FREDERICTON – The deepening financial crisis and looming recession in the United States may hold up plans for the Maritimes to become a transatlantic shipping gateway, economists say.
Experts have long predicted an increase in global trade could lead to a doubling of shipments to North America over the next 15 years, from approximately 50 million containers annually to 100 million.
The log-jam of container traffic at popular west coast ports presented Halifax with an opportunity to grab a slice of the growing shipping market.
Many hoped the Port of Halifax, and the Maritime region as a whole, could become a premier destination for Asian goods travelling through the Suez Canal towards markets in eastern and central North America.
But David Chaundy, senior economist with the Halifax-based Atlantic Provinces Economic Council, said much of the bottlenecking at Pacific Coast ports has already been remedied by upgrading infrastructure.
In addition, the anticipated slowdown in cargo traffic, as the United States faces a recession, will give major ports time to make further upgrades.
“We had a window where we could take advantage of some of these pressures, but the window that Atlantic Canada had may have passed,” Chaundy said.
Halifax handles about half a million containers a year, but the city’s two terminals have the potential to handle 1.4 million containers, nearly three times that amount.
A recent study projected that developing Atlantic Canada and New England as a regional trade corridor could create billions of dollars in revenue and 100,000 jobs.
But a slowdown in transatlantic container traffic would bring those lofty projections into question.
While the broader impacts of the crisis in the U.S. are not yet clear, the impact of the current U.S. slowdown is already being felt by exporters in the Atlantic region.
The value of Atlantic Canada’s non-energy exports to the U.S. plunged 12 per cent over the first seven months of 2008, according to the Atlantic Provinces Economic Council’s forthcoming Atlantic Report.
The latest drop follows three consecutive years of declines between five and six per cent.
Ian Munro, director of research at the Atlantic Institute for Market Studies, said that while projected short-term gains in cargo shipments may be stalled, long-term projections for an increase in transatlantic trade will likely still hold true.
“If you are someone who is sitting down with a spreadsheet, and looking at how many containers will come this year, that’s going to push this back a bit,” he said.
“The very broad trend of increasing trade with Asia, of more goods and services coming, I don’t see that as being jeopardized. In the longer-term, in the next 10 or 20 years, there will be booms and busts but the general trend towards increased trade with Asia, particularly India, will continue.”
To lure more container traffic it’s imperative private enterprise sell Halifax and the rest of Atlantic Canada as a destination to major cargo ships, said Chaundy.
“If we don’t have one of those larger ports we might not see them,”
Chaundy said, adding that the New York port recently expanded and is well-prepared to accommodate increased traffic.
Chaundy said private enterprise must take the lead in bringing traffic to the Halifax port, and must work with CN Rail to ensure timely and cost-effective delivery of goods once they dock at the port.
Munro said the current financial crisis doesn’t change what Canadian federal and provincial government must do to help develop a regional gateway.
Government must present a competitive tax regime, promote schools and universities, and ensure the infrastructure is in place, such as good roads and ports, to accommodate increased traffic, Munro said.