By Paul McLeod
The praises of an Atlantic Gateway were sung to hundreds of investors, officials and other interested parties yesterday at a government symposium.
The symposium discussed the opportunities and the challenges of our trading future. Here is a rundown of the issues:
What is the Atlantic Gateway and why is it such a big deal?
China and India have exploded onto the international market. There is a huge increase in trading via the oceans, with billions of dollars up for grabs. Thanks to some natural good fortune, Nova Scotia has the chance to cash in on this lucrative market.
There are three main shipping routes from Asia to North America. The largest is across the Pacific to the West Coast. But trade has taken off to such a huge extent that the North American ports are congested and lack the capacity to take enough containers.
The second route is from the Pacific through the Panama Canal and up to eastern ports. But the canal is almost at capacity and many ships built today are too large to fit through it. This has led many to turn to the third route. More and more shipments are coming from Asia through the Suez Canal, by Europe to North America. This plays right into Halifax’s hands.
What are our strengths?
Nova Scotia has two big factors in its favour. It is closer by at least a day than any other eastern port for ships coming through the Suez. The Halifax port can boast the quickest shipment times on the East Coast. Our harbour is also able to handle the largest vessels working today. Our biggest competition, New York, is currently dredging its harbour in an attempt to allow access to larger ships. In short, we’re closest and we can handle large shipments that almost none of our competition can take.
What are our weaknesses?
The biggest problem facing Halifax is size. We do not have anywhere near the population of New York, so while shipments there can be unloaded and immediately brought to market, here they must be transported to larger cities. That means higher costs. Transporting by land is more expensive than by sea. Also, every step in the process adds expenses. That means all of the extra loading and unloading steps involved in our port raise costs.
Even worse, New York already has good relationships with the major players and they’re improving transportation routes to the U.S. Midwest. The bottom line is, we can get shipments to their destinations faster, but it’s going to cost more than our U.S. competitors.
What are our chances?
The opportunity is real.
“I don’t think there’s anyone who doubts the size and potential of this opportunity,” said Charles Cirtwill, acting president of the Atlantic Institute for Market Studies.
Cirtwill’s views were shared by every speaker at the symposium yesterday. Nova Scotia has a lot of potential, especially with certain products. Low-priced goods are probably going to keep going to New York. For products only selling for a few dollars, every bump in cost is significant. But when it comes to more expensive items (a few extra dollars isn’t going to discourage someone from buying a motorcycle) or fashion items, our speed can be a big advantage.
The key is moving quickly. The Panama Canal is being revamped to allow for larger ships, so our moment of opportunity may not last long. We need to set up working relationships quickly or lose out completely.
“If we don’t get our act together, none of it’s going to come here. We’re going to be sitting as a backwater and not only Halifax, but also Montreal is going to die,” Cirtwill said.
What do we need to do?
Halifax needs to aggressively sell itself. Unlike the West Coast, we’re only at about half our shipment capacity, so there is huge potential for growth. But we need to set up relationships in Asia and attract trade to our ports before they head elsewhere.
Several symposium speakers talked about Nova Scotia’s need to send business and political leaders to Asia to make deals face-to-face.
What are we doing?
Waiting, for now.
“There’s steps already happening. We want to do it right from day one. That’s why we’re going out to do market analysis and put an action plan in place,” Premier Rodney MacDonald said.
MacDonald expects this action plan to be ready midway through the summer, at which point his government can put things into motion. In the meantime, work is going on behind the scenes. Port officials are meeting with prospective business partners, the province has been talking to the federal government and, of course, there’s Melford.
What effect will the Melford terminal have?
MacDonald points to Tuesday’s announcement of a $300 million terminal in the Strait of Canso as a sign that the private sector is investing in Nova Scotia ports. While it is a competitor for Halifax, analysts hope that the rapid economic growth of China and India, and the ever-increasing demand at home, will lead to plenty of business for both operations.
Is the environment being taken into account?
“Carbon footprinting will become the measure that we will all live by in the future. We must plan to implement this into the Atlantic Gateway,” said Brian Gerrior of the Canadian Retail Shippers Association, one of several speakers at the symposium.
No specific environmental plans were laid down, and the issue was only mentioned briefly. But the limited environmental debate centered around how having a green gateway might not just be a luxury, but a necessity.
How much federal money is involved?
There is about $3 billion allocated toward gateway projects federally. But $1 billion is already earmarked for the West Coast to help improve capacity and infrastructure there. There is about $2.1 billion available for the rest of us, though Halifax will be competing with other developments in central Canada. The Tories have said that funding will be dependent upon sound business plans, so how much money Nova Scotia receives could come down to how well it sells itself.