Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
1 Ashcroft Terminal: Western Canada’s Supply Chain Game Change ii Ashcroft Terminal: Western Canada’s Supply Chain Game Change Foreword
Throughout history, as far back as the fur trade, Canadian economic One way to do that is to move products with onward destinations to success has depended on successfully selling products into move through major cities as quickly and seamlessly as possible, international markets. And it was made possible because, in spite of using inland ports as transhipment and cargo handling centres. Canada’s massive geography, efficient and innovative transportation Social and environmental impacts are mitigated, wear and tear on — by road, rail, shipping, or by air — enabled our products to reach road systems reduced and the overall efficiency of the logistical global markets on a highly competitive basis. In fact, transportation system improved. corridors and gateways have fundamentally shaped the pattern of settlement and the country’s economic geography. Towns and cities Ashcroft Terminal is an excellent example of the kind of innovation formed around the transportation systems of the day, whether it was the country needs. on waterways, along railways or at important convergence points
Today all modes of transportation are being integrated into massive logistical systems with thousands of parts moving millions of products at high speed, across all modes of transportation, spanning Dr. David Emerson continents and oceans. Granular service offerings and precision Vancouver, British Columbia, Canada timing are the expectation of todays’ customers and shippers. Mastery of the supply chain is now critical to commercial life and David Emerson, P.C., O.B.C., was the author of the 2016 Review Report on the competitive success. Canada Transportation Act and related policies, titled Pathways: Connecting Canada’s Transportation System to the World. He has held senior positions with the Looking to the future, the protection, management and development Government of Canada, including: Minister of Foreign Affairs, Minister of Industry of logistical trade corridors will be essential to the health and and Minister of International Trade with responsibility for the Asia Pacific Gateway Initiative and the 2010 Vancouver Olympics. In British Columbia, he was the competitiveness of the economy. This is already emerging as a Province’s Deputy Minister of Finance, Secretary to Treasury Board, Deputy major issue on Canada’s west coast where rail corridors and ports Minister to the Premier and Secretary to Cabinet. His leadership roles in the private are heavily concentrated in metro Vancouver, with land scarce, sector included: President and CEO of Canfor Corporation, President and CEO of congestion growing and the social appetite for industrial activity the Vancouver International Airport Authority, and Chairman and CEO of Canadian weak at best. With todays focus on reducing carbon, noise and Western Bank and Chairman of BC Ferries. David is currently Board Chair of Maple Leaf Foods, GCT Global Container Terminals Inc., and the Asia Pacific Foundation. pollution, the application of technology and supply chain innovation He also serves on the Board of Directors of New Gold Inc. David is a member of the will be essential. Achieving environmental improvement without Privy Council of Canada, a recipient of the Order of British Columbia as well as the serious economic sacrifice will require supply chains to debottleneck, Peter Lougheed Award of Excellence in Public Policy, and was also named an operate more smoothly, consistently and burn less fuel per dollar of Honorary Associate of the Conference Board of Canada. David holds a Bachelor and Masters Degree in Economics from the University of Alberta and Doctorate in national output. Economics from Queen’s University.
iii Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Synopsis • Unique Strategic Location. • Intermodal transportation hub.
Ashcroft Terminal is the most strategically located inland port in • 24/7 Operation with no negative community impact. Western Canada to serve regional, intercontinental and international trade. It has been steadily growing and is shovel ready for more • High added value for clients. growth. It has the potential to lower the cost and increase the • Significant environmental benefits in terms of reduced carbon effective capacity of Canadian supply chains, which are at the heart emissions. of Canada’s Asia-Pacific Gateway and Corridor Initiative and Canada’s trade objectives with the U.S. • Cost savings for clients, communities and the province from lower supply chain costs, reduced road maintenance Trade is the lifeblood of the Canadian economy. Sixty percent of and improved road safety. Canada’s economic output depends on trade and thus Canada’s economic success relies on how efficiently Canadian goods are • Distribution of the economic benefits of the Vancouver moved from source to market. Today, and in the future, trade will be Gateway to the Interior of B.C. the driver for Canada’s economic well-being, and supply chain efficiency will be the key to trade. The recent review of the • Reduced pressure on agricultural lands in Richmond and Canada Transportation Act was critical of the lack of innovation in Delta. Canada’s supply chain, noting that Canada’s rank on a global Ashcroft Terminal offers a whole new way to look at Western logistics performance index fell from 9th in 2007 to 12th in 2014, and Canada’s supply chains. It is a game changing approach to concluded that Canada is “lagging in innovation.” Supply chain achieving the supply chain improvements needed to enhance west efficiency must be improved. coast marine port efficiency and improve Canada’s trade An important opportunity for supply chain improvement is the competitiveness. use of inland ports. The OECD and others have pointed out that the growing use of inland ports increases the capacity of land- constrained marine ports and improves supply chain efficiency. Ashcroft Terminal offers a unique set of attributes that position it to become among the most successful of inland ports. It is already becoming a supply chain game changer. Its advantages include:
iv Ashcroft Terminal: Western Canada’s Supply Chain Game Changer efficiency of the entire system, not individual components of that Executive Summary system.
An important opportunity for supply chain improvement is the Ashcroft Terminal is the most strategically located inland port use of inland ports. The OECD and others have pointed out the in Western Canada to serve regional, intercontinental and growing use of inland ports both increases the capacity of land- international trade. It has been steadily growing and is shovel constrained marine ports and improves supply chain efficiency. ready for more growth. It has the potential to lower the cost and Inland ports have been used to great success in Asia and Europe, increase the effective capacity of Canadian supply chains, which are and examples such as the Port of Charleston’s Inland Port Greer, at the heart of Canada’s Asia-Pacific Gateway and Corridor Initiative the Midwest Inland Port (MIP) in Decatur, Illinois and CN’s Prince and Canada’s trade objectives with the U.S. George transload facility show this concept works successfully in Trade is the lifeblood of the Canadian economy. Canada’s wealth North America as well. is fundamentally reliant on trade with the U.S. and, increasingly, with Ashcroft Terminal offers a unique set of attributes that position the Asia-Pacific markets. Sixty percent of Canada’s economic output it to become among the most successful of inland ports. It is depends on trade and thus Canada’s economic success relies on already becoming a supply chain game changer. Its advantages how efficiently Canadian goods are moved from source to market. include: To be competitive, Canada needs its transportation and logistics systems to be the best in the world. The recent Canada • Unique Strategic Location Transportation Act review identified the importance of supply chain Ashcroft Terminal is located on the banks of the Thompson efficiency in improving Canadian trade competitiveness. Today, and River just over 300 kilometres east of downtown Vancouver in the future, trade will be the driver for Canada’s economic well- and it is the only major industrial property in Canada through being, and supply chain efficiency will be the key to trade. which mainlines of both the Canadian Pacific Railway (CP) and Canadian National Railway (CN) run. This means that That same CTA review, however, was critical of the lack of every train on both of Canada’s Class 1 railways that innovation in Canada’s supply chain, noting that Canada’s rank connects the Port of Vancouver and the rest of North on a global logistics performance index fell from 9th in 2007 to 12th in America must pass through Ashcroft Terminal. Both 2014. The report concluded that Canada is “lagging in innovation.” inbound and outbound; every train. Given the importance of trade to Canada’s prosperity, and the critical Not only is Ashcroft Terminal the only private rail facility with role of supply chains in facilitating trade, Canadians simply cannot capacity to access the mainline of both Class I railways, it is afford to continue to slide down the ranks of global competitiveness. strategically located at the western end of the two railways’ Supply chain efficiency must be improved by enhancing the directional running zone. Directional running (also known as
v Ashcroft Terminal: Western Canada’s Supply Chain Game Changer CN Mainline Train Entering Ashcroft Terminal
Co-Production) is an approximately 200 kilometre stretch of production being 155 rail miles of this distance; in an their mainlines from the southern interiors of BC to the important sense Ashcroft Terminal is effectively only 49 rail Vancouver mainland. All Rail traffic heading Eastbound from miles from Deltaport. Mission to Ashcroft travels on the CP mainline. All rail traffic heading westbound from North America into the Vancouver • Intermodal transportation hub. area travels on the CN mainline from Ashcroft to Coquitlam. The Ashcroft Terminal property is also strategically located This zone is effectively a critical trade rail pipeline that close to major BC highways, including the Trans-Canada smoothly and reliably connects Ashcroft Terminal with the Highway 1 and Highway 97/97C, which serve BC’s north and Lower Mainland. Ashcroft Terminal is essentially integrated central Okanagan Valley and much of BC’s resource within the Lower Mainland by this rail pipeline. For instance, industries. Ashcroft terminal is also connected to Highway 5 Deltaport to Ashcroft Terminal is 204 rail miles, with co- (via 97/97C), which is the most direct route to Edmonton and
vi Ashcroft Terminal: Western Canada’s Supply Chain Game Changer the northern Prairies, while Highway 1 is the fastest route to • Cost savings for clients, communities and the province. Port Vancouver from Calgary and the rest of Canada. Terminal users enjoy a clear cost savings from the Shipping distances from Ashcroft Terminal to Port Vancouver substitution of lower cost rail service for higher cost truck are almost identical via the three routes: 344 kilometres using service. Users enjoy a cost savings from undertaking their the Trans-Canada Highway, 351 kilometres via Highway activities on low-cost industrial lands rather than conducting 97/99, and 378 kilometres via Highways 97C/5. No other them within the high priced and congested Lower Mainland. industrial property in BC has such a strategic location. Clients, communities and the province as a whole benefit from the cost savings associated with eliminating empty • 24/7 Operation with no negative community impact. drayage and repositioning moves. This includes not only The Ashcroft Terminal property includes 320 acres of lower emissions, but lower wear and tear on the road and industrial land located far enough away from local lower costs from accidents. The annual community benefit communities that noise and light disturbance are minimized from reduced carbon emissions, reduce road maintenance The terminal is surrounded by a 350 acre buffer zone which and improved safety amount to roughly $40 million annually. will prevent encroachment by future development. Not only are its present operations undisturbed and un-disturbing, • Distribution of the economic benefits of the Vancouver these operations can expand in scope and level of activity Gateway to the Interior of B.C. well into the future. The wealth of this country is created in the hinterlands of this vast area. As a trading nation since Canada’s inception, it is • High added value for clients. the mining, forestry, agriculture and oil & gas industries that Ashcroft Terminal offers a wide range of cost-effective give Canadians the high quality of life we are so accustomed. services under flexible operating conditions. Clients can pick The marine port cities are key points in the supply chains for and choose among the specific services they need, and moving Canadian goods to markets around the world and utilize Ashcroft Terminal staff and/or bring in their own staff to importing materials for distribution through North America. perform specific operations. The choice is entirely up to each Ashcroft Terminal is strategically located at the top of the client, allowing them to customize services in the manner geographic funnel to the Fraser Canyon trade gateway. which best meets their individual needs. Resource exports can be prepared for shipment closer to the • Significant environmental benefits. source of extraction for more efficient staging and flow into Ashcroft Terminal facilitates a major shift of traffic from truck and out of the marine ports. Ashcroft Terminal operations to rail thereby dramatically reducing the carbon emissions extend gateway benefits to the interior of B.C., and by footprint of many supply chains. Ashcroft Terminal makes a supporting enhanced exports allow economic growth in the significant contribution to the Province’s desire to lessen the hinterlands where forestry, mining and other resource based GHG impact of transportation. activities take place.
