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Richard Parker Professorship Repository Calgary Regional Partnership Documents

2015 A SUPPLY CHAIN’S GUIDE TO INLAND : How inland ports can help lower costs and move your products faster

Johnston, Reg (RJ T&L Consulting Ltd.); Van Horne Institute, University of Calgary; Brown, Jim, JRSB Logistics Ltd

Johnston, Reg (RJ T&L Consulting Ltd.), & Van Horne Institute, University of Calgary, & Brown, Jim, JRSB Logistics Ltd. (2015). A SUPPLY CHAIN’S GUIDE TO INLAND PORTS: How inland ports can help lower costs and move your products faster (Tech.). Calgary, AB: Calgary Regional Parnership. http://hdl.handle.net/1880/107176 technical documentation

Downloaded from PRISM: https://prism.ucalgary.ca A SUPPLY CHAIN’S GUIDE TO INLAND PORTS How inland ports can help lower costs and move your products faster 03 CHAPTER ONE What is an inland and how it can benefit your supply chain today 07 CHAPTER TWO 4 key advantages of inland ports to boost your supply chain 11 CHAPTER THREE Shipping to an : Helping reduce your total landed cost 16 CHAPTER FOUR Growth of inland ports: 4 need to know trends for 2016 18 CHAPTER FIVE Choosing an inland port: 8 crucial tips to lower your total landed cost 22 CHAPTER SIX How intermodal containerization led to the growth of inland ports 27 CHAPTER SEVEN Rail transportation through inland ports: Advantages and disadvantages 36 CHAPTER EIGHT A beginner’s guide to Western ’s major inland ports 48 CHAPTER NINE Case Study: 6 ways the Calgary Region Inland Port lowers your costs and move products faster in Canada CHAPTER ONE

WHAT IS AN INLAND PORT AND HOW IT CAN BENEFIT YOUR SUPPLY CHAIN TODAY?

HOW DOES AN INLAND PORT HELP YOUR BUSINESS? Peter Wallis, President and CEO, Van Horne Institute, points to the increasing importance of inland ports as a critical link in the global supply chain.

“There’s a closely knit network of supply chain capacity created by the relationship between seaports and inland ports. These seaports and inland ports collaborate in a synergistic manner to provide multi-modal options that allow for highly efficient management of a supply chain,” explains Wallis.

Wallis also recommend reading a white paper, developed by global real estate firm Jones Lang LaSalle (JLL) called “The emergence of the inland port,” that provides a great overview on inland ports. The following content was inspired by that paper. 03 CHAPTER ONE

WHAT IS AN INLAND PORT?

According to JLL, an inland port is a hub designed to move international shipments more efficiently from maritime ports to inland for distribution.

While the concept of inland ports isn’t new, where they are located is increasingly critical to the global supply chain. Inland ports can impact logistics decisions ranging from shipping routes to warehouse locations.

The following are characteristics of an inland port:

• Proximity to a large population base • A major connection to seaport via railroad • In many cases, Foreign Trade Zone status and privileges • Available real estate for warehousing and distribution

WHY IS THE DEMAND FOR INLAND PORTS INCREASING? JLL suggests that the reason for the rising demand for inland ports is simple: effectiveness and efficiency.

The supply chain is all about obtaining the best total landed cost while meeting business plans. 04 CHAPTER ONE

RISING TRANSPORTATION COSTS

In many cases, transportation costs are going up significantly. They are expected to increase over the next several years, regardless of what happens with oil and gas prices.

Other thoughts for increasing inland port use are regulations for things such as drivers’ hours-of-service and emissions reduction, among others.

With increased trucking prices, shippers are looking for alternate ways to move freight in a more cost-effective manner.

05 CHAPTER ONE

THE RISE OF INTERMODAL

JJL makes the case for moving freight from seaports through intermodal transportation which includes rail. Inland ports are essentially multi-modal intermodal terminals connected to major seaports.

If you have direct rail access, bringing goods from congested seaports closer to the customer can lower total landed costs.

In addition, there can be efficiency advantages because inland ports are not typically as congested as at the seaports.

BENEFIT TO BIG BOX RETAILERS Inland ports can also serve as a huge benefit for big box retailers that serve as some of the country’s largest importers.

Many big box retailers are now focusing on inland ports and intermodal facilities. They are building facilities close to inland ports because it makes economic sense.

06 CHAPTER TWO

14 KEY ADVANTAGES OF INLAND PORTS TO BOOST YOUR SUPPLY CHAIN

Over the past decade, there’s been a marked decline of local manufacturing along with and an increase in imports. Even with this shift, industrial real estate demand continues to expand.

