City of Leduc

• Leduc-Nisku Economic Development Authority Current Port Alberta Sponsors: