Publications Mail Agreement No. 41967521 www . canadiansailings .ca September 21,2020 REACH 3 coasts, 15 ocean terminals, 23 inland terminals FARTHER. and growing.
PRINCE RUPERT
PRINCE GEORGE EDMONTON
SASKATOON
VANCOUVER CALGARY WINNIPEG MONCTON REGINA QUEBEC HALIFAX
MONTREAL SAINT JOHN DULUTH
CHIPPEWA FALLS ARCADIA TORONTO DETROIT
CHICAGO JOLIET DECATUR INDIANAPOLIS
MEMPHIS
JACKSON
MOBILE NEW ORLEANS
Fluid border crossings to and from Canada and the U.S. Available intermodal long-haul capacity Fluid ports and inland terminals
CN is focused on collaborating with our customers, our supply chain partners and our communities to create a stronger North American economy. We're ready to help you reach farther. Contact us today. | cn.ca WATERFRONTS AT WORK.
Your new integrated port network on the Great Lakes.
WITH MORE FACILITIES, WE CAN SERVE YOU BETTER.
our shipping partners.
The Hamilton Oshawa Port Authority (HOPA Ports) gives you an expanded range of transportation options, a professional team, knowledgeable service providers and improved infrastructure. Let’s talk about how we can work together.
For business inquiries, please call us at 905-525-4337 hopaports.ca Canadian Transportation & Sailings Trade Logistics NEXT PUBLICATION: OCTOBER 19 www.canadiansailings.ca
1390 chemin Saint-André Rivière Beaudette, Quebec, Canada, J0P 1R0, JANUARY FEBRUARY www.canadiansailings.ca
Publisher & Editor Joyce Hammock Tel.: (514) 556-3042
Associate Editor Theo van de Kletersteeg Tel.: (450) 269-2007
Production Coordinator France Normandeau, [email protected] MARCH Tel.: (438) 238-6800
Advertising Coordinator France Normandeau, [email protected] Tel.: (438) 238-6800
Web Coordinator Devon van de Kletersteeg, [email protected]
Contributing Writers Saint John Christopher Williams Halifax Tom Peters JUNE Montreal Brian Dunn Ottawa Alex Binkley Toronto Jack Kohane Thunder Bay William Hryb Valleyfield Peter Gabany Vancouver Keith Norbury R. Bruce Striegler U.S. Alan M. Field
Advertising Sales: Don Burns, [email protected] Tel.: (450) 458-5833 JULY AUGUST CIRCULATION: For all inquiries concerning circulation and subscriptions, please send an email to [email protected]
ACCOUNTING: For all inquiries concerning accounts receivable and accounts payable, please send an email to [email protected]
ANNUAL SUBSCRIPTION: Quebec only $75 plus GST and QST SEPTEMBER OCTOBER British Columbia, Ontario, New Brunswick, Nova Scotia and Newfoundland $75 plus HST
P.E.I., Alberta, Saskatchewan and Manitoba $75 plus GST
U$375 if shipped weekly or US$195 if shipped monthly
Overseas US$750 if shipped weekly or US$400 if shipped monthly
GREAT WHITE NOVEMBER DECEMBER P U B L I C A T I O N S I N C . Home of Canadian Sailings, Transportation & Trade Logistics Canadian Sailings is a registered trade name of Great White Publications Inc. printed by PUBLICATIONS MAIL AGREEMENT NO. 41967521 RETURN UNDELIVERABLE CANADIAN ADDRESSES TO GREAT WHITE PUBLICATIONS INC., 1390 CHEMIN SAINT-ANDRÉ RIVIÈRE BEAUDETTE, QC H9S 5J9 email: [email protected] PUBLICATION DATE NO PUBLICATION Revised September 2020 4 • Canadian Sailings • September 21, 2020 CONTENTS SEPTEMBER 21, 2020
7 Federal Marine Terminals and HOPA Ports announce details of facility modernization and expansion 9 New investment, new confidence at the small-but-growing Port of Oshawa 11 Max Aicher North America and HOPA Ports join forces to bring new business activity to Hamilton’s working waterfront 13 Comment: Are Canada’s Supply Chains Ready to Rebound? 6 14 Growing sustainable ports 14 Brand-New Ship Repair & Fabrication Program at Mohawk College
All editorial contents for the above HOPA Ports section were provided by Hamilton Oshawa Port Authority.
15 Freight forwarders prove their mettle during the pandemic 17 Pandemic put the trucking sector in the spotlight 19 Opinion Your country is at risk – you should care! 23 Hydrogen’s role as a clean fuel surges with advances in fuel 17 cell technology 25 CSL-Hartmann takes delivery of first joint venture newbuild, MV Starnes 26 Grain a strong bright spot in St. Lawrence Seaway traffic picture 27 Railways slowed but not stopped by pandemic’s economic impact 28 CN announces record crop year and increase to maximum capacity in 2020-2021 Grain Plan 19 28 CN’s investments in Ontario to reach over $1-billion by the end of 2022 29 CP announces record grain shipments for Q2 and June, as well as 2020 grain production year 30 Canadian Pacific launches first train of international containers from Port of Saint John 30 New UPS surcharges seem to be closing van doors to large- volume shippers 23 31 Hong Kong forwarder spearheads fight against fake lithium battery certificates 32 No respite for parcel shippers as FedEx and USPS unveil more surcharges
The contents of this publication are protected by copyright laws and may not be reproduced, in whole or in part, without the written permission of the publisher.
September 21, 2020 • Canadian Sailings • 5 SAVE SAVE TIME & MONEY
DIRECT ACCESS TRADING IN BULK, BREAK BULK, SEAMLESS SUPPLY INTO ALL OF NORTH OVER 50 GLOBAL LIQUID & CHAIN WITH A AMERICA MARKETS SPECIAL CARGO CONNECTED NETWORK SIMPLE. COMPETITIVE. CONNECTED.
EUROPE U.S. MID-WEST TO SPECIAL CARGO TO U.S. MID-WEST ICON/BADGE NORTH AFRICA
SHIP WITH US TODAY
6 • Canadian Sailings • September 21, 2020 Federal Marine Terminals and HOPA Ports announce details of facility modernization and expansion
HOPA Ports and Federal Marine Ter- minals (FMT) are pleased to an- nounce a new agreement that expands the company’s presence at the Port of Hamilton.
FMT is the largest and busiest termi- nal operator at the Port of Hamilton; as many as 90 vessels visit FMT’s Hamilton terminal each season. The agreement will see FMT extend its operations at the port for another 15 years and grow its physical footprint on Piers 12-14 to 31 acres.
FMT is a recognized industry leader in marine terminal operations, provid- ing stevedoring services at ports on the US East Coast and Gulf Coast and on the Great Lakes. FMT’s Hamilton terminal handles a wide variety of project and breakbulk cargo (finished steel, machinery, windmill compo- nents, containers, etc.), and dry bulk materials (aggregates, salt, sugar, gypsum, etc.), many of which are es- sential raw materials for southern On- tario’s manufacturing, construction, • Resurfacing and upgrading of over the 30 years that FMT has been and food processing sectors. piers, roads, and environmental a visible presence on Hamilton’s The new expansion includes several features throughout the site working waterfront,” said Ian Hamil- components: ton, President and CEO of HOPA “Thanks to the Port of Hamilton’s Ports. • Rebuilding dock walls at Pier 12 support and confidence, we at FMT to allow for more cargo to be dis- are pleased to grow and modernize The new commitment is in part an charged and stored our facility at the Port, enabling us outcome of an injection of infrastruc- • Construction of a new, 40,000 sq. to deliver on our commitment to ture funding that was announced in ft warehouse operational excellence, customer 2017. The Westport Modernization • A new rail connection to Pier 15, service, and environmental sustain- Project started with $17 million each to create full multimodal connec- ability,” said Louis Saint-Cyr, in contributions by HOPA Ports and tivity Executive Vice-President, FMT and the federal government’s National • Reconfiguring portions of Ship, Fednav Direct. Trade Corridors Fund. This invest- Land, and Hillyard Streets to re- ment in base infrastructure has al- duce interference with residential “Our agreement builds on a collabo- ready leveraged more than $50 roadways and create more us- rative relationship between FMT and million in 3rd party private sector in- able cargo space HOPA Ports that has been fostered vestment.
September 21, 2020 • Canadian Sailings • 7 8 • Canadian Sailings • September 21, 2020 New investment, new confidence at the small-but-growing Port of Oshawa
Just over a year after the ports of Hamil- ton and Oshawa amalgamated, the Port of Oshawa is attracting investment, and building new awareness of its critical role as a gateway to the Greater Toronto Area.
Ian Hamilton, President & CEO of the amalgamated Hamilton-Oshawa Port Authority (HOPA Ports) believes Os- hawa is just beginning to fulfill its po- tential. “I’m not at all surprised that we’ve seen so much activity at the Port of Oshawa in such a short time period,” said Hamilton. “Located on the doorstep of the Toronto region, the port is critical infrastructure for the in-
September 21, 2020 • Canadian Sailings • 9 dustries that will fuel southern Ontario’s recovery and long- term success.”
This August, the process to decommission and remove the dilapidated former Petrocor tank facility located on the port’s west wharf was started. HOPA Ports acquired the lands in late 2019, and has moved swiftly to improve the efficient functioning and appearance of the area, fulfilling a long-held goal of the City of Oshawa and residents. The parcel will be incorporated into the port’s footprint, allow- ing for increased cargo handling capacity and traffic flow.
The port has also begun to attract the attention of new in- vestors and tenants.
In spring 2020, a new grain export terminal, constructed by Sollio Agriculture and QSL, entered its first full season of service. The new facility gives Durham Region grain pro- ducers a local option to market their grain for export, whereas previously their product may have been trucked all the way to Hamilton or east to Quebec.
More recently, Parkland Corporation has agreed to a No- tice of Permission to evaluate investment in a modern liq- uid bulk transfer facility on the port’s east wharf, to serve the regional market.
Starting in August 2020, Parkland will use the seven-month due diligence period to complete engineering design plans, prepare for various regulatory filings and conclude economics.
“Parkland is a responsible operator with extensive experi- ence operating commodity transload terminals in Ontario. The company operates a terminal at the Port of Hamilton +2000 employees where it has maintained an exemplary record of safety and environmental performance,” said HOPA’s Ian Hamilton. +35 terminals For its part, HOPA Ports is focused on ensuring the port has the critical supply chain infrastructure to serve the near- term needs of jump-starting economic sectors like con- struction and manufacturing. Delivering tailor-made success “Following the amalgamation, we took a fresh look at what in Oshawa since 1994 was necessary to modernize the port’s aging assets. HOPA Ports has identified approximately $25 million in work such as dock reconstruction, lighting and dredging that are es- sential for the port to fulfil its trade-enabling mission,” said Hamilton. “The population of the GTHA will soon surpass 8 million people. We’ve got to be thinking about the trans- portation network and industrial supply chains needed to sustain a population of that size.”