The real estate needs of importing businesses are driving this expansion. These companies are looking for strategic locations to support the new distribution patterns required for foreign-made goods.

At the same time, Canada’s major ports face tremendous congestion with the increase of inbound volume of goods manufactured abroad. Projections for the next five to six years indicate some ports will triple containership capacity and freight throughput.

To accommodate rising global imports, the industry is shifting more to an “inland port” model.

Inbound goods are quickly off-loaded from ships and moved to inland distribution centers for subsequent handling and redistribution within the country. 07 CHAPTER TWO

ADVANTAGES OF INLAND PORTS

#1 Efficiency of rail shipping. Can exceed that of only using sea and road.

#2 Avoids heavy congestion at seaports.

#3 Increased capacity. A supply chain system that includes inland ports increases the intermodal capacity for inland freight distribution. The additional capacity allows for off-site storage.

#4 Consolidation of import and distribution functions in one location.

#5 More space available for warehousing and distribution facilities away from seaports. Many seaports have limited land available for expansion leading to a search for lower value locations supporting less intensive freight activities, such as transloading. An example of limited space is in the Vancouver metropolitan area, which is facing land availability issues.

#6 Sustainable option. Rail travelling to and from an inland port uses less fuel than trucks.

#7 Excellent market proximity to at least three million people within 320 kms. 08 CHAPTER TWO

#8 Foreign Trade Zone status and privileges for many Canada’s inland ports.

#9 Abundance of reasonably priced commercial real estate for warehousing and distribution. Relative to Canada’s East and West Coasts.

#10 Collaboration of stakeholders on implementation and management of inland ports

#11 Speeds flow of cargo between ships and major land transportation networks

#12 Success of major retailers using inland ports. Among the first and largest users of inland ports – are major retailers and importers such as Walmart and Home Depot. Many of these logistics giants saved money by consolidating multiple distribution centers into smaller hubs situated at inland ports with adequate logistics capacity.

#13 Become a buffer in supply chains, acting as a temporary warehousing facility

#14 Improve speed-to-market and the lowest cost shipping for a desirable alternative.

09 CHAPTER TWO

DISADVANTAGES OF INLAND PORTS

While using an inland port can be advantageous, that doesn’t mean there aren’t downsides. Key disadvantages to consider include:

#1 Each of Canada’s inland markets has its own regional potential for imports and exports requiring different transport services and modes of operation.

It can be a time consuming process to research and compare the inland ports to determine which one offers you the lowest total landed cost.

#2 Import-based logistics for inland ports tend to have a high priority as it’s the segment that generates the most income for carriers.

#3 Due to trade imbalances (higher rates on inbound than on outbound containers), the value of the backhaul cargo can be quite low.

Excess empty shipping containers for the backhaul tend to gather at inland ports. Shipping them back to the seaport empty or partially empty can be quite costly.

10 CHAPTER THREE

SHIPPING TO AN INLAND PORT: HELPING REDUCE YOUR TOTAL LANDED COST

Shipping goods into Canada can be tricky but determining whether the journey ends at a marine port can be even trickier. Beyond the simple logistics, the cost considerations can be endless. And sometimes the most logical market isn’t always the most practical choice when it comes to a business’ bottom line. If you can’t save money in the location you choose as a transit point, there may be no point being there.

11 CHAPTER THREE

SHIP TO THE BIGGEST MARKET, RIGHT? NOT NECESSARILY

“Choosing the locations to trans-ship through and/or store your products is one of the fundamental aspects of designing a logistics network,” says Calgary-based RJ T&L Consulting’s Reg Johnston.

And sometimes, it might make more economical sense to ship goods past bigger markets in Canada, such as Vancouver, and on to smaller ones, like Calgary and use these inland locations as a central warehousing and distribution point.

“If you don’t consider the locations that will save you the most money from a total landed costs perspective, then you can create some costs in your network and impact your bottom line,” he adds.

That’s where the choice of inland ports comes into play.

12 CHAPTER THREE

INLAND PORTS PROVIDE INVENTORY SPACE & LOGISTICS HUBS TO KEEP GOODS MOVING

Using an inland port can boost the bottom line when it comes to the total landed cost side of the balance sheet.

“A lot of inland ports are seeing success by taking advantage of their central location to a customer base. Calgary, for example, is in the centre of ,” Johnston adds. “That would create cost savings for a company who’s trying to ship to all of Western Canada.”

That would create cost savings for a company who’s trying to ship to all of Western Canada

The advantage is not missing orders due to shipping delays. But that doesn’t mean every business can benefit that way.