vii Ashcroft Terminal: Western Canada’s Supply Chain Game Changer • Reduced pressure on agricultural lands in Richmond and Delta. Agricultural lands are limited in the Lower Mainland, and competing uses such as industrial warehousing, container storage and loading and other activities are looking for places to expand. Locating such activities anywhere in the Lower Mainland is a costly proposal, given land prices and traffic congestion. Locating such activities at Ashcroft Terminal, however, does not compete with other pressing uses for the land and enjoys much more modest costs than land in the Lower Mainland. The more that land intensive supply chain activity can be moved to Ashcroft Terminal and other BC inland ports, the more of Richmond’s and Delta’s agricultural lands can be preserved for their intended use.
Ashcroft Terminal offers a whole new way to look at Western Canada’s supply chains. It is a game changing approach to achieving the supply chain improvements needed to enhance west coast marine port efficiency and improve Canada’s trade competitiveness.
viii Ashcroft Terminal: Western Canada’s Supply Chain Game Changer 3.1 Inland ports in general ...... 21 Table of Contents 3.2 Examples of successful inland ports ...... 24 3.3 Inland ports in B.C...... 25 Foreward ...... iii 4 Ashcroft Terminal: Western Canada’s Supply Chain Synopsis ...... iv Game Changer ...... 27 4.1 Ashcroft Terminal Operations ...... 27 Executive Summary ...... v 4.2 The Role of Ashcroft Terminal in Canada’s Supply Chains ...... 28 4.3 Future Operations: Ashcroft Terminal under Full Build-Out ...... 38 1 Overview and Outline ...... 10 4.4 In summary: why is Ashcroft Terminal a game changer? ...... 41 1.1 Overview ...... 10 1.2 Outline ...... 11 5 Ashcroft Terminal: An Environmental Game Changer ... 45 5.1 Introduction ...... 45 2 Canadian Trade and Its Reliance on Supply Chain 5.2 Environmental Benefits of Ashcroft Terminal Operations ...... 45 Efficiency ...... 12 5.3 Congestion ...... 46 5.4 An environmental game changer ...... 47 2.1 Trade and its importance to Canada ...... 12 2.2 The supply chain’s role in trade ...... 13 6 Appendix C: Railway Association of Canada Report on 3 The Role of Inland Ports in High Performance Supply Climate Change ...... 48 Chains ...... 21
ix Ashcroft Terminal: Western Canada’s Supply Chain Game Changer private sector investment and benefits for shippers, carriers and, 1 Overview and Outline ultimately, consumers.
The potential for Ashcroft Terminal to improve the traffic flows and 1.1 Overview increase the capacity of the Asia-Pacific Gateway and Corridor is The OECD has stated that inland ports are being developed in many recognized by the federal government, and in 2013 it made a parts of the world in response to land-side port capacity constraints financial contribution to rail connection infrastructure improvements and notes that they are logistics buffers that allow exploitation of needed to enhance rail fluidity. Ashcroft Terminal more than economies of flow density. They improve supply chain performance, matched the federal government contribution with private funds. The boost local competitiveness and reduce negative externalities. funding was used to create a 5000 foot switching lead to improve CP mainline efficiency, additional railcar marshalling and storage The Asia Pacific Gateway and Corridor Initiative (APGCI): capability, a rail spur to facilitate rail/truck transfers, improvements to Report and Recommendations observed that some of the most road access and improvements to a grade level crossing. This public productive solutions to the problem of ports may be found beyond and private investment in infrastructure at Ashcroft Terminal was the marine port itself using inland ports where processing and undertaken in recognition of the improvement this would make to distribution can continue free of congestion. They encourage farther- enhancing fluidity through this critical trade corridor, as well as the flung industries to link up to distribution systems, spreading the role Ashcroft Terminal plays in improving supply chain efficiencies benefit of the Pacific Gateway across more of Canada. for Canadian shippers and producers, reducing congestion and GHG Ashcroft Terminal is an inland port strategically located in Ashcroft emissions, and improving safety and security. B.C. that serves regional, intercontinental and international trade. It This report highlights the benefits and opportunities related to the has been steadily growing over the last decade and is shovel ready current and future development of Ashcroft Terminal. In brief: for more growth. It has the potential to increase the effective capacity and lower the cost of Canadian supply chains, which are at the heart • There are opportunities for shippers to reduce their of Canada’s Asia-Pacific Gateway and Corridor Initiative as well as supply costs and increase reliability of shipments. This Canada’s trade objectives with the U.S. could lead to increased sales and export activity.
Private investment to date at Ashcroft Terminal has been substantial, • Rail carriers have opportunities to increase their including rail track, roadway improvements, utility upgrades, and the revenues by converting carloads with empty returns of addition of mineral handling equipment, steam systems, grain and containers, already moving through the Ashcroft Terminal pellet conveyors, and container handling equipment. As current property, to high revenue loaded cars. operations at Ashcroft Terminal take place on less than 10% of its masterplan design, its full build-out will represent an even larger
10 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer • The storage stockpile and transload capabilities of Ashcroft Terminal allows carriers to move bulk products by rail that otherwise would have moved by truck in small loads.
• Communities will also benefit in major ways by the reduction of trucking into and within the urban area, with benefits in terms of lower road congestion and emissions.
Because of all these factors, investors have opportunities for superior returns from investing in Ashcroft Terminal facilities and infrastructure. 1.2 Outline The report begins with a discussion on trade and supply chains in the context of trade gateways, which leads to the opportunity of inland ports, and their role in the supply chain. [Chapters 2 and 3.]
Following this, there is a discussion on Ashcroft Terminal and its unique and strategic role for BC and Canadian trade. [Chapter 4.]
A closing chapter discusses the community and environmental benefits that Ashcroft Terminal already delivers. [Chapter 5.]
11 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer nations are comprehensively interconnected. The U.S. receives 70 2 Canadian Trade and Its percent of Canadian goods and services, and 62 percent of Reliance on Supply Chain Canada's goods and services imports come from the U.S. Efficiency 2.1.3 The significance of Asia-Pacific trade with Canada Trade patterns are changing and the world’s economic focus has 2.1 Trade and its importance to Canada been shifting in recent years to Asia and the Pacific Rim. Canada’s fastest growing trade relationship is with the Asia-Pacific. There is 2.1.1 The significance of trade for Canada little doubt that trade with the growing Asia-Pacific markets is key to B.C.’s and Canada’s current and future prosperity. Canada’s Asia- Trade is the lifeblood of the Canadian economy. Canada, with its Pacific Gateway initiative is a key development in supporting huge land mass, abundant resources and small population, enhanced Canadian trade with this area of the world. produces significantly more resources than the domestic market needs. In fact, trade accounts for over 60% of the GDP of Canada’s economy.1 With only 0.5% of the world’s population, Canada exports 2.4% of the world’s total merchandise. That is five times its share of world population. Canadians owe their high standard of living to trade with other nations.