10 • Canadian Sailings • September 21, 2020 Max Aicher North America and HOPA Ports join forces to bring new business activity to Hamilton’s working waterfront
HOPA Ports and Max Aicher North America (MANA) CEO, Walter Sommerer. “The move is part of a long- are working together on the future development of a term commitment to our Hamilton operation.” portion of MANA’s Hamilton harbourfront property. While MANA retains ownership of the property, HOPA In the course of modernizing its existing Hamilton fa- Ports will take on active management of the site, and cility, MANA has confirmed a 60-acre portion of its site marketing the space. “This land can be put to great use as surplus to its operational needs. The site is located to attract economic activity and employment to Hamil- in the northeast corner of pier 18, within Hamilton’s ton,” said Jeremy Dunn, Commercial Vice President at Bayfront industrial area, and is served by marine, rail HOPA Ports. “We have a great deal of pent-up demand and road transportation. The property includes open from modern industrial users who are looking for access space for outdoor storage, and more than eight acres to multiple modes of transportation, within the Greater of warehouse buildings. Toronto-Hamilton market.”
“As we solidify our position in North America, this al- HOPA Ports has an established track record of devel- liance helps us make full use of our assets,” said MANA oping marine-served industrial spaces. It is a segment
September 21, 2020 • Canadian Sailings • 11 of the commercial-industrial real estate market where HOPA Ports offers a distinct skill-set. Over the past 10 years, HOPA Ports has attracted more than $350 million in investment in the ports of Hamilton and Oshawa.
Throughout the Covid-19 crisis, and as the Canadian econ- omy turns toward restart mode, the need for robust and reliable supply chain assets has become ever more appar- ent. The MANA property is highly valuable for its location and multimodal connections, allowing it to support a wide range of potential customers and industries. Anticipated uses include flexible storage of steel and manufacturing components, warehousing and transloading of materials for the construction and manufacturing sectors, value-add processing, and other logistics uses essential to a respon- sive industrial supply chain.
The property will be managed under HOPA Ports’ sub- sidiary Great Lakes Port Management, established to man- age non port-owned multimodal industrial properties in Ontario’s Greater Golden Horseshoe.
YOUR PROVEN PARTNER We offer a nationally accredited marine security training program, and provide a full suite of marine security services on both the east and west coasts.
1 877 322 6777 commissionaires.ca
12 • Canadian Sailings • September 21, 2020 Comment Are Canada’s Supply Chains Ready to Rebound?
Marine infrastructure creates opportunity for green economic tainability in the things we manufacture, build, or grow in recovery. Canada.
Throughout the pandemic crisis in Canada, the normally un- Today, governments are looking for economic restart ideas seen business of supply chain and logistics has become that achieve multiple aims: near-term employment; infra- much more visible to Canadians. Even in the early, toilet- structure for economic and trade stimulus; and environmen- paper hoarding days of the lockdown, there were never real tal improvements. Investment in maritime infrastructure shortages of either consumer goods or industrial commodi- stands out as a powerful opportunity to deliver a transfor- ties. Rather, there was a newfound recognition of the impor- mative impact to numerous industrial supply chains and local tance of these hidden systems, and the people who work economies, while making a fundamental environmental im- within them. provement in Canada’s national transportation system. Through this lens, marine infrastructure is among the best in- Canada’s supply chains rose to the challenge of the crisis, vestments governments can make. and as Canada moves from response to recovery, the struc- ture and resilience of our supply chains will be an important Not only can marine infrastructure deliver an economic pro- lever in our continued success, and also in achieving true sus- ductivity gain of $20 for every $1 invested, and enable the
September 21, 2020 • Canadian Sailings • 13 growth of international trade, it does so while being the least In southern Ontario, congested highways cost the regional greenhouse gas-intensive mode of commercial transporta- economy an estimated $6 billion per year. A rebound will be tion. The more cargo that moves by marine, the more we all limited by the region’s constrained ability to move people win. Marine transportation has a far superior environmental and goods on the road. With the excess capacity that exists performance relative to rail and trucking, and is able to get within the Great Lakes-St. Lawrence Seaway system, marine trucks off congested highways through Ontario and Quebec. shipping can be part of an overall green shift in the trans- Each Great Lakes vessel can take the place of close to 1000 portation sector. Investment in marine infrastructure is an ex- truck trips, reducing the carbon footprint of the goods car- traordinary tool to deliver the type of transformative change ried by 500%. we all hope is the silver lining to this crisis.
Growing sustainable ports
HOPA Ports has presented its Summary Report of Sustainable Actions in 2019. The Report outlines HOPA’s ongoing commitment to transparency, and explores what the port does, how it interacts with our communities, and how decisions are made to support social, environmental and eco- nomic sustainability.
It is also an opportunity to celebrate successes. A sustainable Port of Hamilton and Port of Oshawa are the product of the hard work and col- laboration of HOPA staff, neighborhood partners, nonprofit organizations, government and industry colleagues.
Read the report at www.hopaports.ca
Brand-New Ship Repair & Fabrication Program at Mohawk College
HOPA Ports has partnered with Hed- Ship Repair and Fabrication course The 9-week, online program will in- dle Shipyards and City School by Mo- that is now open for enrollment and troduce participants to core and foun- hawk College to deliver a brand-new will begin online in October. dational concepts of ship repair: from the parts of a vessel, to retrofits, and even the legislative requirements in- volved in the business of fixing and fabricating a ship.
It is a free program open to anyone looking to get into the field or ex- plore something new.
Learn more or apply online at www.mohawkcollege.ca. Photo: Mohawk College Mohawk Photo:
14 • Canadian Sailings • September 21, 2020 Freight forwarders prove their mettle during the pandemic BY BRUCE RODGERS, EXECUTIVE DIRECTOR, CIFFA
When faced with adversity and These flights, which typically move obstacles, the Canadian freight forward- approximately 45-50 per cent of cargo in ing community quickly adapts to the the belly holds of passenger aircraft, changing environment, continuing to resulted in immediate and drastic meas- service its clients with flexibility and ures being taken. Forwarders worked in minimal disruption. conjunction with their airline partners, This year has been exceptionally converting grounded passenger flights to challenging, and hopefully we never all-cargo, quickly adapting to this chang- again see a repeat of similar challenges ing landscape. Air Canada reported presenting with such forceful magnitude. operating more than 2,000 all-cargo We started 2020 with factory shut- international flights in the second quarter, downs as COVID-19 hit China, to assist the forwarders in the movement impacting supply chains globally. This of required goods and personal protective was followed by rail blockades interrupt- equipment. In the third quarter, Air ing the flow of goods, and then the Canada said that it is planning to operate BRUCE RODGERS Canadian federal government’s decision up to 100 all-cargo flights per week, to protect the lives of Canadians by shut- effectively doubling cargo space. ting down non-essential businesses. Most Forwarders were also put to the test recently, the longshoremen’s strike at the by the changing environment of the ping, service reliability and dependability, Port of Montreal impacted Eastern marine sector. As new or changing trade seamless integration, visibility, and trans- Canada, resulting in carrier diversions agreements changed historical sourcing parency. It is becoming essential that new and increased costs. All of this, and the patterns, factory closures both overseas online digital platforms be available to year is not yet over. and at home resulted in delayed or can- clients. The highly competitive techno- Through all of this chaos and uncer- celled orders, and blank sailings have led logical offerings present many variables to tainty, the freight forwarders have and continue to result in longer lead the shipping industry. The only constant continued to deliver and to overcome times, reduced capacity, higher rates and is that the forwarders must keep an open, each of these obstacles, with an unrelent- overbooking, which also results in rolled learning mind on the changing land- ing and unwavering focus on serving containers. Canadian freight forwarders scape. their clients. have adapted well to the constantly shift- Global trade is expected to fall 13- The air sector has been the hardest ing conditions, often balancing the 32 per cent in 2020, as COVID 19 hit from COVID-19, with IATA (the Inter- disruptive factors in the maritime sector disrupts economic activity and normal national Air Transport Association) with satisfying client demands. life around the world. Freight forwarders reporting that the number of passenger In addition to the above, COVID-19 must have agile processes in place to flights globally were down 95 per cent could become a key catalyst for digital quickly adapt to the changing patterns compared to 2019. As of the end of June, and technological transformation within and client demands. As shown in 2020, IATA reported that this equated to a the freight forwarding industry. There is a Canadian freight forwarders have proven reduction of more than 1 million flights. continuous demand for low-cost ship- to be up to the challenge.
September 21, 2020 • Canadian Sailings • 15 OFFERING A HIGH LEVEL OF SAFETY & PERFORMANCE AMIDST THE COVID-19 PANDEMIC As we venture through this together, we have and will continue to implement all safety recommendations put forth by Health Canada to protect our drivers, employees, customers and partners – without sacri昀cing the high levels of service you have come to expect from Paul’s Transport.
[email protected] View all implemented safety protocols at: 16 • Canadian Sailings • September 21, 2020 PAULS.CA 1.877.813.1901 Pandemic put the trucking sector in the spotlight BY ALEX BINKLEY
When transportation was declared an essential service in response to the COVID-19 pandemic, few would have guessed the men and women who drive transport trucks would join the ranks of the front-line workers. Connect2Canada, published by the Canadian Embassy in Washington, summed it up well. “Without truckers on the road, and especially during a pan- demic, life would be a lot harder. Together with front-line health care workers, professional drivers across the United States and Canada are everyday heroes who are delivering food, life- saving medical supplies, and other essential products during a global crisis.” BDO Canada says the pandemic brought new demands to trucking but also created many headaches. “Con- sumer needs were higher than ever, with more online shopping transactions and an active economy.” Drivers faced more difficult working conditions — “limited washrooms and food stations, and additional quarantine measures on their return home.” The sector was already suffering Communications, said, “I don’t think it’s retailing customers. “We knew some- from a shortage of 20,000 drivers and an overstatement that the trucking thing was coming up. We knew buying that number could climb to 50,000 industry, as the lifeblood of an economy habits would be changing and that we when the economy returns to a more and essential to the everyday lives of had to diversify.” The goal was survival normal pace, BDO said. Unlike railways, Canadians, answered the call to help. of the family-owned business. In addi- airlines and shipping lines, the trucking “The industry and all truck drivers tion to trucking, the company offers industry is mainly provincially regu- should be proud of their efforts to sup- warehousing, and it expanded that oper- lated, making it harder to get the driver port and protect Canadians during the ation with a stockpile of shipping shortage addressed. Sensing growing last five months,” he said. “I hope the containers that customers could store public support for the drivers, the Cana- industry, governments and the public shipments in until needed. dian Trucking Association, which can join us in recognizing their commit- It also purchased PPEs and sanitiz- represents about 4,500 trucking compa- ment and dedication as we diligently ers for employees who had to come to nies, launched a social media campaign pave a road toward the end of this pan- work while enabling others to work called #thankatrucker to highlight the demic.” from home, he said. “We established sector’s extraordinary efforts to keep the Transport Canada says about paperless communications with our driv- economy moving during the COVID-19 crisis. The campaign says “Truck drivers, 30,000 trucks cross the Canada-U.S. ers. We found that our employees got in particular, have gone to great lengths border every day, carrying an estimated used to that way of work and we got to implement policies and best practices $1 billion in goods. Commercial traffic extra business from our customers. It like equipment sanitation, social distanc- has remained relatively stable through- was a vote of confidence for what we ing, wearing masks; as well as out the pandemic although averaging were doing.” promoting self-monitoring, contact trac- between 10 and 30 per cent lower than The company’s customers include ing and voluntary COVID-19 testing, in last year. shipping lines, railways, importers, order to protect the public and mitigate CTA says truckers tend to self-iso- exporters and freight forwarders. Paul’s the spread of the virus while continuing late far more than other workers and it’s employs its own drivers and also works to deliver essential products Canadians not unusual for drivers to complete long with owner operators. While the first need during these unprecedented journeys while only coming into close couple of weeks were hard and chaotic, times.” physical contact with one or two people. the company kept rolling. “Working The campaign aims to underscore Parvinder Bhangal, Vice-President from home was an easy transition “how crucial the trucking sector is to of Paul’s Transport Inc. of Mississauga, because for the last few years we have the economy and the fabric of a func- says his company began preparing for migrated our entire infrastructure to the tioning society during difficult times.” Covid-19 in January based on what it cloud. Our technology was already virtu- Marco Beghetto, CTA’s Vice-President of was hearing from its manufacturing and ally paperless. “We then reached out to
September 21, 2020 • Canadian Sailings • 17 every single customer as part of our con- made us successful throughout this pan- Montreal also impacted on GT’s con- tinuity plan, worked with customers on demic.” tainer-handling business, he said, but it how they were handling this, what their Jean-Philippe Quintin of Groupe was able to keep all its drivers working. challenges were and how we could Robert of Boucherville, Que. said his It now is looking to hire more drivers. It come in and support their changing company offers “over the road trans- also had about 25 per cent of its staff needs during a very uncertain time.” portation but also warehousing, we had working from home. Not only did the company get extra to make sure we reacted to our clients’ GT is licensed to operate across business from its customers, “there were specific supply chains in order to ensure Canada and throughout the United many warehouses and locations that their optimization. With clients in every States. One of the main drivers in its only allowed our drivers into the facility industry, we had to make sure we business is exports, and shipments to because we had the proper PPEs and offered tailor-made solutions to each of Europe of food products, chemicals, procedures implemented with our them based on their realities. “Through- metals and wood have been a bright spot fleet.” out this pandemic, our primary focus at so far this year. The company operates Looking to the future, Bhangal said, Groupe Robert was the safety of our terminals in Montreal and Toronto, and “Now, as we are moving into a better workforce. We were proactive in enforc- uses a highly-automated EDI system for direction, we are continuing to utilize ing preventive measures with all delivering the information on shipments our resources. We invested in new departments both internally and with phone systems recently, prior to the pan- clients/suppliers. To limit possible expo- to customers that proved invaluable demic. The phones allow for video sure, access to our facilities was limited during the pandemic because it elimi- conferencing. “We used technology to to employees only, and everyone coming nated the need for interaction between enhance our driver safety meetings. We in had to go through checkpoint sta- drivers and workers at warehouses talked about safety in the pandemic, had tions, still to this day.” where loads were being dropped off or a doctor come in and explained how to GT Group of Montreal was hit hard picked up, Katosonov said. Even with all stay safe, applying proper hygiene during back in March by the onset of the pan- the turmoil and dislocation the pan- this time. Our proactive approach with demic, says Sales Manager George demic has caused, “hopefully all the information technology, our focus first Katosonov. “We saw a severe downturn visibility it caused us will help us recruit on our front line drivers and our unique in our business with the volume of ship- drivers in the future,” he said. It has also relationship with our customers driven ments falling by 30 to 35 per cent in provided a handy reminder to the public by our openness to work with their dif- March and April. It didn’t really recover of the importance that truck transporta- fering needs during this time is what until August.” The strike at the port of tion is to the economy.
18 • Canadian Sailings • September 21, 2020 Opinion Your country is at risk – you should care! BY THEO VAN DE KLEETERSTEEG
Covid-19 has left few segments of the economy untouched, with hardship experienced by millions of Canadians and thousands of Canadian businesses. It will take many years before we will be able to “erase” the negative economic impacts of this crisis. Covid-19 has fundamentally changed Canada’s domestic policy agen- das, as well as the country’s international competitive position. FINANCIAL RECOVERY The crisis occasioned by Covid-19 has possibly cost the federal government more than its combined operating sur- pluses and deficits of the past fifty years. The government estimated in July that the federal deficit for the year ending March 31, 2021 would be $343 billion. However, not included in the estimated deficit are the tens of billions of dollars of additional support dollars that will need of funds to repay debt, the only other have downplayed the high levels of fed- to be spent during the second half of the source of funds is additional tax revenues eral debt, saying Canada can easily afford current fiscal year. Also not included will through growing the economy. But that’s them. They refer to Canada’s debt to GDP be the tens of billions of dollars that will where the problem lies: Canada already ratio as being lower than leading industri- be lent to businesses during the period, had a sizeable (and growing) deficit before alized nations like Japan, the United since these loans will be considered Covid-19, resulting from continued high States and others. This is true, on a gross assets, not operating expenses. Gross fed- levels of social spending, and a faltering basis, with Canada’s 2019 debt to GDP eral government debt at the end of fiscal economy weakened by international trade ratio of about 90 per cent being well 2021 will likely be well beyond $1.2 tril- disputes, low Canadian labour productiv- under Japan’s (240 per cent), Italy’s (140 lion, and will likely increase steadily as ity, and over-regulation of resource per cent), the US (105 per cent), France large-scale deficits will continue to be industries resulting in delays or cancella- (100 per cent) and Spain (95 per cent). recorded during the next two fiscal years. tions of major new development projects. However, when the numbers are modified Covid-19 has also severely squeezed If anything, those points of failure still to net results by subtracting financial provincial and municipal budgets, as exist, or have worsened. So, given the assets owned by the federal government public transit systems sat idle, healthcare pre-existing malaise, and an economy that from gross debts, the International Mone- expenses ballooned, government workers will continue to be on life-support for tary Fund (IMF) calculates that Canada’s stayed home, and tax collections became quite a while, how can we avoid becom- net 2019 debt position was 65 per cent of problematic. These deficits will be ing overwhelmed by debt, which would GDP, exceeded only by Japan’s 73 per financed through borrowed funds, adding negatively impact our quality of life? We cent. That was before the Covid-19 crisis. a tremendous burden onto the shoulders cannot allow today’s and tomorrow’s obli- Now that Covid-19 is in the process of of both current and future taxpayers. gations to the transferred to the next seriously reducing Canada’s 2020 GDP Ontario is currently expected to finish generations. We need to raise taxes and output while heaping on piles of addi- fiscal 2021 with a deficit of $38.5 billion; cut services. Plain and simple. tional net federal debt, Canada will likely Quebec is expected to produce a deficit in In March and April, Canada lost lead the “rich nations” of the world in excess of $15 billion. There is red ink three million jobs, the worst ever in its having the highest level of net federal debt everywhere. The Economist estimates history. However, even if the three million as a percentage of GDP. that in addition to the $4 trillion of pri- jobs were recovered tomorrow, we would Although Canadian politicians and vately-owed debt by Canadians (the still be facing a struggling economy, and economists are eager to resort to use of second highest in the world), provincial we would still have to find ways to deal the debt to GDP ratio to reassure them- and municipal governments will owe with the hundreds of billions of dollars of selves and taxpayers that our debt is not $2.4 trillion by the end of March of 2021, additional debt. What’s the plan to as burdensome as that of other nations, in addition to federal government debt of recover from this disaster, and put Canada debt to GDP ratios are only useful if the $1.2 trillion plus. back on the economic map? country in question has a proven ability to The PM has stated that he does not HOW BAD IS CANADA’S FEDERAL translate growth in GDP into growth of government revenues and, therefore, an intend to raise taxes to repay significant DEBT? amounts of Canada’s debt. However, if improved ability to repay debt. In increasing tax rates will not be the source Federal officials, including the PM, Canada’s case, that is far from being the
September 21, 2020 • Canadian Sailings • 19 case. In fact, Canada has a poor record of growing government receive a share of the federal budget year after year. Some are rel- revenues, as is shown in the graphic on page 21, which demon- atively small, while others are large. I have taken a detailed look strates that, over the years, the growth of Canada’s federal debt at some of the organizations mentioned, and found many exam- has far exceeded the growth of federal revenues. Canada has ples of funding that in the past was taken for granted, but which been unable to translate GDP growth into robust growth of fed- should be examined far more closely if we are ever to achieve a eral receipts, partly because, unlike countries like Japan, more cost-effective government: Germany, Taiwan and South Korea, Canada does not have any VIA Rail required more than $500 million of support from corporations that have global dominance in their industries. the federal government in 2019, including $280 million to cover Successive past and current governments have greatly operating losses. In 2019 VIA Rail’s revenues totalled $388 mil- encouraged consumption by creating an environment for near- lion, but it lost $$280 million, meaning that, on average, zero interest rates. However, the stimulation of consumer taxpayers subsidized 42 per cent of the cash cost of a ticket. Is demand has had a number of negative side effects. First, this that reasonable? No, of course not. If you travel on VIA Rail, you excessive stimulation drove consumer debt (relative to consumer should do so at your expense, not the taxpayers’. So, either close income) to the second highest in the world, which has created a VIA Rail, or reorganize it so it will not require any subsidies from serious additional risk to the Canadian economy. Secondly, with taxpayers. Better still, sell it to a private operator. so much emphasis on maintaining consumer spending, the busi- Atomic Energy of Canada Limited (AECL) produces ness side of Canada’s wealth generation agenda was overlooked. annual revenues of some $75 million, but needs additional Whereas the period from 1995 to 2008 produced erratic, but annual subsidies of about $1 billion to carry out its mandate. Most nonetheless significant merchandise trade surpluses (excesses of of the subsidies are spent on decontaminating and remediating export over imports), this positive situation turned around AECL’s legacy nuclear facilities which were used in support of abruptly in 2008. In fact, since 2008 there have only been a few developing AECL’s unsuccessful heavy water design of nuclear months during which Canada’s merchandise trade surplus was power stations. Federal taxpayers have made large contributions positive. Looked at from a longer perspective, from 1971 to 2020, to AECL over the course of its history, and are “on the hook” to Canada’s balance of trade was positive by under a billion dollars pay for cleanup expenses that will reach well into the future. One a month, not much for a country with a GDP of $1.7 trillion. external report identifies $13 billion as the level of funding AECL Canada’s poor international trade performance suggests received in federal contributions (over and above commercial rev- strongly that Canadian exporters are unable to compete effec- enues) from the early fifties to March 31, 1995. Although future tively in international markets. High costs, low labour federal contributions are expected to slow down, they were as productivity, excessive regulation, international politics, and high as $1.2 billion during the 2020 fiscal year. other factors are all conspiring to make Canadian exporters less Unfortunately, federal taxpayers will probably need to subsi- competitive. On the flip side, stimulation of consumer demand dize AECL’s ongoing cleanup activities for decades to come. In has stoked imports. We can have trade agreements with every addition to its cleanup and waste storage operations, AECL is in country in the world but, if we are not competitive, we are not the process of developing Small Modular Reactors (SMRs) for use going to increase exports. Consistent poor trade performance will on-grid and off-grid in small and/or remote communities, for result in a lower value of the Canadian dollar, which would introduction around 2030. AECL anticipates spending about increase the cost of imports, and cause inflation. $200 million annually on this development, and hopes to address a potential global market of $150 billion between 2030 and SO WHAT DO WE HAVE TO DO? 2040. Given AECL’s track record of “forever” dependence on tax- payers, have credible and impartial management consultants ever We must see the crisis as a very long overdue excuse to com- confirmed the possible existence of such a market? Moreover, pletely overhaul the way the country is run, and the manner in with the cost of wind and solar power having decreased dramati- which economic value is produced. For more than 50 years, cally during the past decade, what is the attraction of deploying Canada has stumbled from one ad-hoc economic “strategy” into technology that may “forever” be dependent on further public another, accomplishing little, and allowing its larger enterprises to spending to decontaminate the corporation’s original sites, as well go bankrupt, be sold, or decimated by government itself. Witness, as be potentially liable for the safe storage and cleanup of future for example, how de Havilland’s Avro Arrow was killed by the customers’ sites? Regardless of the scientific achievements that Diefenbaker government, how Nortel went bankrupt and Black- may be possible, perhaps AECL’s role should be reduced to deal- berry was reduced to a shadow of its former self because ing with past contamination only. The commercial benefits of its governments did not deem them worthy of support. Or consider “new and improved” line of nuclear reactors appear to be dubi- how Bombardier’s ground-breaking C-Series aircraft became the ous, and taxpayers don’t need a future mountain of debt to clean Airbus A-220. Lastly, let’s consider how governments hemmed up nuclear waste……..If SMRs represent a winning power and hawed over a few measly dollars that might have saved these source for the future, AECL should be able to line up strategic companies, and compare them to the hundreds of billions of bor- partners to complete the development, and fund international rowed dollars the federal government will spend in 2020 to marketing efforts. Given AECL’s disastrous past, this organization sustain employment and avoid excessive personal hardship. is not an appropriate spot for taxpayers to invest in. THE “PLAN” Canadian Broadcasting Corporation has required $1.2 billion in annual subsidies from Canadian taxpayers during each All governments must take a serious look at reducing the of the past few years to remain in business. Bell Media, which cost of the bloated government operations we have ended up operates a similar network of radio and television stations across with. Canada’s Treasury Board Secretariat periodically produces the country, operates at a profit. Should we not expect CBC to updates on federal spending estimates, organized by federal reorganize its affairs in a manner that does not require support organization. The tables list 128 organizations and identify fiscal from taxpayers? 2019 actual net expenditures, with estimates for 2020 and 2021. Canadian Border Services Agency consumes $2.2 billion The organizations listed are not exhaustive: organizations that are of taxpayers’ money annually. Perhaps the time has come to make profitable are not listed, and organizations that report to other travellers, shippers and recipients of commercial goods pay fees government organizations are also not included. for the services they receive, which would reduce the expense There are hundreds upon hundreds of organizations that level that taxpayers should be responsible for?
20 • Canadian Sailings • September 21, 2020 &%!! Canada 2020: rapidly growing debts and declining revenues
&$!!
&#!!
&"!!
&!!!
%!!
$!!
#!!
"!!
! &'$( &'$$ &'$) &'$% &'$' &')! &')& &')" &')* &')# &')( &')$ &')) &')% &')' &'%! &'%& &'%" &'%* &'%# &'%( &'%$ &'%) &'%% &'%' &''! &''& &''" &''* &''# &''( &''$ &'') &''% &''' "!!! "!!& "!!" "!!* "!!# "!!( "!!$ "!!) "!!% "!!' "!&! "!&& "!&" "!&* "!&# "!&( "!&$ "!&) "!&% "!&' "!"! !"#$$%&'(%(')*%+),--,#.$ /'(%0#1%"'1'.2'$%+),--,#.$
Correctional Service of Canada foreign capital. Both of these determinants other hand, one large-scale successful costs taxpayers $2.6 billion per year to of prosperity have been impaired, which transformation did occur involving the operate. We should find ways of making makes it imperative for Canada to act. execution of appropriate government convicted criminals help pay for their own Our ability to export has been impaired by policy, which was the privatization of incarceration, by laying claim to their decades of low labour productivity Canadian National, which resulted in the assets and incomes. growth, well below that of our interna- transformation of a perennial money-loser Similarly, Canada Department of tional competitors. This is an important into North America’s strongest rail carrier. Citizenship and Immigration costs tax- issue which, if allowed to persist, will Covid-19 and its resulting run on the payers approximately $3 billion annually cause further damage to our international treasury put Canada in a financially disas- to operate. Why not charge immigrants competitiveness. Another problem area trous situation. Canada is by no means more for the cost of processing their appli- has been access to foreign capital. For a alone in this position, but that does not cations, and charge Canadians a lot more country that competes for foreign make this position any more enviable. for processing passport applications? If investors with a much larger country next What is at stake is our future ability to pay you don’t travel and don’t immigrate, why door, it is difficult to convince foreign for pensions, and to provide national should you have to pay for these services? investors to invest in Canada, rather than healthcare. From a long term point of The above are merely a few exam- the US. Accordingly, Canada must rely on view, our social safety network is at risk. ples of how $320 billion (2019) of its unique advantages to attract foreign It should be evident to anyone that taxpayers’ money was spent. You get the capital, and that’s where things have when the federal government’s expenses drift: a lot of money is being spent on fallen off the rails. Canada’s energy indus- for fiscal 2021 are expected to exceed its dubious causes. All make Canada less try has always been at the forefront of revenues by about $340 billion, and gross competitive. Sunny ways are great when inbound foreign investment. However, federal debt is more than four times ever-tightening regulation of the industry, expected revenues, no amount of finan- the sun shines benevolently, and every- and unclear government policies have cial engineering or low interest rates is thing goes our way. But, right now, after resulted in significant foreign disinvest- going to rescue us. It may be possible to decades of living without a plan, our inter- ment in the Canadian energy industry. escape the immediate consequences of national competitors have already eaten Canada has never developed a poor financial management, but sooner or our breakfast, and are nibbling at our national economic strategic plan and, as a later things will catch up with us. Eventu- lunch. Then, out of nowhere, a pandemic result, has never achieved the transforma- ally, the government will have to sell appeared that has put Canada in a very tion from resource-focused to assets, tax a lot more, reduce its expenses, serious financial predicament. Although “knowledge-based” even though over the or all of the above. Typically, as with ordi- governments always hope that problems decades numerous academics have called nary individuals, once you allow yourself will simply go away, this one won’t – we for such a transformation. Companies that to descend down this hole, chances of a need to find solutions. made significant forays into non-tradi- reversal in fortunes are slim. Which is A NATIONAL ECONOMIC PLAN tional industries, such as de Havilland, why it is crucial that Canada develop a Blackberry, Nortel and Bombardier, either national economic strategic plan while we Canada’s relative prosperity is deter- met completely unsupportive govern- still can, and start making the necessary mined by its ability to export quality ments, or governments that lacked the investments to implement it. goods and services that foreign buyers courage to do what was necessary to A national economic strategic plan want to buy, and by its ability to attract propel these companies forward. On the should focus on Canada’s strengths to
September 21, 2020 • Canadian Sailings • 21 We need to think out of the tradi- tional boxes. We need good ideas, we need inspired people who are committed to infusing Canada with innovation, and we need money, lots of it. Canada trans- formed itself in no time in the early forties to support the War effort, and its efforts helped change the German and Japanese onslaught. We are faced with similar threats today. The dangers are not as imminent as they were in 1940, which provides us with a bit more time to get things right. But we’d better get going developing a plan. If we don’t, Covid-19 will go down in Canada’s history books as the catalyst that sealed the country’s fate as an irrelevant global competitor. CONCLUSION Although I would like to be opti- mistic, I fear that the government’s identify major future economic opportuni- medical, and engineering degrees be paid largesse to deal with the impacts of ties to help sustain Canada’s prosperity. for in their entirety by governments, Covid-19 has put Canada on the path to Regardless of what such specific future including expenses for residency and nec- impoverishment. We have purchased economic opportunities may be, there will essary travel, to students who achieve nothing for the $450 billion plus of be a few unalterable, essential inputs to and maintain high levels of performance, Covid-related expenses the federal gov- that plan which we should be able to and who pledge to remain in Canada for X ernment will spend during the current number of years following graduation. On agree on early on, before agreement will fiscal year. Had Canada had a strategic the other hand, studies in most Arts and have been reached on the economic plan in place, a good portion of this Business programmes should no longer be opportunities of the future. Immigration money could have been spent on innova- paid for, or subsidized, by governments. and education, as well as finances, lie at tion-related business activities, which the center of a national economic strategy. STRATEGIC INVESTMENTS. would have improved the country’s I will conclude by making a few com- future competitive position. Instead, we ments on these critical components: Whereas in the past, Canada’s econ- borrowed ourselves into oblivion, and Immigration. Canada’s current omy was more diversified, today pressure we have at least another year of outra- policy is to increase the current popula- is building on our energy industry, and the geous expense levels to go through. All tion of 38 million by about 300,000 auto industry. These are big ones, and fur- of this money, which in the aggregate annually through immigration. In the ther deterioration in their prospects will represent several times aggregate future, I strongly suggest that Canada would have a material negative impact, annual government expenditures in focus on immigrants who are likely to particularly when Canada’s finances have normal times, will literally be flushed become active in Canada’s knowledge- suddenly become over-stretched. Thus, down the drain, with no lasting positive based economy. We need individuals who we must look seriously at new economic impact to show for it. We have no new should integrate well, and who are techni- opportunities. businesses to show for it, no wave of cally qualified in areas of the economy For example, could Canada become innovative new products. Instead, we that Canada believes will become pillars a major player in hydrogen energy, and have created even greater dependency of future growth. We should also encour- transportation based on hydrogen fuel? on government which, by any rational age immigration of individuals who have (see article on page 23) Why not! We financial measure, is now insolvent, only experience in building international com- have abundant natural gas, water, hydro- rescued (for now) by its ability to print mercial networks, and entrepreneurs. Our electric power, and a well-established money. As if that’s not enough, through economic future does NOT lie in indus- international supplier of fuel cells (Ballard near-zero interest rates, our federal gov- tries that pay minimum wage, and we Power). What we need in addition to that ernment is actively encouraging a should therefore stop immigration of is a business plan that builds on national financially-weakened population to take people who do not possess the skills that alliances, top notch management, and bil- on more consumer debts. In my neck of are necessary to participate in Canada’s lions of dollars. Availability of the latter the woods, housing prices have knowledge-based economy. was once a major obstacle but, given the increased dramatically, and no house is Education. To the extent that I am plethora of Canadian investment funds, being sold without a bidding war. Mean- aware, Canada has made major positive should no longer be. while, CMHC sits on a huge, huge pile steps in skills training and certification of Or, how about battery technology for of loan guarantees in favour of banks trades. However, our universities still do automotive applications, and alternative that provided large mortgages to pay for not respond well to the needs of the job energy storage? We have a leading sup- homes purchased at sky-high prices by market. Billions of dollars are being spent plier of such batteries in our own non-creditworthy home buyers. Guess at Canadian universities annually, with backyard (Electrovaya). Technology devel- who will ultimately be on the hook for most graduates earning degrees that have oped by this company dispenses with those guarantees if the housing market dubious values for the Canadian economy. dangerous chemicals used in the tradi- were to take a nosedive. Yes, you I therefore propose that government tional manufacturing process, and enables guessed right. There is no good reason to financing of universities be redirected in a number of productivity-enhancing fea- be overjoyed about Canada’s economic such a way that studies toward scientific, tures for users. All it needs is money. prospects these days…..
22 • Canadian Sailings • September 21, 2020 Hydrogen’s role as a clean fuel surges with advances in fuel cell technology BY R. BRUCE STRIEGLER
In a burst of action, hydrogen is making a bid as a clean power source to respond to the world’s energy and climate challenges, as well as the economic wreckage of the Covid-19 pandemic. As countries invest into economic recovery, governments around the world are open- ing their eyes to hydrogen’s potential as a resource which, when used to produce electricity in a fuel cell to power an auto- mobile or commercial vehicle, produces only pure water and heat as byproducts. Although hydrogen has been tradi- tionally used as a feedstock in several industrial processes (such as the refining of crude oil), recent developments have shown that hydrogen’ real potential lies in a number of other applications, including electricity generation, and storing energy indispensable piece of the puzzle. The terms of electrified vehicles, where we par- from intermittent renewable sources. recently announced EU, German and ticularly focus our company. There really Hydrogen is an energy carrier rather Korean plans on hydrogen are among only two ways to create a zero-emission than an energy source. This means its prime examples of that momentum and vehicle: using battery-electric technology potential role has similarities with that of we hope that other countries will join in or fuel cell electric technology. So our electricity. Currently, the majority of soon”, said Benoît Potier, Chairman and focus has been specifically on the heavy hydrogen around the world is produced CEO of Air Liquide and co-chair of the and medium duty end of the vehicle from fossil fuels (76 per cent from natural Hydrogen Council. market – buses, trucks, trains and the gas, 23 per cent from coal), but can also be Membership includes an Investor marine market. That’s where the value produced from water by passing an elec- Group category, comprised of banks and proposition for fuel cells fits nicely – those tric current through it (electrolysis). In fuel other financial institutions that are actively applications where you have a need for cells, electricity is produced from the pursuing the emerging hydrogen economy. long-range rapid refueling with a heavy chemical reaction when hydrogen com- The Group works collaboratively to payload, that’s where fuel cell technology bines with oxygen from the air. In develop public policies and financial fits very, very well.” automotive applications, the electricity schemes centered on large-scale hydrogen McAree explains that the value powers the engine and the only tailpipe deployment. The Investor Group was proposition for fuel cells has become quite emission is water vapour. The Interna- launched in January 2020 and currently strong. “The performance of the technol- tional Energy Agency predicts that by comprises seven banks and investment ogy has been improved considerably in the 2030, the cost of producing hydrogen firms. The Group has already signed a last five or ten years and the cost of the from electrolysis could fall by 30 per cent. landmark agreement to collaborate on the technology has also come down quite a bit. What’s really interesting, if you look at International group forms to financing of hydrogen projects addressing climate change with the European Invest- the last year, are the number of major play- expand global hydrogen ment Bank, one of the world’s largest ers in the transportation industry that are technology and use providers of climate finance. now announcing strategic relationships in A key organization advancing the use Performance and cost fuel cells, or are making investments in of hydrogen is the Hydrogen Council. fuel cell technology. Companies like improvements with hydrogen Launched in 2017, the Council, is a CEO- Bosch, Cummins, or Faurecia - a French led organisation, comprised of 93 leading fuel cells global automotive supplier.” Or, most multinationals corporations, including Guy McAree, Director of Marketing recently he says, “The announcement by Microsoft and CMA CGM. The organiza- and Investor Relations at Vancouver’s Bal- Daimler Trucks and Volvo that they will be tion uses its global reach to promote lard Power Systems, Inc. (one of the entering into a joint-venture to focus on collaboration between governments, world’s leading providers of fuel cells) tells fuel cell technology for the truck market. industry and investors, and to provide us, “There’s a whole series of significant There’s a whole range of really interesting guidance on accelerating the deployment mega-trends that have happened in the last and serious players making investments of hydrogen solutions around the world. few years, coming together to create a and doing deals in our space, that I think “As policymakers, businesses and tremendous amount of interest in both suggests everyone sees the growing oppor- investors across the globe are working to hydrogen and fuel cell technology. Or to tunity.” recover from the economic and social con- translate, decarbonization, like electrifica- The International Energy Agency sequences of the Covid-19 pandemic, tion of vehicles, and that’s generated a notes in its 2019 report, requested by the hydrogen is increasingly recognised as an tremendous amount of interest and in government of Japan for the G20, that
September 21, 2020 • Canadian Sailings • 23 clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly. It concludes that now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used. But, it adds, for hydrogen to make a significant contribution to clean energy transitions, it needs to be adopted in sec- tors where it is almost completely absent, such as transport, buildings and power generation. “It’s noteworthy that the last few years have seen the emergence of the Hydrogen Council which is focused on how we expand infrastructure deployment more widely. It’s interesting because some of the companies that founded the Council are actually big oil and gas companies Council Hydrogen Illustration: along with some of the automotive play- ers. So they see the need and they’re on, “Geographies where we know there is In July of this year, The Economist putting a lot of energy and money into significant momentum and significant reported on advances in battery technol- cracking that problem,” McAree says. opportunity. Specifically, we’re focused on ogy, as part of the generally-held view that Hydrogen was first identified as a dis- China, Europe and parts of the U.S – par- battery-powered cars are the future of tinct element by British scientist Henry ticularly California. (California has motoring. But Hyundai, the big South Cavendish in 1776 and 100 years later, in announced that, starting in 2029, new Korean vehicle-maker, is not so sure. Over 1874, English author Jules Verne was transit buses purchased in California must the past few months it has been running a examining the use of hydrogen as a fuel in be zero-emission vehicles). In most parts of worldwide public-relations campaign his popular work of fiction, The Mysteri- the world we see the earliest deployment extolling the virtues of an alternative ous Island. In 1959, Allis Chalmers of vehicles in the bus segments, this is source of electrical power—hydrogen fuel Manufacturing Company demonstrated a where a lot of placements have happened cells. Instead of storing and then releasing 20-horsepower tractor that was the first up to now, and where we’ve had the most electricity from a battery, a fuel cell gener- vehicle ever powered by a fuel cell. But it experience.” He continues, saying, “Prob- ates current from a chemical reaction ably the next big application that will get was the work which began in 1990 between hydrogen (stored in a tank on traction is the commercial truck market. through a partnership including General board) and oxygen (from the air). Hydro- Ballard is operating and deploying technol- Motors, Los Alamos National Laboratory, gen, suitably compressed, is replenished at ogy in the truck market, we’re powering Dow Chemical Company, and Canadian a filling station, like gasoline. about 3,200 vehicles today, most of which fuel cell developer Ballard Power Systems Hyundai reported in 2019 that sales are delivery trucks in China.” He says that on a methanol-fueled 10-kilowatt Proton of its NEXO fuel cell SUV increased ten- this is the second-largest market for hydro- Exchange Membrane (PEM) fuel cell that fold compared with the previous year. It gen technology, and, ‘Beyond that we see moved the markers. reported that these numbers, “Confirmed really attractive opportunities in areas like that we are on track to achieve several Hydrogen fuel cells for vehicles – the marine segment and also the train and milestones, including 40,000 units by now ready for the marine market tram markets.” 2022, 130,000 units by 2025, and Decades later, we’re reading volumes It was an interesting co-incidence that 500,000 units by 2030.” Hyundai Hydro- of media reports about the “Hydrogen on the same day Mr. McAree talked with gen Mobility – a joint venture between Economy.” Hydrogen related company Canadian Sailings, Ballard announced the Hyundai and Switzerland’s H2 Energy – stocks are on the rise, truck manufacturers launch of the fuel cell industry’s first will rent fuel cell-equipped class 8-equiva- are investing, fuel cell costs have declined module designed for primary propulsion lent trucks to Swiss customers on a by 60 per cent since 2006, and the con- power in marine vessels. Called the per-kilometer basis. The trucks are pow- TM text has also changed. Over 77 countries, FCwave , the fuel cell product is a 200- ered by two 95 kW fuel cells, and will including Canada, have committed to net- kilowatt modular unit that can be scaled in have a range of about 400 kilometers, con- zero targets, and credible plans to meet series up to the multi-megawatt power suming about 34 kilos of hydrogen. those targets must consider all options. level. It is anticipated to provide primary In December 2019, the government Canada is well-positioned to benefit from propulsion power for vessels such as pas- of Australia introduced its National Hydro- growing international demand for hydro- senger and car ferries, river push boats, gen Strategy, noting that, “The gen and fuel cells. Based on collaboration and fishing boats – as well as stationary development of our hydrogen resources and investments made by both the public electrical power to support hotel and aux- could enhance Australia’s energy security, and private sectors in past decades, iliary loads on cruise ships or other vessels create Australian jobs and build an export Canada has a hydrogen and fuel cell sector while docked in port. Ballard’s Marine industry valued in the billions. We have all that thrives in export markets and that Center of Excellence, at Hobro, Denmark, the pieces needed to create this new includes global leaders, Ballard Power Sys- will focus on engineering, manufacturing industry and supply clean hydrogen to the and servicing the developing marine tems and Hydrogenics Corporation of TM world: the energy resources, expertise, Mississauga, which was recently acquired market with the new FCwave product. and infrastructure. This Strategy sets a by Cummins Inc. Highlights of hydrogen activity on path to build Australia’s hydrogen industry. Mr. McAree says that Ballard focuses the global scene We plan to accelerate the commercializa-
24 • Canadian Sailings • September 21, 2020 tion of hydrogen, reduce technical uncer- tudes to oil and gas in many parts of the greater use of renewable power from inter- tainties and build up our domestic supply world. mittent sources such as wind and solar.” chains and production capabilities. The China is aggressively driving hydro- Earlier this summer, Natural Strategy looks to initially concentrate gen and fuel cell development, and is on Resources Canada said it was working hydrogen use in niche hubs that will foster track to outpace development in the EU with a wide range of stakeholders to domestic demand. A strong domestic and U.S. with a focus on hydrogen buses “inform” the development of a hydrogen hydrogen sector will underpin Australia’s and trucks. In the first seven months of strategy. Several provinces have shown exporting capabilities, allowing us to 2019, installed capacity of hydrogen fuel their own interest in hydrogen, even if the become a leading global hydrogen player. cells increased six-fold. To the Chinese initiatives have been relatively small to this The Australian Government has already government, hydrogen offers a way point. British Columbia has established a committed over $146 million to hydrogen towards meeting climate and pollution network of retail hydrogen stations, while projects. These projects will help us learn goals without increasing reliance on Quebec is openly mulling the idea of more about how hydrogen can form part imported fuels. It also opens new export hydrogen exports to the U.S. When asked of Australia’s energy mix to help drive opportunities. The country hopes that to sum up the current state of hydrogen down prices and emissions, as well as pro- hydrogen will account for 10 per cent of fuel cells, Ballard’s McAree says, “I think vide a foundation of expertise to build a the Chinese energy system by 2040. we’re at the front-end of a really significant competitive export industry.” Against this background, China’s hydrogen build-up in demand. I think we’re going to In July 2020, Oilprice.com reported production continues to grow and is see, as we go forward over the next couple Russia’s gas giant Gazprom will start pro- expected to surpass 20 million tons this of years, a significant ramp-up in the scale ducing zero-emission, hydrogen beginning year from over 9 million tons in 2018. of production, of sales and deployments in 2024 under a new government plan to Natural Resources Canada published and cost reduction at the same time. I develop a hydrogen economy. The plan its “Hydrogen Pathways” document in sees Gazprom building and beginning to 2019, saying in it will guide the develop- really think we’re at this exciting time test a methane-hydrogen-powered turbine ment of a national hydrogen strategy. The when the market is ready.” next year, and until 2024 it will also study document says, “There are ten potential The “hydrogen economy” offers different applications of hydrogen as a fuel, end use pathways where hydrogen and Canada opportunities to add significant both in things such as gas boilers and gas fuel cell technologies could be deployed. economic value for both domestic and turbines, and as fuel for vehicles. Gazprom These pathways can be grouped by cate- export applications, while helping to will not be the only one involved in the gory based on transportation, reduce greenhouse gas emissions. With hydrogen drive. Rosatom, the country’s communities, industrial use or power gen- skyrocketing debt and reduced govern- nuclear power major, will start testing eration. When used with hydrogen from ment revenues, the hydrogen economy hydrogen as fuel for trains in 2024. renewable sources, hydrogen fuel cells offers opportunities for development of Russia’s largest private gas company, offer a zero emission option that can be leading-edge technologies, and giving a Novatek, is also interested in taking part in scaled for many applications including shot in the arm to Canada’s manufacturing the hydrogen initiatives. The government motive power for vehicles, space and industries. In addition, widespread adop- plan that contains all these strategies is a water heating in communities, space and tion of hydrogen as a substitute for road map for a future in which hydrogen process heat for industry, and power for gasoline and diesel fuel may lead to cost will feature more prominently in Russia’s remote, backup, and critical applications. reductions, potentially benefitting the export mix, in response to changing atti- Hydrogen power-to-gas applications enable entire economy. Let’s get going.
CSL-Hartmann takes delivery of first joint venture newbuild, MV Starnes
MV Starnes, the first of two CSL-Hartmann joint venture ships built at Chengxi Shipyard was success- fully delivered on August 10. At a speed of 14 knots, the 40,000 DWT self- unloading ship successfully completed all dockside and sea trials and is now being prepared to sail to Hamburg via the Suez Canal. The vessel can self-discharge at a rate of 5,500 tonnes per hour and is equipped with a 90.5 metre boom, which is one of longest and largest ever built for a self-unloader. The self-unloading system can handle lump sizes up to 300 mm and free flowing materials with a bulk density in the range of 1.2-3.5t/m3. Starnes is fitted with energy saving Hub fins, an exhaust scrubber and a ballast water treatment system with IMO and USCG compliance. The ship is the first of two for the CSL-Hartmann joint venture and joins a fleet of six other Hartmann self-unloading ships with September 21, 2020 • Canadian Sailings • 25 172,000 tonnes loading capacity that are transporting aggregates on routes throughout Europe. There, the vessels’ operations will consist of carrying aggre- gates between Norway, Germany, and the United Kingdom. These two extra vessels add 80,000 tonnes loading capacity to the fleet on these routes. Captain Bi Fusheng and Chief Engi- neer Li Fuwang will take the vessel to Manilla where there will be a crew change. The new crew will take the vessel on to Hamburg, Germany. CSL and Hart- mann welcomes Starnes to the fleet and look forward to a successful partnership working together in Europe.
Grain a strong bright spot in St. Lawrence Seaway traffic picture
ships lined up to load Prairie wheat and canola destined for Europe, South Amer- ica, the Caribbean, the Middle East and Africa. Port facilities have handled an extra million tonnes of grain compared to this time last year, a 27 per cent increase. However, Heney added that grain vol- umes through the port have been trending upwards since the Canadian Wheat Board was dismantled in 2013. “Grain volumes are always impacted by the quality of har- vests and fluctuating demand from world markets. But Canadian grain handlers are now marketing their own wheat and also looking to maximize efficiencies in their supply chains. Thunder Bay has the fastest rail-car turnaround and ship turn-around times and that has continued and even improved during the pandemic, despite extensive extra safety protocols.” Burlington-based ship operator McKeil Marine reported that its grain vol- umes were up 13 per cent in August, and it announced this month that it had August year-to-date Seaway ship- ore, dry bulk and petroleum,” said Ter- acquired a bulker vessel from Europe that ments (from April 1 to August 30) totalled ence Bowles, President and CEO of The will be delivered to Canada to add to its 19.3 million metric tonnes. During the St. Lawrence Seaway Management Cor- domestic fleet. Built in 2012, M/V same time period of 2019, Seaway vol- poration. “The Seaway has been a vital Juliana will be re-flagged as a Canadian umes were 21.1 million tonnes, which export corridor for Canadian farmers to vessel and be renamed the Harvest Spirit. were down from 21.6 million tonnes in reach world markets during the pan- Harvest Spirit will service a long-standing 2018. demic. We’re hopeful that grain numbers customer of McKeil that is striving to Year-to-date shipments were down in will remain strong with the new crop har- meet the strong market demand for Cana- all categories, except by 13.3 per cent vests in the autumn.” dian grain, soybean and canola products. increase in grain shipments, which repre- The port of Thunder Bay continues McKeil’s President, Scott Bravener, high- sented 31 per cent of all Seaway to see above-average grain shipments. lighted: “Nationally, our grain markets shipments on a year-to-date basis. This is a reflection of the continuing inter- continue to perform well. In fact, the “It’s great to see the continued strong national demand for wheat through the demand for Canadian grain is booming, numbers for Canadian grain shipments, global pandemic,” said Tim Heney, Port which is particularly encouraging news in which has helped offset significant CEO. The Port reported that it was on these challenging times. Our grain exports declines in key cargo sectors such as iron track for its best cargo year in decades as are bolstering overall cargo shipment vol- 26 • Canadian Sailings • September 21, 2020 umes in the Great Lakes and St. Lawrence opportunities, these ports will be even caused by the delay in the Seaway open- Seaway and Harvest Spirit will allow for more essential for Canadian producers.” ing and the Ontario COVID Emergency McKeil’s continued growth in this robust With the 2020 shipping season in full Order that shut down construction for domestic market.” swing, bulk cargo shipments have several weeks. From a spring decline of 18 Hamilton-Oshawa Port Authority remained strong at the port of Toronto as per cent compared to 2019, overall cargo continues to see grain numbers improve, shipments of cement, steel, salt and sugar volumes have surged to recover more with grain exports hitting the million- continue to be received. Geoffrey Wilson, than 12 per cent of that deficit over the tonne mark in August. The ports of CEO, PortsToronto, said: “Though the summer. Steve Salmons, President and Hamilton and Oshawa provide critical global COVID-19 pandemic has had an CEO, said: “Grain shipments are up 12 export infrastructure for Ontario-grown impact at the port, with federal regula- per cent over 2019, the highest in more corn, wheat and soybeans. “We have tions effectively cancelling the 2020 than five years. Aggregates continue their attracted more than $200 million in new cruise ship season, port tonnage has rebound in response to several large agri-food sector investment at our ports remained consistent with this time last regional road projects, and the construc- inside the last decade,” said Ian Hamilton, year and Port of Toronto is well positioned tion of the Gordie Howe International President & CEO. “As crop yields con- for the remainder of the shipping season.” Bridge. Salt shipments are also maintain- tinue to improve, and as new trade Port Windsor reported that it has ing their historic high levels in preparation agreements like CETA create more export bounced back from a slow spring start for the coming winter months. Railways slowed but not stopped by pandemic’s economic impact BY ALEX BINKLEY
The second quarter results posted by Canadian National and Canadian Pacific show the two railways made the best of the bad economic situation caused by COVID-19 while keeping their vision focused on the future. CN posted rev- enues of $3.2 billion, a 19 per cent decrease from 2019 but its operating ratio rose 18 points to 75.5 per cent. Canadian Pacific’s second-quarter revenues were $1.79 billion and its operating ratio came in at 57 per cent. The railways were rocked by block- ades in February and the subsequent pandemic since but generally fared better than their U.S. counterparts in terms of freight volumes. Since March, the Association of CP Photo: American Railroads reported Canadian the communities we serve. “The decisive sion scheduled railroading operating rail freight was about 10 per cent below actions we took early on in March, well model. The COVID-19 pandemic has cre- 2019 figures while in the U.S. it often before the pandemic impacted the North ated immense challenges, but CP has ranged 15 to 20 per cent below the previ- American economy, allowed us to deliver risen to the occasion, adapted and ous year. In mid-August, CP and CP were over $1 billion of free cash flow during responded to the benefit of our cus- running 8.5 per cent below last year this recessionary quarter,” he said. The tomers, communities and shareholders. while the U.S. carriers were 12 per cent railway is helping encourage “the eco- “While economic uncertainty remains, lower. nomic recovery through our $2.9 billion we’re controlling what we can control – Through this period, farm and food capital investment plan for 2020 as well our costs. Our strong bulk franchise, products along with grain shipments have as our new investment announcement of which included record movements for been the bright lights for the Canadian the purchase of approximately 1,500 Canadian grain and potash in the first half carriers coming in above 2019 numbers new, efficient, high-capacity, covered of the year, helped to offset some of the most weeks. Both railways set grain haul- hopper cars to expand our grain export declines we experienced in other lines of ing records for the 2019-20 crop year business for delivery starting in January of business.” which ended July 31. 2021.” CN has begun recalling some of The acquisition of the Central Maine CN CEO JJ Ruest says, “By being its laid off employees as traffic rose during and Québec Railway “combined with our adaptable, we were able to swiftly right- mid-2020. continuing pipeline of unique growth size our resources and continue to CP CEO Keith Creel says CP’s opportunities, provides me with optimism provide our essential transportation serv- “second-quarter results showcase the for the remainder of 2020 and into ices to our customers, the economy, and resiliency of our people and of the preci- 2021,” Creel said.
September 21, 2020 • Canadian Sailings • 27 CN announces record crop year and increase to maximum capacity in 2020-2021 Grain Plan
CN published its 2020-2021 Grain Plan, announcing that it set a new record by moving over 30 million metric tonnes (MMT) of grain from across Canada during the 2019-2020 crop year. CN also announced that it is prepared to move up to 7,600 bulk and processed hopper cars per week outside of winter, and up to 6,100 per week during winter in the upcoming crop year. During the 2019-2020 crop year, over 28.2 MMT of grain moved from Western Canada as well as over 1.1 MMT moved through intermodal containers. JJ Ruest, CN’s Chief Executive stated that “Although we achieved our best grain movement volumes in 2019–2020, we are far from complacent. We remain commit- ted to continue making capacity-enhancing investments to our network and to upgrade
our rolling stock, including the purchase of CN Photo: 1,500 additional railcars manufactured in North America in 2020-2021. With all “Over the last year, the CN Agricultural The annual Grain Plan is prepared those, we are on our way to reach continu- Advisory Council has been providing CN through an extensive consultation process ously improved performances. These with insight and feedback from the Ag com- and with the input of key stakeholders investments benefit our grain customers as munity. Our input has improved CN’s through an open invitation on the Com- well as all those from the other sectors we understanding of the issues that matter to pany’s website. The plan reviews CN’s serve. CN recognizes that the Grain Plan farmers and has helped to contribute to performance during the last crop year, has been a helpful initiative to increase better service. The challenges faced this assesses its ability to move anticipated levels supply chain performance and keep every- year demonstrated how essential trans- of grain during the upcoming crop year, and one focused on moving annual crops.” portation is and how having a collaborative explains specific steps that CN is taking to Alanna Koch, Chair of the CN Agricul- and resilient supply chain can keep goods ensure it has the necessary capacity to tural Advisory Council commented that moving.” move the grain safely and efficiently.
CN’s investments in Ontario to reach over $1-billion by the end of 2022
CN has awarded a contract to build 1,150 new generation, to manufacture new generation, high-capacity, grain hopper cars. high-capacity, grain hopper cars to National Steel Car Ltd. of Ontario-made is quality-made. CN is a great contributor to Hamilton, ON, bringing to $1-billion the amount CN plans to Ontario’s economy, consumers and communities, and its role is invest in Ontario by the end of 2022. In addition to its purchase especially valued as the Province and the country recover from of 1,150 rail cars, as well as CN’s ongoing annual capital invest- COVID-19. It’s investments like these that will create jobs and ments, CN has also pledged to invest more than $250-million in prosperity across the country as Ontario-made grain cars will be the construction of the proposed Milton Logistics Hub, an essen- used in the movement of Western Canadian Grain.” tial transportation infrastructure project that is critical to the JJ Ruest, CN’s Chief Executive stated that as the North Amer- economic future of consumers in Ontario and Canada. ican economy continues to recover, “CN is determined to play an On July 21, 2020, CN announced it was purchasing the new essential role in Canada’s return to national prosperity following closed 55-foot eight-inch jumbo grain hopper cars, each with the challenge of COVID-19. We are doing it in many ways – 5,431 cubic feet of capacity. CN’s Western Canadian grain fleet is including by making significant investments in the places we comprised of CN-owned hoppers, leased cars and private cus- serve. The $1-billion CN plans on investing in Ontario over the tomer equipment. The new grain hopper cars will enable the next two years demonstrates our ongoing commitment to the company to move more tonnage of grain per year. Province. The purchase of new railcars will encourage economic The Premier of Ontario, Doug Ford, commented: “I’m recovery, and help CN continue to meet the growing needs of immensely proud that CN has chosen a made-in-Ontario solution grain farmers and grain customers across Canada.”
28 • Canadian Sailings • September 21, 2020 CP announces record grain shipments for Q2 and June, as well as 2020 grain production year
Canadian Pacific announced its best- ting 2018-2019 crop year, and has con- dian grain to export markets in contain- ever quarter and month for moving tinued to build on that momentum. ers. With containerized grain included in Canadian grain and grain products. The Crop-year volumes to date are now 8.8 the total, CP transported more than 30 two records are the latest in a standout per cent ahead of last year's pace. "The MMT during the crop year. crop year of linking Canadian producers strength of the CP network and operat- CP also announced it hauled more to worldwide markets. "The collaborative ing model continue to show themselves Canadian grain and grain products in the relationships CP has built with its cus- in these achievements. We stand ready 2019-2020 crop production year than tomers, combined with responsive rail to meet what we expect will be strong any in its 139-year history. In total, CP service, have contributed to another quar- demand in the final month of the 2019- moved 29.52 million metric tonnes ter of record-breaking grain movements," 2020 crop year,” Hardy said. (MMT) this crop year, exceeding last said Joan Hardy, CP's Vice-President Sales This year's successes also attest to year's record of 26.77 MMT by 2.75 and Marketing, Grain and Fertilizers. the efficiency of the 8,500-foot High Effi- MMT, or 10 per cent. "In this banner "We thank our customers and CP family ciency Product (HEP) train model. An crop year, the men and women of CP members who work safely and with pur- 8,500-foot HEP train can carry in excess proved again they're more than ready for pose each day to keep this essential of 40 per cent more grain than the the task. I am immensely proud of the service moving in support of the Cana- 7,000-foot train model when combined CP family and the entire grain supply dian agricultural industry. I am proud to with the additional capacity of new high- chain in delivering a second consecutive be a CP railroader." capacity hopper cars. Customers are crop-year record, and by such a signifi- During its second quarter ending actively investing in their elevator net- cant margin. This truly shows the value June 30, CP moved 8.41 million metric works to accommodate 8,500-foot trains. of CP's capacity for the movement of tonnes (MMT) of Canadian grain and By year-end, more than 30 per cent of grain," said Keith Creel, CP's Chief Exec- grain products. This broke the previous the CP-serviced unit train loaders will be utive. record of 7.9 MMT in the fourth quarter 8,500-foot HEP qualified, increasing "Viterra depends on efficient, reli- of 2019. During the month of June, CP capacity and efficiency in the grain able transportation year-round," said Kyle moved 2.76 MMT of Canadian grain and supply chain for customers and stake- Jeworski, Viterra’s CEO. "With CP's grain products. This broke the previous holders. More than 2,700 new 8,500-foot HEP train model, Viterra can June record of 2.4 MMT set in 2014. high-capacity hopper cars are now in move more grain with each train, creat- CP has consistently delivered for service. These cars can carry 15 per cent ing efficiencies for the whole supply Canadian farmers since the start of the more volume and 10 per cent more chain. And CP's reliable service through- 2019-2020 crop year amid high demand weight compared to the older Govern- out the crop year helped enable Viterra for transportation services. CP's strong ment of Canada cars they are replacing. to meet our customers' needs. I look for- fall and winter performance established Shipping containers also played an ward to CP's and Viterra's shared success momentum going into spring. By March important role in exporting Canada's in meeting the demands of our Canadian 31, CP was 6 per cent ahead of where it crop. This year, CP moved more than farmers and global customers in the was at the same point in the record-set- 650,000 metric tonnes of western Cana- coming crop year."
September 21, 2020 • Canadian Sailings • 29 Canadian Pacific launches first train of international containers from Port of Saint John Canadian Pacific officially launched its international inter- CP gained access to the port of Saint John through connec- modal service through the port of Saint John, N.B. The inaugural tions with EMRY and NBSR with CP’s purchase of the Central train carries containers from Hapag-Lloyd’s Detroit Express Maine & Quebec Railway (CMQ), completed in June. CP has bound for intermodal terminals on the CP network in Canada and committed to investing $90 million over three years into the the U.S. CMQ property to enhance safety and efficiency over the corridor. “The new Port of Saint John service offers shippers a com- Complementing that investment is the port’s $205 million West pelling value: a congestion-free port with a world-class operator, Side Modernization project, which includes a new wharf, a termi- matched with CP’s precision scheduled railroading model,” said nal upgrade and a deeper shipping channel. CP’s route is the Keith Creel, CP President and Chief Executive Officer. “CP has shortest between Atlantic Canada and key North American mar- been without access to a deep-water Atlantic Ocean port for a kets. By year’s end, CP anticipates it will be able to offer 24-hour quarter-century, and today I’m pleased to deliver a simple mes- sage: We’re back.” service between Saint John and Montreal. CP originated westbound train 251-11 for the Montreal “The Port of Saint John connection gives us the rare oppor- region at Brownville Junction, Maine, with the first Port of Saint tunity to offer shippers a truly new and extremely compelling John containers on connection from the New Brunswick Southern service to reach North American markets,” said Jonathan Wahba, (NBSR) and Eastern Maine (EMRY) railways. From Montreal, CP CP Vice-President, Sales and Marketing, Intermodal and Automo- will move these containers on connecting trains to destinations tive. “With a world-class terminal operator in DP World and CP’s that include Toronto, Winnipeg, Calgary, Edmonton, Vancouver, investment in the CMQ, our customers will enjoy an unmatched Chicago and Minneapolis. The first eastbound intermodal train to value proposition that will benefit beneficial cargo owners for the port of Saint John departed Montreal on Aug. 7. years to come.” New UPS surcharges seem to be closing van doors to large-volume shippers BY IAN PUTZGER, AMERICAS CORRESPONDENT
UPS has sent a strong signal to large- volume B2C shippers with the announcement of hefty surcharges for resi- dential deliveries that rise with their parcel numbers. In addition, it is raising the bar for large shippers which sell items that are out- size or require additional handling. The integrator is to introduce peak sur- charges for volume shippers on 15 November, applying to customers that ship in excess of 25,000 packages in a week. They are based on the discrepancy with the customers’ volumes in February, before the Covid-19 shutdowns in the US. For cus- tomers that use UPS SurePost (where the final-mile delivery is carried out by the US Postal Service) or UPS Ground Residential services, surcharges are $1 per package, if the weekly volume in the peak season is 110 per cent-200 per cent of their volume in February, rising to $2 per package, if the In addition, UPS will levy surcharges These surcharges replace those UPS volume has increased to 200-300 per cent of $5 per package for shipments that introduced in May, while surcharges for of February volume, and $3 for a 300 per cent+ increase in volume. require additional handling, $50 for large international shipments remain at the May For the integrator’s residential deliver- shipments and a whopping $250 for ship- levels until further notice. ies involving air transport, the surcharge ments that exceed its maximum limit. For large shippers, the new regime ranges from $2 per package (for 110-200 These charges apply to customers with means significantly higher costs. Pundits per cent of February volume) to $4 (more more than 1,000 such shipments in a week, and shipping consultants have pointed out than 300 per cent of what they moved in and will kick in on 4 October, running that these increases are hitting retailers February). through 16 January. hard. Their margins are already being
30 • Canadian Sailings • September 21, 2020 eroded from the migration of in-store to online sales. promised an aggressive cost reduction programme, said Mr. Maci- “A lot of retailers are already stretched on margin. They can’t uba. With the costs involved and the low margins, e-commerce is absorb increases in transport costs and are going to have to raise the natural target for this , he added. their e-commerce prices,” said Dean Maciuba, Director, Consulting UPS did not mention its largest customer, Amazon, but Mr. services, at Logistics Trends & Insights. Maciuba reckons the surcharges will also apply to that company, and The hikes won’t be happily received by retailers, coming days sees them as a signal that UPS is unwilling to make the necessary after UPS posted strong results for the second quarter; with revenue investment to accommodate a large increase in the volume of low- up 13.5 per cent and adjusted net income reaching $1.9 billion, yielding e-commerce parcels. nearly 9per cent higher than a year ago. However, one key metric Presumably, the integrator will give large customers discounts, was down, Mr. Maciuba pointed out. “Revenue per piece was down but even a large reduction should still lift the yield of this traffic sig- 4 per cent. That’s huge,” he noted, adding that the integrator had nificantly, Mr. Maciuba believes. Observers have noted that the peak raised rates 5 per cent for this year. “They have to raise revenue per season surcharges run longer than last year, and Mr. Maciuba doubts package,” he said. they will disappear come mid-January. “I think they’re going to Carol Tomé, the new UPS Chief Executive, called the second- extend further,” he said. quarter results “better-than-expected”, but in the earnings call Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)
Hong Kong forwarder spearheads fight against fake lithium battery certificates BY SAM WHELAN
The widespread use of fake lithium battery safety certificates by Chinese e- commerce sellers is a “disaster waiting to happen” for the air cargo industry. The Material Safety Data Sheets (MSDSs) include information on how an individual battery should be safely packed and trans- ported, and obtaining one legally requires laboratory testing. However, according to Chaminda Gunasekera, a senior director airfreight at Seko Logistics, to avoid the time and cost involved, the majority of Chinese electronics manufacturers are using unauthenticated MSDSs to export their products via e-commerce market- places. “A very high percentage of MSDS certificates are not properly authenti- cated, or carry incorrect information,” he told The Loadstar. “It’s not major facto- ries; homegrown SME electronics Janaka Dharmasena Photo: manufacturers riding the e-commerce boom are producing maybe 50 items and Simon Wong, CEO of Hong Kong’s tication programme. “We want to put a selling them online ,and they don’t want Logistics and Supply Chain MultiTech process together where e-commerce sell- to the trouble of getting an authentic R&D Centre, said high levels of e-com- ers go to an online standards organisation MSDS. “Something bad is going to merce shipments had propped up volumes to input all the information about the happen if we don’t tackle this as an indus- during Covid-19. “As more and more product and get an authentic MSDS in try.” products are using lithium batteries, the few hours,” he said. “It will also have a Indeed, while the cause of the recent challenge of observing all the relevant QR code, which can be scanned and fire onboard an Ethiopian Airlines 777 requirements will be increasing as well,” checked by forwarders, airlines or any freighter at Shanghai Pudong is still Mr. Wong added. “We have been in dis- authority to find the shipper, and other unknown, the incident has reignited the cussions with several parties, including important information.” debate over how to safely transport cargo terminal operators, airlines and for- Mr. Gunasekera has discussed the lithium batteries via air cargo. “Normally, warders, about how to strengthen plan with prominent airlines in Hong most battery electronics move through practices for even better safety.” Kong and the Middle East and believes Hong Kong Airport, because if there is an Seko’s Mr. Gunasekera has overseen that, with them on board, the scheme incident and dangerous goods violation, the forwarder’s rise to become one of the could become industry standard. the responsibility falls on the freight for- largest e-commerce cargo players shipping “Nobody should have to fly in an airplane warder, whereas in mainland China, civil to Africa, developing a number of cargo with undeclared batteries or dangerous aviation law states it is the airport’s screening and safety measures, and is now goods,” he said responsibility,” explained Mr. Gunasek- spearheading a cross-industry effort in Reprinted courtesy of The Loadstar era. Hong Kong to introduce an MSDS authen- (www.theloadstar.co.uk)
September 21, 2020 • Canadian Sailings • 31 No respite for parcel shippers as FedEx and USPS unveil more surcharges BY IAN PUTZGER
It didn’t take long for the other shoe to drop – after UPS announced peak season surcharges for domestic parcel deliveries on August 7, US parcel shippers were bracing themselves for FedEx to follow suit. It duly did so this week, after a similar announcement from the US Postal Service (USPS) on Friday. Both integrators blamed rapid growth in e-commerce volumes driving up their costs and hitting margins. FedEx’s announcement read: “As the impact of the virus continues to generate a surge in residential deliveries, we are entering this holiday peak season with extremely high demand for capacity and are experiencing increased operating costs across our network. We anticipate residential volume to continue to surge into the new year.”
Like UPS, FedEx is heaping misery Neydtstock Photo: on large shippers: its peak season sur- charges range from $1 per parcel for clients are looking to regional carriers as FedEx and UPS recorded volume shippers with weekly volumes of more alternatives. By and large, these have growth in the 20 per cent range in their than 110 per cent of the volume they capacity available and offer considerable ground delivery segment during the last moved weekly between 3 February and 1 savings, but their free capacity is rapidly quarter. USPS has been stretched even March (before the pandemic hit), to $4 being gobbled up, he added. more, with volumes rising almost 50 per per parcel for those with volumes up According to shipping consultant cent in the second quarter, according to more than 500 per cent. In addition, ShipMatrix, shippers can save between 7 ShipMatrix. The postal agency is also to FedEx levies surcharges of $52.50 for and 12 per cent if they use regional carri- levy a peak season surcharge on residen- oversize shipments, $4.90 for shipments ers for residential deliveries. But this tial deliveries of its domestic competitive requiring additional handling and $350 option does not work for everybody, said package offerings. Last week, it submitted for ‘unauthorized’ ground deliveries. Mr. Haber. “You’ve got to have a lot of a proposal for a temporary price adjust- These increases are significant, com- volume for this to work. It’s more the ment to the US Postal Regulatory mented John Haber, CEO of consultant large accounts where this makes sense.” Commission. These would kick in on Spend Management Expert. For one of his One area where FedEx has taken a October 18, ranging from 24 cents a pack- firm’s clients, this means a $2 million different course to UPS is for shipments to age for its Parcel Select service to $1.50 impact over the duration of the peak sur- residential addresses delivered by the for the Priority Mail Express product. charge period, which runs from USPS. While UPS applies a volume These increases are between 6.75 and November 2 to January 17. threshold for surcharges on its SurePost 13.3 per cent. Compared with the hikes “Over the past year, the changes service, FedEx has chosen to levy sur- UPS and FedEx have announced, they are have been incredible,” he added. “Sur- charges on all its SmartPost shipments, relatively modest, Mr. Haber said. How- charges and rate hikes have been regardless of a shipper’s weekly volume. ever, they will likely increase the pain for announced at such a frequency that This surcharge will be $1 per parcel SmartPost and SurePost users, he added, Spend Management has been stretched to between November 2 and 29, rising to $2 as the integrators had historically passed compute the financial impact on all of its from November 30 to December 6, and on higher mail rates to their clients, clients.” The integrators are “getting dropping back to $1 for the remainder of adding a juicy mark-up in the process. As away” with this series of rate increases the peak period. At prices of $3-4 for ship- a result, Spend Management is bracing because of a lack of alternatives for ship- ments weighing less than one pound, this itself for another round of calculations on pers, he argued. “This highlights the lack amounts to a 50 per cent-plus surcharge what the next increase means for its cus- of competition. There are not enough in early December, Mr. Haber pointed out. tomers. Making its announcement later parcel providers in the US,” he said. This comes at a time when FedEx would than the USPS, FedEx may have factored- This is also reflected in the stance be arguably better off leaving the Smart- in the planned postal increases, but UPS UPS has taken in negotiations with ship- Post volumes to the USPS for delivery. will likely come up with an adjustment to pers after it had announced its peak season “There are capacity issues” Mr Haber deal with this, Mr. Haber said. surcharges. Spend Management clients said, noting that delivery times had It seems for parcel shippers, there is have reported very little willingness by the dropped into the low nineties range. “This no respite in sight. integrator to offer discounts to mitigate the doesn’t seem a very opportune time to Reprinted courtesy of The Loadstar charges, Mr. Haber said. Many of his larger move SmartPost.” (www.theloadstar.co.uk)
32 • Canadian Sailings • September 21, 2020