Some companies don’t want to carry inventory at all and keep inventory in transit on vessels or in ports, constantly moving it to customers.

“That’s a good place to hold inventory if you need to be in the centre of a population you are serving. The coastal ports are usually used to blast inventory into the customers that they can reach quickly.”

13 CHAPTER THREE

INLAND PORT DEVELOPMENT IS ON THE RISE

Many businesses, especially retailers, find inland ports can serve as distribution centres. Containers can be off-loaded and switched to another mode of transportation to meet retailers’ needs more practically.

And that increases levels of service to the customer. Johnston says many companies bypass B.C.’s lower mainland, using Calgary as a location of choice for their supply chain focus.

“You have to make the right choice about where you put your stock,” Johnston says. “It’s a combination of the cost-efficient service to customers and reducing total landed costs.” Looking to major retailers like Walmart, Home Depot and Canadian Tire and their centralization of distribution can be instructive.

Those companies considering a combination of factors beyond geography can cut costs, including those going into landed cost.

However, what makes sense for a retail business might not for a manufacturer who needs source product or inventory for the manufacturing process, but wants to move the final result to market while holding little-finished stock. 14 CHAPTER THREE

TIPS FOR CHOOSING MODES OF TRANSPORTATION

The Canadian Trade Commissioner Service offers some handy guides for modes of transportation to consider when shipping from marine port or outbound to customers:

TRUCK - Popular for shipments within , but service declines once you go beyond the major industrialized countries.

RAIL - Widely used when shipping to the United States, or to and from seaports.

AIR - More expensive than surface or sea transport, but the higher costs may be offset by faster delivery, lower insurance, cheaper warehousing, exotic markets and better inventory control.

OCEAN - For large items, bulk commodities and goods to offshore markets that do not require fast delivery is more economical by sea.

15 CHAPTER FOUR

GROWTH OF INLAND PORTS: 4 NEED TO KNOW TRENDS FOR 2016

As Canada’s supply chain edges towards 2020, there has been a increase in use and growth of inland ports. Here are some key trends fueling that growth:

RAIL SPEEDS UP DELIVERY TIMES Gone are the days when railroads couldn’t be counted on for efficiency. This means rail-bound goods consistently reach interior markets on-time.

For example, perishable items, such as fresh produce, can be delivered without worry of arriving past their best-before date. This is changing the way food is transported across the country.

RETAILERS NEED TO BE CLOSER TO CUSTOMERS Major retailers are increasingly being drawn to inland ports Canada’s inland ports allow retailers to consolidate warehouses into larger hubs closer to their customers. 16 CHAPTER FOUR

CONTAINERS MAKING ROUND TRIPS Intermodal and inland ports are more viable today because containers are arriving, dropping off and being refilled for the return trip. These containers return overseas filled with agricultural commodities, scrap metal, and merchandise produced in the U.S. for export.

A far cry from 10 years ago when containers arriving at inland ports are emptied, and then scrapped or stored for future return trips. In many cases, it was cheaper to scrap these empty containers than send them back.

NARROWING PRICE DIFFERENTIAL BETWEEN TRUCK AND RAIL Over time, the cost of moving goods by truck is increasing. This is due to many factors including:

• Environmental requirements • Insurance costs • Driver shortages

At the same time, the cost of moving goods by rail has dropped, as railroads have become more efficient. With these four key trends, it’s easy to see the economic viability of inland ports and why we’ll see more businesses use them as part of their supply chains. 17 CHAPTER FIVE

CHOOSING AN INLAND PORT: 8 CRUCIAL TIPS TO LOWER YOUR TOTAL LANDED COST

If you are not already using an inland port, are you considering it? Perhaps you are looking at increasing your use of one? These are important decisions many companies face with significant financial implications.

There’s rising demand for inland ports because of their effectiveness and efficiency. The supply chain is all about obtaining the best total landed cost while achieving your business objectives.

Many supply chains have even moved to an intermodal model to further lower costs.

With growing transportation expenses, a shortage of truck drivers and congestion at larger sea ports, inland ports have become a viable option. 18 CHAPTER FIVE

CAN THE INLAND PORT CAN MEET YOUR SCHEDULING NEEDS? When planning your inbound and outbound transportation needs, can the inland port meet your product inflow and outflow needs. You will want to consider how critical timing is for your operations.

How will your delivery method impact your supply chain schedule? Can you meet your customers’ needs efficiently? How often will you need expedited freight to handle emergency situations?

DETERMINE THE BUSINESS CLIMATE WHERE THE INLAND PORT IS LOCATED You’ll want to examine the cost of doing business, availability and quality of workforce, and the quality-of-life for you and your employees.

WHAT ARE THE INLAND PORT’S CAPABILITIES? Determine if the inland port has the ability to expand your logistics needs. Review the freight handling options that are available at the port, and their costs.

What resources are available when using the inland port?

WHAT COMPANIES CURRENTLY OPERATE AT THE INLAND PORT? Are they satisfied with the port’s operations? Look for companies that can complement your business, and vice versa. 19 CHAPTER FIVE

WHAT ARE YOUR INTERMODAL NEEDS? Do you use rail, road, water and air, or a combination? Are the inland ports well-connected to these transportation modes? Consider how far the port is from the airport or railway. Align your needs with the port’s location.

CALCULATE YOUR TOTAL LANDED COSTS FOR EACH INLAND PORT. “Total landed cost is a calculation that accounts for everything, cost- wise, that’s involved of moving your product to your customer,” says logistics expert Reg Johnston, of RJ T&L Consulting Ltd. in Calgary.

“It’s all the costs associated with moving your product from source to its ultimate destination, where you make money on it.”

That should be IF you make money — because the wrong total landed cost formula can cost you a bundle.

Johnston explains that any increase or decrease in this cost affects the profit margin. “Total landed cost is the math associated with whether you can make money in a certain location by selling your product. It’s a key number in the bottom-line calculation.”

20 CHAPTER FIVE

DETERMINE WHAT FINANCIAL INCENTIVES ARE AVAILABLE Many inland ports are providing incentives to attract new business. Find out if the inland port offers attractive incentives such as affordable lease rates and land, a Foreign Trade Zone, etc.

The right incentives can make choosing an inland port a good business decision.

ANALYZE THE PORT’S LOCATION Is the inland port within close proximity to your markets? Does the port’s location offer the north-south and east-west access options that you require?

Does the inland offer important east-west connections that give your business easy access to a seaport?

21 CHAPTER SIX

HOW INTERMODAL CONTAINERIZATION LED TO THE GROWTH OF INLAND PORTS

The research study, “ The Containerization of Commodities: Integrating Inland Ports with Gateways and Corridors in Western Canada,” completed by Jean-Paul Rodrigue, PhD, for the Van Horne Institute, provides the foundation for the content of this section.

22 CHAPTER SIX

The research suggests the growth of inland ports can be predominately credited to the intermodal shipping container. Rather than goods loaded and unloaded in seaports, shipping containers are transferred by truck or train to destined inland ports.

Shipping containers allow many functions to be moved to the inland port that were traditionally carried out at a seaport. Transferring functions to an inland port speeds up container transfer and reduces container handling space.

According to Jim Brown, Owner of JSRB Logistics Consulting Ltd., “In many rail corridors, intermodal transportation to inland ports provides a much better dollar value than highway.”

In Canada, there’s a growing level of intermodal use which reflects trends observed in the United States and around the world.

23 CHAPTER SIX

WESTERN CANADA’S STORY ON CONTAINERIZATION

The containerization of commodities involves development and expansion of a niche market that can fluctuate according to:

1. Price of the respective commodities 2. Nature and extent of the demand 3. Container shipping rates

Intermodal transportation opens up new opportunities for commodity exporters and buyers alike.

Over the past 15 years, containerization of commodities increased as container shipping rates remained constant while the price of most commodity groups doubled or tripled. Containerization also enables a better level of inventory management of commodities.

24 CHAPTER SIX

AVAILABILITY OF CONTAINERS: CHALLENGE OR OPPORTUNITY?

In the past, container availablity has been a recurring challenge. Maritime shipping companies, dominant managers of containerized assets, tend to locate where there are commercial opportunities.

Today, at inland ports across Western Canada, there’s a growing level of intermodal integration. This is reflective of a current trend developing across North America and elsewhere around the world.

25 CHAPTER SIX

CONTAINERS MOVING INLAND

In the past, transloading near port terminal facilities was a preferred strategy to cope with the challenges in container availability. This is changing. According to Jean-Paul Rodrique’s study:

“Inland ports are likely to be the missing multiplying effect that would encourage maritime shipping companies to have a larger number of containerized assets moving inland.”

The report suggests it’s too early to assess the impact of transloading at inland ports rather than near port terminal facilities, but the trend is expected to continue.

26 CHAPTER SEVEN

RAIL TRANSPORTATION THROUGH INLAND PORTS: ADVANTAGES AND DISADVANTAGES

When researching transportation routes, many businesses around the world have asked us what are the pros and cons of shipping by rail through an inland port.

It’s an important question to ask because deciding which transportation method to use has significant impact on your landed cost.

This section is going to explain the advantages and disadvantages of shipping by train through an inland port so by the end you can make the best decision for your business.

27 CHAPTER SEVEN

SHIPPING BY RAIL IN CANADA: AN INTERMODAL SUCCESS STORY

The romance of the railroad is deeply embedded into our Canadian culture. The image of the train chugging through Canada’s picturesque landscape has inspired many songs and stories. But for the supply chain industry, the lure of rail goes beyond charming words and beautiful pictures.

Linked with ship, air and truck transportation, the powerful freight train moves through Canada with products that drive the world’s economy.

In today’s high-speed supply chain networks, rail represents a key component of the intermodal framework surrounding inland ports.

How do you know if rail is the right solution for you? With Canada’s railroads ramping up capital spending on infrastructure and equipment, intermodal services have significant benefits.

28 CHAPTER SEVEN

ADVANTAGES

1. SOLUTION TO TRUCK DRIVER SHORTAGE IMPACTING INLAND PORTS

• Canada is heading into a truck driver shortage. The Conference Board of Canada warns a shortage up to 33,000 drivers by 2020.

• Fewer trucks on the roads will mean decreased capacity to transport goods.

• As capacity concerns choke transportation efficiency in trucking and driver availability continues to drain capital resources, the railway offers a viable alternative to trucking.

29 CHAPTER SEVEN

2. LOWER COSTS TO REACH INLAND PORTS

• Reaching inland ports by rail costs less than by truck or air. Especially for bulk commodities hauled over a long distance such as coal, lumber, grain, fertilizer, fuel, etc.

• Shipping freight by rail may be less expensive if your freight is near a railhead at the point of pick-up and delivery.

• Railroads offer containerized service with the containers available in different sizes. This allows for cost-effective large-scale shipments.

• In addition, significant cost savings are realized with the availability of stacked containers,

• Trains are about three times more fuel-efficient.

30 CHAPTER SEVEN

3. TRAINS BETTER FOR THE ENVIRONMENT

• Trucks contribute more to greenhouse gas emissions (and their associated climate change impacts) than trains.

• One train can carry the load of more than 280 trucks.

• If you live near a railroad, you may see semi-trailers secured to the deck and shipping containers stacked two-high.

• They’re moving freight that isn’t clogging Canada’s highways and polluting the air with excess hydrocarbons and nitrogen oxide produced by trucks.

31 CHAPTER SEVEN

4. SAFEST MODE OF GROUND FREIGHT TRANSPORTATION

• Railway is the safest form of transport.

• The chances of accidents and breakdown of railways are less than compared to trucks.

• Many highway accidents often involve trucks. Less so with trains.

• Fewer trucks to and from inland ports provides a safe mode of transport for consumer goods and commodities.

32 CHAPTER SEVEN

5. DEPENDABILITY

• A significant advantages of railway transport is its dependability.

• A dependable railway means a dependable supply chain in inland ports.

• Railway transportation is the least affected by weather conditions such as rain, fog and snow as compared to other modes of transport.

• Trains run on a fixed time schedule.

33 CHAPTER SEVEN

DISADVANTAGES

1. INFLEXIBILITY

• Inflexibility is a disadvantage of railway transport to and from inland ports.

• Routes and timings cannot be adjusted to individual requirements.

2. UNSUITABLE FOR SHORT DISTANCES

• Rail transport is unsuitable and uneconomical for short distances and small traffic of goods.

3. REQUIRES MORE EXTENSIVE PLANNING

• It takes more time and labour to book and deliver goods via rail than motor transport.

34 CHAPTER SEVEN

4. MAY NOT ACCEPT OUT OF GAUGE CONTAINER

• While ships are able to carry out of gauge cargo, that’s not always the case with rail.

5. REQUIRES MORE EXTENSIVE BLOCKING, BRACING AND SECURING

• With rail, cargo requires more blocking, bracing and securing to prevent damage.

6. DOESN’T ALWAYS HAVE THE OPTION OF CARRYING SPECIALIZED EQUIPMENT

• Open top and flat racks can’t be moved inland by rail unless approved by the ocean carrier and accepted by rail.

Boasting over 48,000 kilometres of track, Canada has one of the largest rail networks in the world. By comparing the pros and cons, you can make a better decision if rail transportation make sense when shipping to an inland port.

35 CHAPTER EIGHT

A BEGINNER’S GUIDE TO WESTERN CANADA’S MAJOR INLAND PORTS

Over the past year, many supply chain professionals have asked us “What are inland ports and where are they located in Canada?” With the Calgary Region being an inland port, we understand why this is an important question to ask.

Knowing what are the major Canadian inland ports is key to moving your products successfully across the country and calculating your total landed cost. For the purpose of this article, a major inland port is served by rail/container/intermodal terminal.

We’ll provide a high-level description of the inland ports in Western Canada, helping you understand what they have to offer.

Canadian Pacific Railway (CP) and Canadian National Railway (CN) provide rail service to these inland ports. The northern corridor (Vancouver / Prince Rupert – – Saskatoon – ) is dominantly serviced by CN while the southern corridor (Vancouver – Calgary – Regina – Winnipeg) is dominantly serviced by CP. 36 CHAPTER EIGHT

These long-distance corridors are supporting economies of scale (e.g. double stacking) that help reconcile growing port traffic and effective hinterland access.

The following provides a snapshot of Western Canada’s inland ports along these corridors:

WESTERN CANADIAN INLAND & SEA PORTS

Port Metro Vancouver Port (Edmonton)

Prince Rupert Port Authority Saskatoon Ashcroft Terminal Global Transportation Hub (Regina) BC Calgary Regional Inland Port CentrePort Canada (Winnipeg) AB SK MB CHAPTER EIGHT

1. ASHCROFT TERMINAL

Ashcroft Terminal is a privately owned inland port in British Columbia strategically located with both the CP & CN mainlines directly on site.

Ashcroft is located 340 km east of Vancouver and 90km west of Kamloops.

Ashcroft Terminal currently services all sectors of the Natural Resource Industries from Agriculture, Mining, Forestry and Oil & Gas by providing transloading, fleet management, railcar storage and logistics solutions.

38 CHAPTER EIGHT

QUICK FACTS:

• 320 acre industrial terminal / 350 Agricultural buffer land • Both CP & CN mainlines pass directly through the private facility. • 10 miles from CP/CN directional running (last location westbound / first location east bound outside co-production) • Currently over 32,000 ft of rail off the CP mainline direct access to HWY 97C and 6 km from HWY 1 • Operating since 2001 • Full Build-Out plan calls for 25+miles of internal track directly off both mainlines for direct hook & haul, on the private facility

OPERATIONS AND INFRASTRUCTURE

Ashcroft Terminal’s onsite operations include:

• Trans loading • Railcar storage • Materials handling • Industrial storage • Truck Scales • The terminal contains over 30,000 feet of rail servicing both CP and CN. 39 CHAPTER EIGHT

2.

Port Alberta is an industry-led economic development association based in the Edmonton Capital Region in Alberta, Canada. The city of Edmonton has a well-developed intermodal and freight distribution sector.

It’s also Northern Alberta’s dominant commercial centre.

The Port is a joint venture between the Edmonton Economic Development Corporation (EEDC) and Edmonton International Airport.

Port Alberta doesn’t own any land or assets. It has an excellent governance structure that includes a stakeholders’ representative board.

With Port Alberta, there are no intentions to be involved in terminal and logistics zone development.

Rather, the Port acts more like an economic development office focusing on the promotion of freight distribution.

40 CHAPTER EIGHT

QUICK FACTS:

• Rail Access: CN, CP • Highway Access: Highway 16, Highway 2 • Capacity: 500,000 TEUs (2013). Expanded to 800,000 TEUs in 2014 • Designated foreign trade zone

For those with a supply chain connected to the oil and gas sector in northern Alberta, Port Alberta offers significant opportunities due to its location.

The Port provides transportation, logistics and supply chain solutions to connect Alberta’s economy to worldwide markets.

41 CHAPTER EIGHT

3. CALGARY REGION INLAND PORT

Calgary Region has rapidly grown to become a major inland hub. Even the economic slowdown brought on by low oil prices hasn’t dramatically impacted the industrial real estate sector...it continues to see growth.

The Calgary Region is one of Canada’s key inland intermodal distribution centres. It has an expanse of affordable industrial inventory for building, buying or leasing.

On a national scale, it’s second only to Toronto as an inland port.

Calgary Region’s industrial market is distribution-driven and little of it has direct exposure to the energy sector.

The Calgary Region is now seeing the trend towards the construction of large-scale buildings in the distribution and warehousing sector.

42 CHAPTER EIGHT

QUICK FACTS:

• Location: Calgary metropolitan area • Size: 2,800 acres • Rail Access: CN, CP – both CP and CN have set up main terminals • Highway Access: Highway 1, Highway 2 • Volume: 822,000 TEUs (rail only) • Designated foreign trade zone.

GROWTH IN INDUSTRIAL DEVELOPMENT Calgary Region’s competitive advantage increases due to traditionally higher retail spending levels per capita in Alberta and Saskatchewan.