2.1.2 The significance of US trade for Canada Trade with the U.S. has always been and will continue to be a foundation of the Canadian economy. The proximity to the U.S. market, the commonality of language and the similarity of business practices and society in general make Canada and the U.S. natural trading partners. Moreover, the road and rail networks of the two
1 1Foreign Affairs, Trade and Development Canada, Canada’s State of Trade: Trade and Investment Update, 2014, p. III. The Message from the Minister in this report goes on to note that if trade suddenly stopped, 3.3 million jobs would be lost and the unemployment rate would jump to 25%. That is the level of unemployment Canada experienced during the Great Depression. Trade with Asia is Key to BC’s Prosperity Source: Government of BC website: https://news.gov.bc.ca/releases/2016PREM0057-000836
12 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer “It is widely understood that a very important factor in Canada’s future competitive success will be how 2.2 The supply chain’s role in trade effectively Canadian transportation is integrated into international supply chains. The creation of the 2006 2.2.1 Importance of the supply chain to trade Asia-Pacific Gateway and Corridor Initiative marked the first time that Canada explicitly linked Canada’s economic success relies on how efficiently Canadian transportation and trade policy, bringing multiple goods are moved from source to market. To be competitive, Canada levels of government and industry together to identify needs its transportation and logistics systems to be the best in the and resolve bottlenecks and impediments to trade. world. The recent Canada Transportation Act (CTA) Review This approach was admired and respected by our identified the importance of supply chain efficiency in improving competitors, and now they are building on the Canadian trade competitiveness. Today, and in the future, trade Canadian model. will be the driver for Canada’s economic well-being, and supply chain efficiency will be the key to trade. We have to stay ahead of the game. Getting too The CTA Review noted that “transportation logistics and supply comfortable is a recipe for decline and ultimate failure, chain efficiency is now seen by various research organizations as so Canada must continuously build on success and more important to global competitiveness than duties and tariff embrace new initiatives to avoid this fate.” 3 rates.”2 This is particularly important for Canada, which tends to The CTA Review notes capacity as a key constraining aspect to have very long supply chains that compete against shorter supply supply chain efficiency: chains. “To meet the needs of growing trade volumes and Canadians have long recognized this, and the various components complex global supply chains, additional of Canada’s Asia-Pacific Gateway and Corridor Initiative have made transportation capacity (gained, for example, through tremendous progress in bringing together private and public entities an expanded physical footprint, more productive to address bottlenecks and other impediments to trade. In the same capital and/or labour, or better optimized operations) CTA Review, this co-operation is noted, but it recommends that will also be needed. However, moving forward with more needs to be done to enhance supply chains in order that some capacity improvements will be a challenge. Canada does not fall behind its competitors. It states: Marine ports, for example, may be physically constrained due to the growth of cities around them.
2 Canada Transportation Act Review, Pathways: Connecting Canada’s Transportation System to the World, Volume 1, p. 6. Emphasis added. 3 Ibid., p.9. Emphasis added.
13 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer This is not the case for uncongested ports such as • Advanced and connected information technologies to facilitate Prince Rupert and Halifax, where there is ample long- the efficient exchange of information among multiple parties to term expansion potential, but it is very much the enable smooth transit of goods. situation for Port Metro Vancouver.”4 • Freight forwarders to arrange the moves for shippers from origin Given the expanding role of global value chains in global trade – the through to destination. WTO estimates the percent of world trade now moving in global value chains has grown from 36% in 1995 to 49% by 2011 – it is key • Highways that enable the movement of exports from interior for Canadian supply chains to continue to evolve and improve and points to inland ports and marine ports. 5 fully integrate into global supply chains. • Local roads that provide access to access local shippers/receivers. 2.2.2 Complexity and vulnerabilities of supply chains • Local and highway trucking firms and drivers to move these An important part of supply chains are marine ports. These are more goods to and within the port region. than just points where traffic crosses from one country into another. For example, a marine port requires many facilities to function as a • Railways to bring Canadian bulk exports for loading, and for trade gateway: taking Canadian imports to interior markets. Railways offer lower cost to shippers, have a smaller environmental footprint and by • Navigation aids for ships to transit safely to and from the marine taking traffic off roads and highways reduce congestion. port. • Equipment, such as rail cars and truck trailers, often specialized, • Marine pilots that can safely direct vessels through local waters. to transport the goods. • Trained labour to get cargo safely off and on ships. • Refuelling and maintenance facilities for this equipment. • Canada Customs to ensure goods are properly declared and to • Warehousing and storage facilities, and distribution centres to prevent the movement of contraband or restricted goods. accommodate inventory and process flows of goods. • Customs Brokers to ensure the proper paperwork is submitted to There are a wide variety of stakeholders involved to make the port enable Canada Customs to do its job and eliminate delays in chain work efficiently. With growing concerns about capacity processing shipments. constraints at marine ports, the ability of the supply chain to accommodate growth is becoming vulnerable to failure. As a result, 4 Ibid., p. 41. Emphasis added. a lot of the activity that traditionally took place at the marine 5 Developing trade consultants, “Value of Air Cargo: Air Transport and Global Value Chains”, port itself is now moving inland. There are a plethora of supply report commissioned by IATA, 6 December 2016, Foreword.
14 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer chain efficiencies that can be realised by inland ports. By processing Figure 1: Potential Impacts of a Disruption to the Candian Trade Supply shipments inland, marine port space and capacity is freed up for the Chain highest value activities which need access to the expensive, constrained and increasingly busy marine port lands. Moving some supply chain activities to inland ports is an increasingly accepted solution to addressing marine port capacity constraints and supply chain vulnerabilities.
2.2.3 Supply chain inter-connectedness It is critical that the supply chain components work together as a unified system to achieve optimal efficiency. Increasing marine port capacity without addressing rail capacity and operational constraints, or vice versa, will not create a more effective and efficient supply chain. Three examples showing the inter-connectedness of supply chains are provided below.
Example 1: Natural Disaster Rail Disruption As an example of the inter-connectedness of the system, consider what would happen if a railway mainline was blocked, for example by a landslide in the Fraser Canyon. What initially appears as a “railway problem” quickly cascades throughout the system:
• Since the slide is in the area where CN and CP have directional running, both carriers are affected. The rail carriers begin to incur costs associated with crew overtime, increased fuel, increased maintenance, higher insurance, etc. as they try to move the same amount of traffic over one line instead of two, all in the critical trade corridor with limited to no passing tracks nor, due to topography constraints, the ability to expand passing tracks. The carriers may incur monetary penalties for failure to meet service delivery
15 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer commitments. This negatively impacts the cost • The sudden increase in trucking use for long-haul deliveries competitiveness of the supply chains. will have a negative environmental impact, will cause congestion on highways and roads leading to the marine • Shippers will run the risk of losing sales since product is not port, and may have safety implications from more vehicles on available at the time and place needed. This may represent a the road. short-term loss, or it could have longer term ramifications. • There may be increased road maintenance costs stemming • Shippers will incur higher inventory carrying costs. While from heavier truck use of highways and urban roads. goods are in transit, the shipper must still finance that inventory, incur higher insurance costs, letter of credit will be • Once the shipper begins to use another carrier or marine voided, etc. If inventory is idle and is not converted to cash, port, or the buyer switches sources, Canadian railways and shippers may run into line of credit limits with significant marine ports may lose part or all of the traffic, even when consequences. Again, this negatively affects the normal rail service resumes. competitiveness of the supply chain. • Shippers may run out of inputs, or have no place to put their • Shippers will incur additional transportation costs. To outputs. This is especially problematic for just-in-time alleviate the short and long term effects of failure to have its manufacturing or chemical processes that rely on continuous product where and when needed, some shippers may switch supply of product. Impacts on just-in-time operations can be to a U.S. railroad or to another mode of transport (trucking) very high. depending on their circumstances. In any case, shippers will end up paying more for the shipment than he would have • Marine ports have less product to load, so vessels sit waiting, with its regular carrier. incurring demurrage charges.
• The buyers of the products, forced to substitute another • If fewer rail cars are available, marine ports have no place to product or source from another location, will incur additional put shipments unloaded from ships. costs and may suffer from degradation in product quality. • Stockpile capacity for bulk products may become fully • Trucking firms may become inundated with sudden demand. utilised, and container yards may also fill. The consequence In the short term this can be met by overtime; however, may be ships waiting for days or weeks to be emptied. safety regulations limit how much time drivers can operate. • When overseas shippers learn that rail operations have been The sudden surge in demand might negatively impact the interrupted, they often will specify that the ship proceed to a trucking firms’ regular clients. This certainly could have U.S. marine port for unloading, at a loss of many Canadian negative short-term implications, but could well have longer jobs in a wide range of businesses, including customs term ramifications as well.
16 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer brokers, freight forwarders, warehouse workers, truckers, weather, railways are forced to operate shorter and slower trains railways, marine port terminals etc. since braking systems lose effectiveness and rails become more brittle in extremely cold weather. As a result, farmers were unable to Clearly, a problem in one component of the supply chain can quickly move the quantity of grain they needed to. escalate to impact a wide range of the activities linking shipper to buyer. The problem was so severe, with such major implications for an important Canadian export, that the Government of Canada advanced the timing of the Canada Transportation Act review, and commissioned Dr. David Emerson to conduct this review, giving priority consideration to grain transportation.
In the interim, the federal government, which regulates CN and CP, set a minimum weekly amount of grain each railway had to move,6 and established a fine of $100,000 per week for failure to move the minimum. The expectation was that this would incentivize the railways to move more grain and solve the problem of getting grain to market.
Grain movements did increase, (in part because of better weather) but there were many unintended consequences to Canadian supply chains due to the government’s attempt to optimize movement of one commodity.
• Some Saskatchewan growers complained that the railways were focused on moving Alberta grain to the west coast and Manitoba grain to Thunder Bay – moves that gave the Landslides are a common occurrence in the Fraser Canyon quickest turnaround for the railways. Example 2: Responding to Problems Caused by Extreme • Oat growers complained that there was no railway interest in Weather Disruption moving their product to the U.S. Consider the recent challenges in grain movements during the winter of 2013/14. That summer and autumn saw a record volume of crops harvested in western Canada – 50% above the usual amount. That winter saw record cold weather throughout the prairies. With cold 6 Starting at 250,000 tonnes the first week the order came into effect, rising in steps to 500,000 tonnes for the 2014 crop year; a subsequent order set the minimum volume at 536,250 tonnes.
17 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer • The Western Grain Elevators Association was concerned large container vessels unloads at port can cause significant road about congestion at the west coast and Thunder Bay. congestion as drayage activity peaks. In addition, the rail system may not be able to handle the extensive peaking caused by the • Expressions of concern were heard from farmers that railcars container surge. As a result, the per container benefit of decreased tied up with grains were no longer available to ship fertilizers. marine transit costs, may be offset by increased marine port, trucking and rail costs. • Shippers of other commodities were concerned about impacts on their products, and about being considered To deal with these ultra large container vessels, marine ports and second class citizens compared to grain shippers, setting up their partners have to consider ways of improving system fluidity to a potential conflict over who was at the head of the rail deal with the surges in traffic. Options include: capacity queue. • Larger and more numerous cranes for loading/unloading • CN complained about being fined for not meeting the ships. minimum volume when it advised that the grain shippers were not tendering sufficient volumes. • New and improved rail and/or road access to the marine port.
Attempts to optimize individual components of any supply chain to • Improved information systems and exchanges of information address a specific problem that arises might seem to work in the between liners and other parts of the supply chain. short-run. Optimizing components individually, however, is almost certain to fail to optimize the system.7 Only by looking at the Asia- • More area within the marine port may be required to stage Pacific Gateway and Corridor as an intertwined system can containers, if such space is available. Otherwise containers efficiency and cost competitiveness be improved. may need to be moved to other locations for storage, and then repositioned at ship arrival, causing significant additional Example 3: Impacts of High-Capacity Container Ships road congestion due to increased drayage activity. The major shipping companies are using larger and larger capacity containerships, with the latest versions carrying in excess of 19,000 • Increased use of inland ports would relieve the congestion TEUs, to improve the cost-efficiency of the marine transit segment of pressures at the marine port and on the urban roads affected the supply chain. The surge in containers when one of these ultra by drayage activity. • Inland ports are often used to pre-sequence outbound
7 One submission to the Canada Transportation Act Review explains this very well. See containers in the order they are to be loaded onto the ship Coleman, John, “The interrelationships among capacity, congestion, system optimization, and and to hold them until ship arrival to allow faster and lower levels of service: How the railway-shipper network will perform in the next 20 years under the Canada Transportation Act”, A report for the Canada Transportation Act Review Panel, 3 cost operations. August 2015.
18 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
The Railways employ overlapping bridges to traverse the difficult Fraser Canyon conditions
19 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Thus dealing with the ultra large container vessels in the most efficient way should not only involve all the stakeholders at or near the gateway, but those along the corridors as well, including inland ports.
Due to the complexity of supply chains, and their inter- connectedness, the federal government should not develop policy or regulations governing one element of the gateway and corridor without considering the impact on the system as a whole.
2.2.4 Supply chain under-performance in Canada The 2016 Canada Transportation Act Review noted that Canada’s rank on a global logistics performance index fell from 9th in 2007 to 12th in 2014.8 The review concluded that Canada is “lagging in innovation.” The review was not willing to accept Canada’s smaller market size as an excuse, and highlighted how other small economies, such as Sweden and Switzerland, are ahead of Canada in terms of global competitiveness.9
Given the importance of trade to Canada’s prosperity, and the critical role of supply chains in facilitating trade, Canadians simply cannot afford to continue to slide down the ranks of global competitiveness. Supply chain efficiency has to be improved by enhancing the efficiency of the entire system, not individual components of that system. This must be done in such a way that the new approaches and facilities reduce the environmental footprint of getting our exports to market.
Numerous tunnels protect the railway from landslides throughout the canyon 8 Ibid., Volume 1, p. 22. 9 Ibid, p.76.
20 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer range (Veenstra, Zuidwijk and van Asperen 2012) or 3 The Role of Inland Ports in major Chinese ports (Beresford et al. 2012).”11
in High Performance Supply The Asia Pacific Gateway and Corridor Initiative (APGCI) Report and Recommendations observed: Chains “Canada has two major West Coast ports: Prince Rupert, which is uncongested, and Vancouver, where 3.1 Inland ports in general congestion is a major concern. Though this The OECD notes that inland ports “are being developed in many congestion is real – some of the most productive parts of the world in response to land-side port capacity solutions to the problem may be found beyond the constraints.”10 It further notes: port itself. We noted that with the exceptions of the enormous island ports of Hong Kong and Singapore, “The advantages of dry ports stem from their ability virtually every port around the world is planning to use to reconfigure inland transport networks improving rail to move containers quickly to some variation of an supply chain performance, boosting local inland terminal where processing and distribution can competitiveness and reducing negative continue free of congestion. We believe such a externalities (Bergqvist, Wilmsmeier and Cullinane strategy would be useful for Canada. Besides 2013b). One of the key features of dry ports is their relieving port congestion, inland terminals create intermodal character, as they allow for the exploitation employment and economic opportunities of economies of flow density and the ability to use rail elsewhere in the country. They also encourage or inland waterway transport. They also act as farther-flung industries to link up to distribution logistics buffers, in particular in those areas where systems, again spreading the benefit of the logistics terminals at ports are required to reduce Pacific Gateway across more of Canada. Inland container dwell times for efficiency reasons or lack of terminals can be especially important in generating a capacity, such as in the Hamburg-Le Havre port greater variety of alternatives to the use of empty containers heading back to Asia. 12
11 Acciaro, Michele and Alan McKinnon, Efficient Hinterland Transport Infrastructure and Services for Large Container Ports, Discussion Paper No. 2013-19, International Transport 10 Brooks, Mary, Thanos Pallis and Stephen Perkins, Port investment and container shipping Forum, OECD, September 2013, p. 18. Emphasis added markets, Discussion Paper No. 2014-03, International Transport Forum, OECD, April 2014, p. 12 Burghardt, Jeff, Arthur DeFehr and T. Richard Turner, Asia Pacific Gateway and Corridor 24. Initiative (APGCI) Report and Recommendations, submitted to The Honourable David
21 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Another recent OECD report notes the importance of inland ports in improving supply chain performance, and observes that marine ports are increasingly becoming financial participants in inland ports in order to strengthen their hinterland connections:
“Governance of port cities is increasingly influenced by the process of developing trade corridors. The goal is to integrate the port system in a multimodal transportation network in order to improve market access, fluidity of trade and the integration in an industrial network. In this context, a port must have interfaces between major oceanic maritime trade and economic activities of ports and inland terminals that provide intermodal structures and connections between the forelands and hinterlands…”
That same report provided a table showing the financial stake that some marine ports have made in inland ports, reproduced below.13
There are a number of examples of successful inland ports that have relevance to Canada. These are highlighted on the following page:
Emerson, Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics, 2007, p. 6. 13 This table is taken from the OECD report, The Competitiveness of Global Port-Cities: Synthesis Report, Olaf Merk (ed.), p. 72.
22 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Figure 2: Financial participation of seaports in inland ports/terminals
Seaport Inland Port Share (in %) Other Shareholders
Ningbo Taicang, Wanfang Int. Terminal 100%
Nanjing, Mingzho Terminal 100% Jiaxing, Fuchun Terminal 100% Wenzhou, Jinxin Terminal 45% Wenzhou Port Group Hong Kong Wugang, Suno-Trans & CSC, BM Taichahng Wugang Terminal 55% Holdings South Carolina Greer Inland Port 100% Virginia Virginia Inland Port 100% Shanghai Chongqing Container Terminal 50% Chongqing Jiujiang Terminal 50% Jiujiang Municipality Wuhan Container Terminal 49% Wuhan Municipaility Nanjing Longtan Container Terminal 25% Nanjing Port, COSCO Jiangyin Container Terminal 30% Baohua Group, Jiangyin Port Wenzhou Container Terminal 20% Barcelona Zaragoza Terminal 21.55% Mercazaragoza, Aragon government Guadelajara Multimodal Terminal 49% Perpignan St. Charles Terminal 5% Antwerp Geleen Rail Terminal 33.3% Ewals Intermodal, Meulenberg Beverdonk Container Terminal 20% DP World Le Havre Paris Terminal Gennevilliers Compagnie Nationale du Rhône Marseille Lyon Terminal 16% Compagnie Fluviale de Transport Naviland Cargo Chambre of Commerce and Industry of Pagny Terminal 10% Bourgogne and Saône and Loire
23 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer 3.2 Examples of successful inland ports origin/destination points, rather than at the Port of Charleston. The rail move between marine port and inland port is cost competitive with trucking, and results in lower emissions. It also lowers the risk 3.2.1 The Marine Port of Antwerp: Strategic inherent in trucking, including increasing fuel costs as well as driver Partnerships with Inland Ports shortages and hours of service limitations. Key is the reduction in The Port of Antwerp has generally used strategic partnerships with moving empty containers, which improves trucking and railway “hinterland hubs and terminals” (inland ports) to offer integrated productivity and lowers costs. multimodal solutions to logistics needs. There were 58,000 container moves by rail in FY2015, a projected The Port of Antwerp’s efforts to distinguish itself from competing 89,000 moves in FY2016, and an estimate of 110,000 moves (300 marine ports as the most reliable and cost-efficient supply chain per day) in FY2017. The growth in activity has prompted a $2.2 partner in Europe is predicated on its integrated logistics platform. million expansion of the facility ($1.6 million in 2017 and $600,000 in This encompasses inland ports, rail, trucking, and barges along 2018) from its current 38 acres to 70 acres.15 The success at Inland inland waterways. Port Greer has also prompted the South Carolina Port Authority and CSX to examine a second inland port in Dillon S.C., which has 3.2.2 Inland Port Greer: Owned and Operated by a access to the CSX mainline. Marine Port Authority The efficiencies afforded by Inland Port Greer has been credited Inland Port Greer is 212 miles inland from the Port of with prompting Michelin North America to announce a $300 14 Charleston. Opened in 2013 with the aim to increase efficiency at million investment to build a tire distribution centre on lands the Port of Charleston and provide shippers access to an expanded adjacent to the inland port. catchment area, it is 100% owned and operated 24/7 by the South Carolina Ports Authority. It is included within the Greenville- 3.2.3 Decatur Illinois: A Collaboration between Spartanburg port of entry. It is located on Interstate 85 and is served by rail by Norfolk Southern. The railway operates an express Railway, 3PL and Inland Port shuttle service five days a week inbound and six days a week CN Rail is working with Archer Daniels Midland Company (ADM, a outbound. broad-based agricultural company with a major logistics service component) at the Midwest Inland Port (MIP) in Decatur, Illinois. CN Its current focus is on containers. The use of Inland Port Greer moves U.S. bound containers from the Port of Montréal (some 1,600 allows containers to be terminated and sourced closer to the actual km) and the Port of Prince Rupert (some 4,300 km) destined to U.S.
14 This is just a few miles shorter than the road distance between Ashcroft Terminal and Lulu 15 http://greertoday.com/greer-sc/16-million-allocated-for-inland-port-expansion-110000-rail- Island in Richmond, site of BC’s largest lumber reload centre. moves-are-projected/2016/06/16/
24 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer markets to MIP. There ADM unloads the inbound 40 foot containers This inland port offers a suite of services similar to what currently for distribution across the Midwest and then reloads the containers either is being offered, or will be offered, at Ashcroft Terminal. It with export grains and processed products. By concentrating the should be noted, however, that the Prince George facility focuses on service at the inland port, they achieve an economy of scale and lumber whereas Ashcroft Terminal already serves a wider range of efficiency of operation that has enabled growth. ADM notes that they products, including oil and gas, mining and metals, chemicals and are “pleased to see rising volumes of imported containers arriving at agricultural products. The location of Ashcroft Terminal at the our intermodal ramp via CN for area distribution in Illinois. The eastern end of the CN/CP co-production corridor also positions it resulting empty container capacity is essential to our efforts to grow better to serve import containers. exports of our products to global markets, especially in Asia.”16 3.3 Inland ports in B.C. As with most supply chain successes, all the parties involved, private In 2015, Metro Vancouver published a Policy Backgrounder on and public sectors, worked together to achieve efficiencies and Inland Terminals.18 The Backgrounder acknowledged some of the synergies that are not available through independent action. benefits of inland ports such as improving the efficiency of marine terminals, facilitating a modal shift from truck to rail to reduce 3.2.4 Prince George: A Railway-Owned and Operated emissions and road congestion, alleviating pressures on industrial Inland Port and agricultural lands in the region, and expanding the catchment CN Rail owns and operates the 33 acre container lumber transload area. facility in Prince George. Services at Prince George include However, the Backgrounder critically overlooked several key container loading and unloading, cross-docking, inventory benefits of inland ports, including: management, storage, and trucking and delivery.17 At more than 700 km by rail from the Port of Prince Rupert, the Prince George Inland • reduced supply chain costs; Port’s success has proved how inland ports in B.C. can provide effective container capacity and efficiencies for the marine ports and • improved supply chain reliability; railways. • improved overall supply chain efficiency;
• improved safety; and 16 News article, Canadian Shipper.com, “CN, ADM and Midwest Inland Port partner on container shipments over Decatur Ill., intermodal ramp”, 24 August, 2016. Accessed at http://www.canadianshipper.com/transportation-and-logistics/cn-adm-midwest-inland-port- • lowered costs associated with lower land values away from partner-container-shipments-decatur-ill-intermodal-ramp/1003371496/ on 25 August 2016. the port. 17 There are other Canadian inland ports in operation. For example, CentrePort in Winnipeg is often cited as an example of an inland port. As CentrePort has a different funding model (i.e., 18 Metro Vancouver, Metro Facts in Focus/Policy Backgrounder: Inland Terminals, 2015. considerable government support) than Prince George or Ashcroft, it is not included as a Available at http://www.metrovancouver.org/services/regional- model for a BC inland port. planning/PlanningPublications/PPEInlandTerminalFactsinFocus.PDF.
25 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer In light of Canada’s declining supply chain performance, these are exactly the types of benefits that are critical for the supply chain enhancements that Canada needs to compete globally. The success of Prince George shows the potential for B.C. inland ports to lower supply chain costs and increase efficiency. The discussion below on Ashcroft Terminal further highlights the significant potential that inland ports have to improve Canada’s supply chain performance and support U.S. and Asia Pacific trade.
CN Prince George Intermodal and Ashcroft Terminal are British Columbia's Inland Ports
26 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer shippers to load their product in containers and move them 4 Ashcroft Terminal: directly by train to the Port of Vancouver. This reduces the shippers’ transportation costs as well as the costs associated Western Canada’s Supply with road congestion and carbon emissions. The ability to maximize the benefits from CN-CP co-production also Chain Game Changer improves reliability of service compared to trucking goods to the Lower Mainland for loading into containers.
4.1 Ashcroft Terminal Operations • Fleet management Ashcroft Terminal offers 365/24/7 services to shippers. Since 2012, Ashcroft Terminal offers fleet management services, activity at Ashcroft Terminal has grown rapidly. At present, it serves including rail car storage, storage-in-transit, railcar repair, 18 customers in a wide variety of industries: maintenance, cleaning, etc. Ashcroft Terminal has ample storage space in an ideal location that significantly reduces • Bulk/Transload repositioning delays and improves the overall efficiency of Shippers transload from truck to rail or from rail to truck operations. Railcars can be available immediately, and full depending on the nature of their activities. Ashcroft Terminal unit trains can be handled and assembled. Having on-site has ample storage capacity on site, eliminating congestion repair, maintenance and cleaning services eliminates the problems at source or at the marine port. Transloading also need for repositioning cars to have these services performed reduces shipping costs as customers are able to tailor their elsewhere. transportation solutions to their specific circumstances and needs. This unique inland port is ideally suited to support BC’s and Canada’s export and import supply chains. Today, all of our • Intermodal/Containerization industries - resources, manufacturing and agriculture - compete in Ashcroft Terminal provides the infrastructure needed for global markets. Success can only be achieved by low cost, reliable
27 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer and efficient supply chains. Supply chains are the combination of the prairies are a simple form of inland terminal), but more recently transportation, storage, loading/handling and value adding activities they have become more sophisticated and of critical importance to that get products to markets at the right time, in the right condition many trading nations since they enhance the capacity and reliability and at the right price. of seaports.
In addition to the transportation advantages of Ashcroft Terminal the Unlike properties in the high land-value marine port districts facility also provides storage and transloading services, and value (Ashcroft Terminal can serve the Port of Vancouver, the Port of added activities can be performed by the Terminal or by the shipper Prince Rupert as well as marine ports down the U.S. West Coast), on the site. the Terminal can provide a wide range of supply chain activities at significantly lower cost to the shippers. One source of this cost Figure 3: Breakdown of Ashcroft Terminal's Existing Customers reduction is the ability to reduce high cost trucking distances and move product onto lower cost and more environmentally friendly rail Metals service at the beginning of the railways’ high efficiency co-production 5% Forestry zone. Supply chain or logistics cost savings using Ashcroft Terminal 10% can be dramatic, as illustrated in the case studies provided in this Oil & Gas report. 33% Chemicals 4.2 The Role of Ashcroft Terminal in 9% Canada’s Supply Chains
4.2.1 B.C. Gateway Constraints The marine ports of Vancouver and Prince Rupert are both excellent Agriculture deep-water ports that serve a critical role not only for the BC 14% economy, but the Canadian economy as a whole. Despite their economic importance in sustaining Canada’s high standard of living, both face some constraints concerning their ability to expand their Mining footprint and are contemplating expansion projects. Opponents of 29% expansion are generally concerned about negative environmental Because the site can provide not only transportation services, but impacts (emissions and potential degradation of the marine eco- also storage, loading and value added activities, it is an inland port. system), increased traffic congestion from increased trucking, a Inland ports have been used for decades (e.g., grain terminals on decrease of the livability of the region as well as the loss of
28 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer agricultural lands. They prefer initiatives to improve the productivity woodpulp is unsustainable, inefficient, cumbersome, costly, and and throughput of the existing marine port lands. contributes greatly to emissions and congestion. In general:
While some critical services can only be done at the marine port, • Lumber and wood pulp is trucked or railed (in boxcars or other services can be done elsewhere in the supply chain. Lower center beam railcars) from the interior of BC to Vancouver- value-added activities, particularly ones that utilize a relatively large based re-load centres, where the lumber & pulp is stored amount of space, are ideal candidates for inland ports, including the awaiting loading into containers. storage of empty containers, loading of containers, staging of rail cars, and blocking of trains. Undertaking these activities at an inland • At the same time empty containers are brought to the Port of port allows the marine port to focus on higher value-added activity, Vancouver by rail returning from the east, and then trucked to and increase productivity and throughput by freeing up space and the various re-load centres. capacity. • The lumber is loaded into the containers, which are then trucked back to the marine port. 4.2.2 How Ashcroft Terminal addresses B.C. Gateway Not only is the product trucked from source into the Vancouver constraints: The example of lumber and wood region, it and its containers are moved by truck several additional pulp exports from BC to Asia via the Port of times, on the urban road network, before the product is finally loaded Vancouver onto a ship. Significant export volumes. In 2015, there were almost 4 million metric tonnes of lumber and Since there are numerous container storage and reload sites, there over 2.3 million metric tonnes of wood pulp exported from the Port of are generally a number of truck trips required throughout the Lower Vancouver.19 At about 25 tonnes per FEU for lumber and woodpulp, Mainland for each container to get loaded and moved to the marine this represents about 160,000 containers of lumber, and another terminal for loading onto a ship. At best a minimum of two trips are 94,000 containers of wood pulp. Lumber represents the largest needed (empty container from marine port/rail yard to reload centre; movement of export containers, while wood pulp is the third largest loaded container to the marine port). But since trips between off-port 20 storage sites and reload centres are often required, containers can through the Port of Vancouver. wind up making several more moves within the Lower Mainland, The Current inefficient supply chain. contributing to road congestion and vehicle emissions. These The current supply chain approach for export of lumber and inefficient truck trips happen every single day throughout the Lower Mainland for the #1 and #3 largest export containers from Port of
19 Port Metro Vancouver, “Statistics Overview 2015”, p.5. Vancouver docks. 20 There are other forestry products that could potentially move via an inland port, but we focus on lumber and wood pulp to be consistent with the study done for the Corporation of Delta, discussed below.
29 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Cars in storage at Ashcroft Terminal with passing CP mainline train
30 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer This is an inefficient and costly approach to getting forest to where the lumber is waiting for loading. Once loaded the products exports to market. Medium to long distance trucking is containers need to be trucked to the marine port. This complicated more costly than moving the product by rail. Since the trucks flow is illustrated on the following page: have to travel all the way back to the interior empty, this makes the economics even worse. It also adds to road congestion (on the highway and within the urban area), emissions, road wear and accidents. All this adds to the costs of the BC and Canadian forest industry producers.
Furthermore, this approach requires considerable movement of empty containers. These movements not only occur from the interior to the Lower Mainland, they involve movements within the Lower Mainland. Empty containers move:
• by rail from central Canada and from US points, through the BC interior (and through Ashcroft Terminal) to the Port of Vancouver;
• by truck from the Port of Vancouver to off-dock storage facilities (or direct to reload facilities); and
• by truck from off-site storage facilities to reload facilities. This activity may take multiple times for a given shipment.
In some cases, additional movements of empty containers by truck within the Lower Mainland might be needed to get the right amount of containers at the right transload facility. Empty containers are not always initially stored at the ideal location for their further use and must be repositioned. The same is true of loaded containers.
These empty container movements use rail capacity to the Port of Vancouver that could otherwise be employed moving loaded containers for export. The empty container movements also add to road congestion within the Lower Mainland when being repositioned
31 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
32 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
33 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer A more efficient supply chain using an inland port. • Containers stay completely off the roads to and within As an alternative to both the long-distance trucking of lumber, the Vancouver. movement by rail of empty containers to the marine port and the criss-crossing of empty container repositioning movements in the Advantages. Lower Mainland a strategically located inland port needs to used. The key is having the lumber either loaded into empty containers at Ashcroft Terminal is just the solution. The process would be as Ashcroft Terminal, or loaded at the mill and trucked to Ashcroft 21 follows: Terminal. Either way, undertaking container stuffing of lumber at the mill or at an inland port instead of the seaport region itself would: • The railway drops off empty containers headed to west coast ports from Eastern Canada or points in the U.S. at Ashcroft • Replace long-haul truck movements Terminal. The empties need not be brought into Vancouver of product to the marine port with shorter haul movement to 22 for further truck drayage to empty container storage yards on Ashcroft Terminal. This reduces highway congestion as far expensive and constrained industrial land in Metro fewer truck-km of activity need to take place. Vancouver. • Eliminate the need for the railways to carry empty • From Ashcroft terminal empty containers would be trucked containers the shorter distance to the mill for loading, and returned to all the way to the marine port. Transport Canada estimated Ashcroft Terminal; that 45-55% of total rail container handlings at the Port of Vancouver were empties. Instead, the railways could drop • Or alternatively (and with better economics and them off at Ashcroft Terminal and pick up loaded containers. environmental footprint) the mill could truck the lumber the This gives the railroads additional revenue traffic to replace shorter distance to Ashcroft Terminal where the container the deadheading of empty containers, effectively increasing would be loaded on rail; their revenue traffic in areas where building additional track is problematic or impossible. • The westbound train capacity previously used to move empty containers to Vancouver is freed up, enabling its use to take loaded containers from Ashcroft to the marine port.
21 In many cases loading at the mill may have advantages relative to loading containers at the • The loaded containers would go by rail from Ashcroft inland port. Empty containers would move from the inland port to the mill, and the mill would use the same labour they would use to load a truck or boxcar to load the container. This allows Terminal directly to the marine port. the mill / producer better control over this part of the supply chain. This would also reduce the potential for damage to the product, and could have inventory management and control • No cross trucking of empty then loaded containers would benefits. Ultimately this would lower costs to producer due to the elimination of double handling (direct loading of containers at the mill instead of loading to truck or boxcar at the mill take place within the urban region of Vancouver. and transloading to container at the inland port. 22 This can be a real advantage, as the growing driver shortage is most pronounced for long- haul services.
34 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer • The same rail capacity is used in a much more produtive the product and improve the quality of life for drivers who will way be driving shorter distances closer to home. and it eliminates the need to truck export products to Improve driver safety Vancouver, alongside the empty container moving by rail • by reducing the number of trucks driving long distances and adjacent to the highway. in urban environments. • Eliminate the need for drayage activity • Reduce wear and tear on highways from marine port to urban re-load centres (empty containers) as well as on urban roads leading to/from the port and and back again (loaded containers). reload centres due to the increased use of rail relative to 23 • Reduce handling costs to the producer truck. by eliminating the additional handling that goes with this The result is a much more streamlined operation, as illustrated drayage activity. below. Note that the container travels the same number of • Reduce urban road congestion and emissions kilometres by rail, but now a higher proportion is loaded kilometres by eliminating the long-haul trucking traffic to the marine port rather than empty kilometres. This increases railway revenues and as well as the reduced drayage activity within the urban reduces shipper trucking costs. area.
• Reduce GHG emissions by eliminating the long-haul trucking traffic to the marine port as well as the reduced drayage activity within the urban area.
• Reduce overall cost by substituting lower cost rail transport for higher cost long- haul trucking transport.
• Improve trucking productivity (fewer hours of trucking is required for a given shipment, enabling faster turnarounds), reduce trucking emissions both by reduced fuel usage and a smaller fleet needed to move
23 These various savings are computed for a number of case studies included in the appendix, and aggregated in Chapter 5.
35 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
36 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer High efficiency Supply Chain: loaded containers to marine port; would amount to roughly 19,000 tonnes,27 valued at just no intra-urban drayage under $600,000.28
The Corporation of Delta commissioned a study to quantify the • There are additional benefits from reduced wear on roads. benefits described above that could come from the use of an inland Road degradation is a function of the weight of vehicles and 24 port. Assuming a modest 13% of containers of lumber and wood thus is disproportionately attributable to heavy trucks.29 The pulp are loaded at an inland port (and the remaining 87% continue to same container market share used above is estimated to move in bulk to the Lower Mainland for loading there), the study reduce road maintenance costs by $28 million per annum. estimated that this would reduce annual truck movements in the Lower Mainland by 217,670.25 This may sound like a “modest” • There are also road safety benefits. According to the U.S. impact, but even at 365 days of operation (keeping in mind the National Highway Traffic Safety Administration, heavy trucks marine port itself is a Monday-Friday operation) this removes almost account for between 0.5% and 1% of highway traffic but 600 trucks from congested urban roads per day. Factoring in account for 8% of road fatalities.30 The annual benefit is reduced activity on weekends and statutory holidays, this would estimated to be $11 million per year.31 translate to about 870 trucks per working day, or over 70 trucks per hour based on a 12 hour day. This estimate is based on only a The CN Prince George transload facility has been expanded to modest market share for the inland port(s).26 A doubling of market increase this exact kind of service - loading empty containers with share to roughly 25% would see twice as many trucks removed from lumber. CN’s new service at Midwest Inland Port in Illinois is urban roads. This represents a significant reduction in the level of similar, except it moves loaded import containers to the inland port congestion in the Lower Mainland, the amount of GHG where they are unloaded and the products distributed to their final emissions, and the amount of economic wastage moving empty destination, and the containers reloaded with grains for export. containers long distances to load product. These examples, and others like them, are becoming more widespread globally as they need to be. • It is estimated that in the case of a 25% container market share for the inland port, annual greenhouse gas reduction 27 Op cit., p. 33, for scenario 2. 28 Valued at the long term carbon price of $30 per tonne. 29 A study by the Brookings Institution found that heavy trucks (55,000 pounds of gross vehicle weight) have road cost impacts 20 times that of lighter vehicles. Road Work, K Small, 24 Cargo Velocity Inc., Inland Intermodal Cargo Facility Study for the Corporation of Delta, C. Winston and C Evans, Brookings, 1989. See chapter 3. 30 August 15, 2014. U.S. National Highway Traffic Safety Administration, “Traffic Safety Facts, 2008”. 31 25 “Inland Intermodal Cargo Facility Study for the Corporation of Delta,” 15 August 2014, Our estimate uses data on the estimated cost of road safety per million tonne kilometers for prepared by Cargo Velocity Inc. See page 33. This represents a reduction of 14 million liters of freight for truck and rail from “Elements for designing a modal short program for Canada,” Rob diesel fuel per year. P. 25. McKinstry, F Bounajm and E Taylor, Railway Association of Canada, 2011. We estimated the 26 Keep in mind that the loading of containers could be done at the inland port or at the mill savings in road safety and offset this by potential increases in safety costs of the rail transport itself. Either way, loaded containers would be staged at the inland port for furtherance by rail from the mode shift. Rail safety costs are between 6 and 7 times less than road safety costs directly to the marine port. per million tonne kilometers of freight.
