Prince Rupert Port Authority president and CEO Don Krusel addressed members of the Prince Rupert and District Chamber of Commerce at a luncheon last week.

Diversification port’s main focus for next decade

Prince Rupert Port Authority Don Krusel provided business leaders with an update of the port's activities at a chamber luncheon last week

The comparison of a west coast port authority and a lengthy novel aren’t made too often, but on Nov. 18, Prince Rupert and District Chamber of Commerce luncheon attendants were offered that simile when Prince Rupert Port Authority president and CEO Don Krusel took the mic to give an update on the business.

“I find it very hard to contain a discussion on what’s happening with the port in a single year. It’s kind of like reading one chapter in a story in the middle of a story and expecting everybody to understand what the theme and ending is all about,” said Krusel.

The CEO dived into the port’s activities with the business leaders of Prince Rupert and explored the impact of the port’s activities specifically on the community through its Community Investment Fund – a fund designed to raise money for community legacy projects and non-port related activities. $100 million has been invested in capital works in the community and over the next two to three years, the community can expect to see another $100 million invested in legacy projects, Krusel said.

“We had a record year of $26.3 million in net income in profit [in 2014], so why is that important to this community? Well, unlike most other commercial entities who have shareholders and have owners to draw on that profit, we do not have shareholders or owners. So, however much money is made by the port authority is reinvested into the community in one form or fashion,” he added.

While 2014 was a record year for the port in many more ways than just net income, with records in grain and container shipments acquired, 2015 is shaping up to be a bit of a transition year as the port delves into probably its main focus heading into the next decade: diversification.

In 2014, the Port of Prince Rupert’s cargo breakdown by volume saw three main areas of traffic: container, coal and grain.

The direction of those three facets of the port are veering in different directions, which is one of the main arguments in favour of diversification. If global trends hit one industry hard, then the other port tenants can pick up the slack.

2014 container traffic (29 per cent of overall tonnage traffic), grain (30 per cent) and coal (37 per cent) make up a vast majority of the traffic seen through the port’s facilities.

The coal industry in particular is taking a hard hit this year and the demand for the resource has been in decline for a couple years now. The Fairview Container Terminal on the other hand, is seeing exponential growth. As the fastest-growing container terminal in North America, the terminal’s traffic numbers are up 31 per cent compared to 2014 on a year-to-date basis, with still two months to go.

In 2013, the port introduced the Westview Wood Pellet Terminal, adding another piece of the pie. The 2015 forecast for the Westview terminal is 788,000 tonnes, which is up 54 per cent, year-to-date. Those numbers make up two per cent of the port’s current cargo breakdown, and it will make up two per cent of the 2024 projected cargo breakdown, but it’s an early indicator of things to come. The port is calling their expansionary actions part of their 2020 Gateway vision. The anticipatory 2024 model of cargo traffic includes coal, LNG, container, break bulk/other bulk, potash, grain, pellets and project cargo.

“The plan will bring more than just 100 million tonnes of cargo, but also diversification. No single commodity will make up more than 25 per cent of the pie. It ensures the economy will manage the ups and downs of individual sectors. If we are successful of full build-out [of the diversification model] and we bring all those pieces of infrastructure to the community, the revenue to our municipality would go to $60 million a year … It’s a light at the end of the tunnel and something to focus our collective energies toward building a strong community,” said Krusel.

Another main thesis by Krusel in the presentation was the emphasis on keeping the port’s competition at bay; namely the Ports of Vancouver, Seattle, Los Angeles and Los Angeles’ adjoining port, Long Beach.

“One of the big risks that we have is that some of our traffic is discretionary traffic, meaning they don’t have to come to Prince Rupert. They could go to [any of the above listed] ports. There will always be container ships going to those ports. The reason we’re growing and expanding so rapidly right now is because we have a competitive advantage. But the competition is breathing down our necks,” said Krusel.

There are two long-term challenges the Port of Prince Rupert faces, with their effects already being seen today, said the president.

One is the sheer amount of time and resources that are needed in order to establish a facility in order to respond to market trends. While it takes only a couple years for drastic changes to occur in the oil industry or coal markets, or topically for Prince Rupert, the LNG market, it often takes a decade or longer to capitalize on those opportunities in order to properly plan, design, develop, get environmental approval, construct and raise the hundreds of millions of dollars of infrastructure required to build for these opportunities.

The second continual challenge the port faces is “finding a path forward while having a vibrant economy and at the same time, having a vibrant environment,” Krusel said.

“We want to be able to walk down a pathway where both those important aspects of the community can be met. I have to believe that if we can put people on the moon and back; if we can explore the outer reaches of the solar system, that we surely can have faith in the science and technology where we won’t have to be put in a position where we choose one or the other. We don’t have to choose industry or environment. We don’t have to choose berthing structures over fish habitat. I believe we can have those side by side,” said the president.

 

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