Using an adjusted weighting based on population and retail spending per capita, Calgary Region’s advantage for outbound distribution to Western Canadian population centres is most compelling for driving the growth on logistic industrial development.

43 CHAPTER EIGHT

4. GLOBAL TRANSPORTATION HUB

The Global Transportation Hub (CTH) Authority in Regina, Saskatchewan is Canada’s only autonomous and self-governing inland port authority.

The statutory corporation is responsible for marketing, financing, planning and attracting investment for an inter-modal transfer and logistics facility in Regina.

Canadian Pacific’s (CP) decision to locate its new intermodal facility at the west edge of Regina was fundamental to the development of the GTH.

QUICK FACTS:

• 1,700 acres of serviced land ready for further development • Rail Access: CP • Highway Access: Connections to all major networks including Trans- Canada, Minneapolis/St. Paul, Chicago and points south and west, including Mexico • Designated foreign trade zone 44 CHAPTER EIGHT

5. CENTREPORT CANADA

CentrePort Canada is an inland port created in 2008 by provincial legislation called the CentrePort Canada Act. The Act established the mandate of CentrePort Canada and designated 20,000 acres to the tri-modal inland port.

QUICK FACTS:

• Location: Winnipeg, MB • Size: 20,000 acres dedicated land. 3,000 acres currently available • Rail Access: CN, CP, BNSF • Highway Access: Connections to all major networks including Trans- Canada, Minneapolis/St. Paul, Chicago and points south and west, including Mexico • Air Access: Adjacent to the Winnipeg James Armstrong Richardson International Airport • Designated foreign trade zone

CentrePort Canada offers greenfield investment opportunities for a wide variety of business operations including distribution, warehousing and manufacturing. 45 CHAPTER EIGHT

In addition to a 24/7 international cargo airport, CentrePort Canada provides access to three class I rail carriers and national and international trucking routes.

The Governments of and Canada have invested $212.4 million for CentrePort Canada Way, a 10-kilometre expressway to better connect companies in the to key gateways and corridors, which opened in November 2013.

Winnipeg, and the dry port are located near the geographic centre of North America. The city has direct connections to both the and the , Canada’s only Pacific ports.

Winnipeg’s central location gives it direct access to the following:

• Key ports in central Canada. • Port of Vancouver, and the Port of Prince Rupert, Canada’s only major Pacific ports. • Winnipeg has a direct connection to Manitoba’s , a major grain export facility and the only Canadian deep-water port.

46 CHAPTER EIGHT

CLOSING THOUGHTS

The future of inland ports in Western Canada is bright. Their demand will only increase.

Why? Effectiveness and efficiency.

Rapidly growing containerization of commodities in smaller locations, such as Regina, highlights the significant role inland ports can play.

In addition, more transloading activities are being moved to inland ports, such as Edmonton and Calgary. A result of domestic container availablilty and lower landed cost.

The supply chain is all about obtaining the best total landed cost while meeting your business objectives.

Again and again, inland ports are proving their worth.

47 CHAPTER NINE

CASE STUDY: 6 WAYS THE CALGARY REGION INLAND PORT LOWERS YOUR COSTS AND MOVES PRODUCTS FASTER IN CANADA

Finding the best port with the lowest total cost can be daunting. Let’s take CenterPoint Intermodal Centre, Chicago’s inland port as an example. It is the home of the largest inland cargo port in North America.

The city as a whole is the commercial transportation hub of the nation. It’s a sought after location for distribution hubs. It also brings strong economic growth to the region and in times of economic crisis, the Chicago’s inland port remains intact.

So why are we talking about Chicago’s inland port? Because like Chicago, the Calgary Region is seeing rapid growth with a booming supply chain sector.

48 CHAPTER NINE

It’s becoming recognized as a major transportation hub in Western Canada and continues to see exponential growth year after year.

Finally, the Region’s inland port continues to thrive in the midst of a deepening recession.

With significant promise of future growth, the Calgary Region Inland Port may be the Canadian solution to lower your total landed costs and move your products faster.

Here are 6 things you should know If you are considering using the Calgary Region as your inland port:

1. EXCELLENT LOCATION FOR TRUCKERS The Calgary Region sits at the heart of major east/west/north/ south highway routes. It connects eastern and western Canada as well as with the United States and Mexico (through the CANAMEX corridor).

Within one truck’s day drive of the Region, you can access a market of more than 18 million people. If you calculate that over a 24-hour day, you can access over 50 million people. 49 CHAPTER NINE

2. WORLD-CLASS RAIL SERVICE The Calgary Region is a major rail freight hub. Rail service is provided by both of Canada’s major railways (CP and CN), offering cargo access to markets in North America and abroad through the Ports of Vancouver and Prince Rupert.