37 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer 4.3 Future Operations: Ashcroft Terminal Mainland but instead will now be loaded into containers at the mill, or trucked a relatively short distance to one of these inland ports for under Full Build-Out loading. The containers reach the marine port by a more efficient, What will Ashcroft Terminal look like in the future under a full build less costly and more environmentally friendly mode of transport: rail. out? What might an observer in the 2020s see? Ashcroft Terminal’s access to empty containers dropped off by CN They would see that Ashcroft Terminal’s direct access to the and CP as empty container returns from Eastern Canada and the mainlines of both CN and CP at the eastern end of the CN/CP co- U.S. move past Ashcroft, will have attracted other industrial production zone, through the Thompson/Fraser Canyons, gives its sectors to the inland port, primarily in minerals and mining, as well customers options like no other Canadian inland port. as oil and gas, and importantly agricultural products. Ashcroft Terminal will continue to expand handling of not only dry goods, but Ashcroft Terminal offers its customers low-cost transportation liquids and liquefied gasses. Containerization of export product will options, as well as flexible, responsive and reliable logistics services. have become the major product line at Ashcroft Terminal. It provides the railways with easy access to additional traffic by diverting truck traffic at minimal disruption to mainline operations and Bulk goods/transloading, also will remain a major activity. Ashcroft attracts new rail traffic by achieving lower transportation costs Terminal will continue to provide storage for a number of products and improving supply chain efficiency. for year-round distribution by truck or rail, as appropriate. This will include raw materials such as minerals, as well as intermediary Ashcroft Terminal enables Port Vancouver to increase its goods such as pipeline, drilling, construction and mining supplies. It throughput without expanding its footprint in the Lower will also include dangerous goods, including blasting material for Mainland by moving low-value-added activity from constrained mining and construction, as well as hazardous gasses and liquids marine port lands to inexpensive inland ports. This has the added which can be safely handled away from larger population centres. benefit of preserving agricultural lands in the Lower Mainland since it minimizes the need for that land to go into industrial use. Ashcroft Terminal will also continue to provide a complete range of fleet management services. Railcars will be stored at Ashcroft Ashcroft Terminal benefits communities by reducing needless criss- Terminal for significant savings to their customers, and then sent out crossing truck traffic in the urban area of Greater Vancouver, and where needed on an as-needed basis. The storage of railcars will reducing the movement of empty containers and trucks, which have given rise to a significant level of other activities, including lowers congestion and GHG emissions and improves road safety. storage-in-transit, railcar cleaning, maintenance and repair. Regular Along with the inland terminal at Prince George and other locations, railcars, as well as those handling dangerous goods, will be Ashcroft Terminal will have greatly reduced the trucking of welcomed at Ashcroft Terminal, a much better location for the latter forestry products from interior locations to tidewater. The bulk than the urban area of Metro Vancouver. of BC’s forestry products will no longer be trucked to the Lower
38 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
Ashcroft Terminal Under Full Buildout
39 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer As Ashcroft Terminal continues to develop as a full-service supply the railways may have preferred these trains to be properly blocked chain/logistics facility and service provider, it will act as a focal point at the marine port, marine port congestion stemming from ever to attract activity under the auspices of a Foreign Trade Zone larger container ships and the increasing number of blocks that are (FTZ). There are economies associated with locating FTZ required for the efficient sequencing of trains will make blocking at operations at logistics hubs such as marine ports, airports and inland Ashcroft Terminal economically viable. In 1997 when Deltaport ports. This activity will include the storage of goods, as well as value- opened its intermodal container service it never planned for more added activity and final distribution on an as-needed basis. This than two destination rail blockings. Currently Deltaport has 55 to 60 opportunity will arise as the number of import containers being actual blocks and finds itself congested and inefficient. moved to Ashcroft Terminal grows. Another opportunity is with the increasing amount of import traffic Ashcroft Terminal will provide an opportunity to increase the speed that can be routed to Ashcroft Terminal. The inland port gives rise to and capacity of marine port throughput by performing a rail car the opportunity for this traffic to be cost-effectively reloaded from container blocking for Canadian importers. The railways specify to marine containers to the larger 53 foot domestic trucks and marine terminal operators how they want the containers blocked for containers. loading onto trains (how containers to various destinations should be positioned on the eastbound trains). Unfortunately, the containers do At full build out, Ashcroft terminal will be supporting approximately not always come off vessels in the most logical and operationally 256 regular on-site value-added jobs. The ability of Ashcroft efficient position. Marine terminal operators have generally been Terminal to effectively increase marine port throughput, improve able to block containers together heading to the major markets, but railway efficiency and reduce supply chain costs has meant when it gets to the myriad of smaller destinations, congestion at the Canadian exporters have improved their competitiveness on a global terminal often means the marine terminal operators do not always scale; all while at the same time offering reliable service. Ashcroft manage to get these containers loaded onto a train in the specified Terminal, working closely with the railways, trucking firms, marine manner in a timely way. As a result this produces congestion and port terminal operators, and the shippers themselves, has become a delay issues at the docks. game changer - an integral component and enabler of Western Canada’s leading edge supply chain connecting Canada to the An opportunity is for all the containers bound for these “other” Asia Pacific market. Its ability to get direct access to the mainlines of destinations to simply be loaded at random onto rail cars at the port both Canadian Class I railways also means Ashcroft Terminal will and then moved to Ashcroft Terminal where they could be properly continue to play a significant role in the continental supply chain blocked according to the railways’ specifications. Moving this car serving the U.S. market. blocking function to Ashcroft Terminal will reduce congestion, speed car loading and free up space at Port Vancouver. It allow trains heading east to be properly sequenced upon departure from Ashcroft Terminal, adhering to the railways’ operational needs. While
40 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer 4.4 In summary: why is Ashcroft Terminal a higher revenues, there is reluctance to divert containers onto secondary lines where asset turnover declines. The Ashcroft game changer? Terminal is a unique facility through which the majority of returning As illustrated above, Ashcroft Terminal offers unique attributes that westbound containers will move. can reduce costs, enhance traffic flows, improve efficiency, productivity and capacity, reduce harmful impacts and enhance Not only is it the only private terminal with access to the mainline of Canada’s trade competitiveness. both Class I railways, it is located at the western end of the railway directional running zone. Railway capacity through the Fraser River To summarize, there are several reasons why Ashcroft Terminal is a Canyon is severely constrained by the mountainous terrain and game changer. challenges of topography. To maximize the efficiency of the western Canadian railway network, CN and CP agreed to operate their two 4.4.1 Unique Location mainline tracks through the canyon, and up to the eastern boundary Just over three hundred kilometres east of downtown Vancouver, of the Greater Vancouver rail district, as if it were a single railway. Ashcroft Terminal is located on the banks of the Fraser River and it They refer to this high efficiency operation as the railway co- is the only major industrial property in Canada through which production zone, or the directional running rights zone. Effectively, mainlines of both the Canadian Pacific Railway (CP) and Canadian all westbound trains of either railway use the CN line and the National Railway (CN) run. This means that every train of both eastbound trains use the CP line. It is the railway equivalent of the railways that connects the Port of Vancouver and the rest of efficiency of one way streets in congested urban areas. This zone is North America must pass through Ashcroft Terminal. Both effectively a rail pipeline that smoothly and reliably connects Ashcroft inbound and outbound; every train. Terminal with the Lower Mainland. Ashcroft Terminal is essentially integrated within the Lower Mainland by this rail pipeline. Mainline access is critical for rail service. Mainline service levels are faster and more reliable. They are more frequent.32 Of particular 4.4.2 Intermodal transportation hub importance for many shippers is that empty containers are readily The Ashcroft Terminal property is also strategically located close to available on the mainline. This is not always the case off the major BC highways, including Highway 1, the coast to coast Trans- mainline. Containers are generally controlled by the major maritime Canada Highway and Highway 97/97C, which serves BC’s north and shipping lines, and their objective is to get empty containers back to central Okanagan Valley. Via Highway 99 this corridor has direct the marine port as quickly and directly as possible. While they would access to the North Vancouver marine port terminals. These like containers to return to the marine port with full loads to earn highways serve much of BC’s resource industries. Ashcroft terminal
32 At its peak, there are almost 60 trains a day moving through Ashcroft Terminal, with is also connected to Highway 5 (via 97/97C), which is the most direct approximately 35 CN trains and 21 CP trains. This is an average of a train every 24 minutes route to Edmonton and the northern Prairies, while Highway 1 is the that goes through AT. fastest route from Calgary and other points east to Port Vancouver.
41 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Shipping distances from Ashcroft Terminal to Port Vancouver are in the hinterlands where forestry, mining and other resource based almost identical via the three routes: 344 kilometres using the Trans- activities take place. Canada Highway, 351 kilometres via Highway 97/99, and 378 kilometres via Highways 97C/5. No other major property in BC has 4.4.6 Reduced impacts on highways and urban roads such a strategic location. Loading traffic generated in the BC interior into containers at Ashcroft Terminal instead of trucking it to the Lower Mainland 4.4.3 High added value for clients eliminates a lot of long distance trucking (moving product to the Ashcroft Terminal offers a wide range of cost-effective services Lower Mainland and returning empty) as well as drayage under flexible operating conditions. Clients can pick and choose movements of empty containers within the Lower Mainland. The among the specific services they need, and utilize Ashcroft Terminal reduction in traffic not only lowers congestion, it reduces staff and/or bring in their own staff to perform specific operations. maintenance costs on roads through lower wear and tear. The choice is entirely up to each client, allowing them to customize services in the manner which best meets their individual needs. 4.4.7 24/7 Operation with no negative community impact 4.4.4 Cost savings for clients, communities and The Ashcroft Terminal property consists of 320 acres of industrial province land located far enough away from local communities that noise and Clients enjoy a clear cost savings from the substitution of lower cost light disturbance are minimized. The terminal is surrounded by a rail service for higher cost truck service. Clients enjoy a cost savings buffer zone of AT owned land which will prevent encroachment by from undertaking their activities on low-cost industrial lands rather future development. Not only are its present operations undisturbed than conducting them within the Lower Mainland. Clients, and un-disturbing, these operations can expand in scope and level communities and the province as a whole also benefits from the cost of activity well into the future. savings associated with eliminating empty drayage and repositioning moves. This includes not only lower emissions, but lower wear and 4.4.8 Environmental benefits tear on the road and lower costs from accidents. Ashcroft Terminal allows for much more efficient supply chains – facilitating the shift of truck traffic to rail and eliminating a 4.4.5 Distribution of Vancouver Gateway economic considerable amount of positioning and repositioning movements of benefits to the interior of BC containers. Rail is a more environmentally sound way of moving Ashcroft Terminal operations extend gateway benefits to the interior goods, and eliminating movements of empty containers is a clear of B.C., and by supporting enhanced exports allow economic growth win-win situation. Ashcroft Terminal makes a significant contribution to the Province’s desire attempts to lessen the GHG impact of transportation.
