Atlantic Gateway Business Case Prepared for Atlantic Canada Opportunities Agency Prepared by InterVISTAS Consulting Inc. In Association With MariNova Consulting Ltd. and TranSystems September 2007 Atlantic Gateway Business Case Page ii This study was commissioned by the Atlantic Canada Opportunities Agency and prepared by InterVISTAS Consulting Inc. in partnership with MariNova Consulting Ltd., and TranSystems Corporation. The analysis contained in the report is based on research, industry standards, and data available to the consulting team at the time of the study and conclusions are drawn from the consulting team’s professional experience, knowledge, and analysis. The authors accept responsibility for the views expressed and all errors and omissions contained within this report. The views expressed in this report are those of the authors and do not necessarily reflect the views or positions of the Atlantic Canada Opportunities Agency or the Government of Canada. Atlantic Gateway Business Case Page iii Table of Contents Table of Contents ........................................................................ iii Glossary of Terms.........................................................................v Executive Summary.....................................................................vi 1.0 Introduction...........................................................................1 Background............................................................................................................................. 1 Purpose, Objectives and Methodology ................................................................................... 2 2.0 Setting the Context ...............................................................4 Global Economic Change ....................................................................................................... 4 The Gateway Concept in Atlantic Canada .............................................................................. 6 North American/Canadian Policy Agendas............................................................................. 9 3.0 Opportunity Assessment.....................................................11 Atlantic Transportation System ............................................................................................. 11 Market Segments.................................................................................................................. 12 Opportunity Assessment Findings ........................................................................................ 30 4.0 The Container Opportunity..................................................33 Market Overview ................................................................................................................... 33 Atlantic Gateway Growth Drivers .......................................................................................... 35 Competitive Assessment....................................................................................................... 48 Findings from Consultations.................................................................................................. 49 Analysis of Strengths and Challenges .................................................................................. 51 Atlantic Gateway Business Case Page iv 5.0 Building the Atlantic Gateway .............................................55 Vision .................................................................................................................................... 55 Atlantic Gateway Value Proposition...................................................................................... 56 Roles, Responsibilities, Governance and Accountability ...................................................... 59 Atlantic Gateway Action Plan – An Integrated Approach...................................................... 60 Risk Factors .......................................................................................................................... 70 6.0 Economic Assessment........................................................72 Current Economic Impact...................................................................................................... 72 Container Traffic Projections................................................................................................. 75 Economic Impact of Achieving the Vision ............................................................................. 79 Other Social Benefits ............................................................................................................ 86 7.0 Advancing Through a Coordinated Approach .....................87 Atlantic Gateway Business Case Page v Glossary of Terms ACOA – Atlantic Canada Opportunities Agency. Intermodal – Coordinated transportation of freight, especially in connection with long-haul movements, using any combination of AILT – Atlantic Institute of Logistics and Transportation. freight forwarders, containerization, air, rail and road. AIMS – Atlantic Institute of Market Studies. IPI gateway – Inland point intermodal gateway. Used to move cargo via land to/from an inland port. All water service – A shipping service that does not include inland intermodal activity, but is transported from its origin to its ISC – Indian subcontinent. destination solely by water transportation (e.g. all water service from Far East via Panama Canal to U.S. east coast). Land bridge – Containers moving from a foreign country by vessel, and then sent to an inland point by land transportation. APEC – Atlantic Provinces Economic Council LNG – Liquefied natural gas. APGCI – Asia-Pacific Gateway and Corridor Initiative. Logistics – The part of supply chain management that plans, APHIS – Animal and Plant Health Inspection Service. implements, and controls the efficient, effective flow and storage of goods, services, and related information between the point of Break bulk – Material stacked on wooden pallets and lifted into origin and the point of consumption in order to meet customer and out of the hold of a vessel by gantry cranes on the dock or requirements. aboard the ship itself. MT – Million Tonnes Boxcars – An enclosed railcar used to transport general freight. Pax - Passengers CAGR – Compound annual growth rate. Pendulum service – A shipping lane that has sequential port Class 1 rail service – Rail carriers that generate gross revenues calls along a maritime range, structured as a continuous loop. exceeding $250 million per year. Post-panamax vessel – Shipping vessels that are too large to CMA – Canada Marine Act. transit the Panama Canal. CTA – Coasting Trading Act. Reefer – A refrigerated shipping container typically used for transporting perishable commodities. The term is also used to Distribution centre – A facility that receives large quantities of describe a temperature controlled ship. inventory, serves as a temporary storage centre, and facilitates responsive and expedient shipments to branch locations. May also RoRo – Roll-on-roll-off ship (designed to carry wheeled cargo). coordinate and provide required packaging for the transportation of products. RoPax – Roll-on-roll-off passenger ship or ferry. Distripark – A district in which several modes of transport are RPK – Revenue passenger kilometres. The product of the number available along with distribution facilities. of passengers multiplied by the distance flown. ECNA – East Coast North America. Short sea shipping – Coastal or coastwise shipping. FTZ – Foreign Trade Zone. Created in the United States they offer Supply chain – Supply chains encompass all activities special customs procedures to businesses engaged in international associated with the flow and transformation of goods from the raw trade activities. material extraction through to the end user, as well as the associated information flows. Gantry crane – Port crane used to load and discharge containers from vessel, able to be positioned by moving along rail tracks. TCH – Trans-Canada Highway GDP – Gross domestic product. Measure of the size of an economy TEU – Twenty-foot equivalent unit (e.g. 20 foot container). that includes a value of all final goods and services produced in an economy. Transload – Reloading, repackaging and warehousing of freight. It is usually used to describe the activity of switching cargo from Green lane – Allows security services to better identify and one mode to another (e.g. container to highway trailer). respond to potential threats and provides incentives to importers to enhance their supply chain security measures. Transshipment – transferring containers from a large ‘mother ship’ to a small ’feeder’ ship. Usually occurs in a large ‘hub’ port Greenfield – A site unencumbered by development. for transfer to a smaller port. HRM – Halifax Regional Municipality. Unit train – A train pulling only one type of car (e.g. container cars, grain cars). Indirect employment – Employment created in industries supplying direct Gateway business. WCNA – West Coast North America. Induced employment – Employment generated as direct and indirect Gateway employees spend their wages in the economy. August 30, 2007 Atlantic Gateway Business Case Page vi Executive Summary Canada is a successful trading nation. Our economic growth and standard of living depend on the export and import of products and resources and transportation systems that enable us to move goods and people with world-class efficiency. However, the global economy is changing