CP and CN’s combined regional container traffic is approximately “810,000 20-foot equivalent units (TEUs) annually.”

To put this in perspective, compare that to Prince Rupert Port which handles 618,167 TEU’s and Port Metro Vancouver which handles 912,928 TEU’s.

CP is headquartered in Calgary, and its main line runs through the Calgary Region (East/West). CP opened a new intermodal facility in 1996. In 2013, CN opened their 680-acre Calgary Logistics Park just northeast of Calgary.

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3. STRONG ECONOMY IN SUPPLY CHAIN In the Calgary Region, the transportation and logistics industry employs more than 78,700 Calgarians in 5,170 businesses. The industry has a gross domestic product of $5.34 billion.

Include manufacturing and you add another 49,200 employees, 1,720 businesses and $6.87 billion in GDP.

4. INTERNATIONALLY RECOGNIZED SUPPLY CHAIN EDUCATION PROGRAMS The Calgary Region’s secondary and post-secondary school systems are providing more programs in transportation, supply chain and logistics.

The U of C’s Haskayne School of Business, Mount Royal University, SAIT Polytechnic and Bow Valley College all provide courses that support the growing number of positions in supply chain.

Furthermore, The Van Horne Institute is recognized internationally as a leader in public policy, education and research in transportation, supply chain, logistics and regulated industries. 51 CHAPTER NINE

5. EXPANSION OF THE CALGARY INTERNATIONAL AIRPORT The Calgary International Airport (YYC) is located on a 21-square kilometer tract of land with 142,398 square meters of terminal buildings. The Calgary Airport Authority has undertaken an over $2 billion expansion program, the largest and most ambitious expansion in its history. The Airport Development Program includes two major projects:

RUNWAY DEVELOPMENT PROJECT At 14,000 ft. long and 200 ft. wide, YYC’s newest runway is the longest in Canada and incorporates many leading-edge technologies. The runway has been operational since June 28, 2014.

NEW INTERNATIONAL TERMINAL The new International Terminal will more than double the size of the existing airport. Currently under construction, the terminal is scheduled to be completed in 2015 with a Fall 2016 opening.

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NEW FEATURES INCLUDE:

• Addition of approximately two million square feet to YYC equivalent to 34 NFL football fields • 22 new aircraft gates for International and U.S. destinations • New Canada and U.S. customs facilities and a 300-room hotel • New ways to connect passengers through YYC including a Connections Corridor and Compact Transit System • The International Terminal is a green building • 660 km of in-floor radiant heating tubing • Co-generation power that will generate electricity and heat, saving 4,900 of CO2 each year • Harvest 500,000 litres of rainwater for low-flow plumbing fixtures

Calgary enjoys a strategic location and provides a single hub location that specializes in receiving, transferring, storing, and distributing air, rail and highway cargo both domestically and internationally.

In fact, cargo can be shipped from Calgary to anywhere in the world within 48 hours.

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6. MAJOR PRIVATE SECTOR DISTRIBUTION HUB Calgary has attracted several major distribution hubs:

• Costco • Walmart • Loblaws • Sears • Canadian Tire Group • Marks’ Work Warehouse • Forzani Group • Canada Safeway • Gordon Foods Service • Princess Auto • Sysco • Home Depot facility

AMAZING INDUSTRY COLLABORATION The Calgary Region has a shared vision to continue to grow as a major distribution hub and inland port. A collaborative approach exists between Calgary Economic Development, the Calgary Regional Partnership, the Calgary Logistics Council, Calgary Airport Authority and the Van Horne Institute.

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WHY THE CALGARY REGION INLAND PORT The Calgary Region Inland Port is one of the most cost- effective places in North America to establish a business in the transportation, supply chain and logistics industry.

Some reasons why: • Superior access to markets • Availability of serviced land • Massive warehousing and logistics parks • Cost-effective business environments • A highly skilled labor force • Unprecedented regional growth • Ability and foresight to meet future market needs

Calgary, like Chicago, has become a global transportation hub and arguably Western Canada’s premier distribution center and inland port.

55 Acknowledgements

Calgary Regional Partnership would like to thank the following for their contributions to this e-book: - Reg Johnston, P. Eng., RJ T&L Consulting Ltd. - Van Horne Institute at the University of Calgary - Jim Brown, JRSB Logistics Consulting Ltd. www.calgaryregion.ca • 403-851-2509 • Box 2093, Cochrane, AB, T4C 1B8