42 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer Figure 4: Comparitive Terminal Sizes
and other activities are looking for places to expand. Locating such 4.4.9 Reduced pressure on agricultural lands in activities anywhere in the Lower Mainland is a costly proposal, given Richmond and Delta land prices. Locating such activities at Ashcroft Terminal, however, Agricultural lands are limited in the Lower Mainland, and competing does not compete with other pressing uses for the land and enjoys uses such as industrial warehousing, container storage and loading much more modest costs than land in the Lower Mainland. The more
43 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer that land intensive supply chain activity can be moved to Ashcroft Terminal and other BC inland ports, the more of Richmond’s and Delta’s agricultural lands can be preserved for their intended use.
Ashcroft Terminal offers a whole new way to look at Western Canada’s supply chains, and a game changing approach to achieving the supply chain improvements needed to improve Canada’s trade competitiveness.
44 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer As already indicated, today empty containers are moving past 5 Ashcroft Terminal: Ashcroft terminal by rail to Vancouver, and alongside the rail line, trucks loaded with forest products are moving on the highway. This An Environmental Game is wasteful and produces needless emissions both from two side by side movements, one loaded and one empty, and by using higher Changer emission trucking. The Railway Association of Canada (RAC) recently made a submission to the federal government entitled “How 33 5.1 Introduction railways can be part of Canada’s climate change solution,” in which they highlight the benefits of converting truck traffic to rail: In addition to the significant benefits to shippers and other stakeholders, supply chain activities at Ashcroft Terminal offers “In Canada, rail can move one tonne of freight 215 kilometers benefits to communities in the form of reducing the environmental on a single litre of fuel. Furthermore, a single freight train is footprint of supply chains, and reducing urban congestion. Ashcroft capable of removing over 300 trucks from our congested Terminal can make game-changing improvements to the community road and highway network”. impacts of B.C.’s export supply chains. The RAC cited that initiatives of the Government of Quebec to 5.2 Environmental Benefits of Ashcroft support the shift of highway freight traffic to rail. It has used its Green Terminal Operations Fund, funded by its cap and trade system to invest in investments in railway track, transload facilities and reload centres. The RAC notes While the transportation sector has made great strides in improving that from 2011 to 2015, $30 million was awarded to rail and fuel efficiency and has adopted a number of technologies and intermodal projects. These resulted in reduction of 210,000 tonnes of approaches to minimize its environmental impact, transportation still carbon emissions per year.34 is a leading source of Canada’s greenhouse gas emissions. Not all modes of transport, however, have the same environmental impact. The RAC notes that not only does rail inherently have a smaller environmental footprint, it continues to reduce its carbon emissions • The key strategy to reducing emissions from the freight at a rapid rate. Since 1990, carbon intensity has been reduce by transport sector is to shift what we can from modes of 40% (in terms of kilograms of greenhouse gas emission equivalents transport with high levels of emissions, such as trucking, to per 1000 revenue tonne kilometers of freight), an astonishing modes with lower levels of emissions, specifically rail. achievement in both technology and operating procedures.35 • Eliminating any unnecessary transportation related to goods Further, both “CN and CP are also active participants in the movement (i.e. empty movements) is also a clear win-win 33 situation. A copy is provided at Appendix C. 34 Op cit, p. 9. See Appendix C 35 Op cit, p. 10.
45 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer internationally recognized Carbon Disclosure Project (CDP)”, which 5.3 Congestion seeks transparency in carbon reducing strategies and impacts. The report previously discussed (in Section 4.2) the noticeably Ashcroft Terminal’s proximity to many forestry sites means trucking beneficial impact of operations at Ashcroft Terminal on highway distances can be reduced to the relatively short haul to Ashcroft congestion and congestion within the Vancouver urban region. Terminal rather than the long haul to the Lower Mainland. This would It is estimated that 870 truckloads of forest products head to reduce trucking miles and hence GHG emissions significantly. The Vancouver each working day. These obviously contribute to Inland Ports Study for the City of Delta estimated that a reduction of congestion along Highways 1 and 99. up to 38,000 tonnes of carbon per year with use of an inland terminal between Kamloops and Hope,36 representing an annual social value But the trucking impact in the urban area of the Lower Mainland is of $1.1 mn. Using Ashcroft Terminal as the transload point even greater. A truckload of forest products does not end at the dramatically reduces empty trucking miles (from Ashcroft Terminal marine port. After arrival in the Vancouver region, It typically goes to back to the forestry sites rather than all the way empty from the a reload centre. The container into which the products need to be Lower Mainland) and it eliminates empty container movements from loaded typically has previously gone to a storage yard – at a different the east to Ashcroft Terminal instead of all the way to Vancouver. location. That container will thus need to move – by truck -- to the Rather than both the loaded truck and empty container on a rail car reload centre. The truck that brought the container may then move, moving side by side from Ashcroft to Vancouver, there is a single, unloaded, to another location for its next task. After loading the loaded movement – by the low GHG emission rail mode! container at the reload is finished, yet another truck may be needed to move the loaded container to port or to another storage area, and The RAC’s report further notes that rail is about four times more that truck may have been empty on its trip to the reload centre. efficient than trucks.37 Shifting the transportation of goods from truck to rail can thus lead to a significant reduction in GHG emissions and In fact there is a spider web of truck movements within the Lower a cleaner environment. Even a national shift as small as of 3% of Mainland that involve the same lumber (or other shipments) and truck traffic to rail would reduce emissions by 1.1 megatonnes, while empty containers moving to and from various locations until the a 10% shift would reduce emissions by 3.7 megatonnes, more than product finally ends up loaded on a ship. Further, for each of the what B.C. hopes to achieve through its environmental taxation movements in the urban web of trucking movements, there may be regime.38 an empty return. Thus the trucking movements into and within the metro Vancouver region for forest products alone greatly exceed the 870 intercity trucks into Vancouver per day and amount to several thousand per day and several hundred per hour. 36 “Inland Intermodal Cargo Facility Study for the Corporation of Delta,” 15 August 2014, prepared by Cargo Velocity Inc. See page 33. This represents a reduction of 14 million liters of diesel fuel per year. Ashcroft Terminal changes all this and reduces highway and urban 37 See page 7 of Appendix C. road congestion. By doing reload activity of forestry, grain and other 38 Ibid.
46 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer products activity outside the urban area, and holding the shipments at Ashcroft Terminal until the right ship is ready:
• The truck to city from the interior of B.C. is eliminated;
• The empty return of the truck is eliminated;
• Many truck movements within the city are eliminated; and
• Empty returns of these trucks are eliminated.
The goods still flow to the marine port and the marine port volumes remain unchanged, but the product arrives already loaded by rail, and can go direct to the dock for loading onto a ship.39
The same is true for containers coming off the ship. They can be loaded directly onto rail for shipment to Ashcroft Terminal where they can then be sorted to specific destinations and/or reloaded from twenty or forty foot containers to 53 foot truck. For these incoming containers there is no trucking within the Vancouver metro area and no truck out of the Vancouver. 5.4 An environmental game changer With use of Ashcroft Inland port, marine port volumes remain unchanged, but the impact of marine port volumes on the urban region is dramatically reduced, both in terms of emissions and urban/interurban road congestion: a game changer.
39 If anything, the streamlining of the supply chain will lower costs, and make B.C. forestry products more competitive, potentially increasing sales and export volumes.
47 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer 6 Appendix C: Railway Association of Canada Report on Climate Change
“How Railways can be a part of Canada’s climate change solution,” Railway Association of Canada, 1 July 2016
48 Ashcroft Terminal: Western Canada’s Supply Chain Game Changer
Submission to Environment and Climate Change Canada
Table of Contents
1 Canada’s railway sector ...... 4 Climate change policy in the transportation sector ...... 5 2 How railways can be part of Canada’s climate change solution ...... 6 3 Policy considerations for the future ...... 9 4 Railway emissions management programs and performance ...... 10 5 Our recommendations ...... 12 Modal shift is a mitigation opportunity for Canada ...... 12 Revenues collected from carbon pricing strategies should be reinvested into rail ...... 12 The Government needs to support clean technology and innovation in the rail sector ...... 13 6 Concluding remarks ...... 13
Appendix A: List of RAC Members
2
Submission to Environment and Climate Change Canada
Acronym Table
AMT Agence métropolitaine de transport
CO2e CO2 equivalent COP Conference of Parties CDP Carbon Disclosure Project GHG Greenhouse Gases MOU Memorandum of Understanding Mt Megatonnes PEET Programme d’efficacité énergétique dans le domaine du transport PETMAF Programe d’aide à l’améloration de l’efficacité du transport maritime, aérien et ferroviaire en matière de réduction ou d’évitement des émissions de gaz à effet de serre PREGTI Programme visant la réduction ou l’évitement des émissions de gaz à effet de serre par le développement du transport intermodal RAC Railway Association of Canada RTK Revenue Tonne Kilometer TTCI Transportation Technology Center Inc. U.S. United States
3
Submission to Environment and Climate Change Canada
Please accept these comments on behalf of the Railway Association of Canada (RAC) and its members.
RAC represents freight and passenger railway companies that move 75 million people and more than $280 billion worth of goods in Canada each year. As the voice of Canada’s railway industry, the RAC advocates on behalf of its members to ensure that the rail sector remains globally competitive, sustainable, and safe.
This submission underscores that the railway industry is well placed to support Canada’s commitment to combat climate change and reduce transportation-related emissions. It recommends that: