2023-09-05 09:00:00
Posted at 5:00 a.m.
The Port of Montreal has not escaped the swing of the pendulum following two years of congestion, with a marked decline in container traffic. Even if the trend will continue, the port authority believes that it would be “irresponsible” to back down with the Contrecœur expansion project, an opinion that is not unanimous.
“The demand for imports is less strong,” bluntly asserts Guillaume Brossard, vice-president of development, marketing and international relations at the Montreal Port Authority (MPA). “We notice a return to ways of doing things that we saw a little more in the past compared to the last two years. »
As a result, the number of cans transiting through Montreal fell by 13% from January to July. This trend can also be observed outside metropolitan France. The declines were also marked in Vancouver (-16.3%), the most important port in the country, as well as in Halifax (-6.3%). The slowdown is also observed south of the border. For example, in New York, container volumes are down 13.2%.
We point the finger at the economic slowdown, but also at the still well-stocked warehouses of many merchants. The disruption of supply chains during the pandemic, responsible for significant delivery delays, has prompted many retailers to order more to build up reserves in the hope of avoiding stockouts.
They are now trying to sell these goods at a time when the pressure is increasing on household budgets. Other consumers are now spending in other sectors, such as travel, which reduces new orders.
For the months of June, July and August, revenues are down around 20%. It’s very quiet. We’re kind of those who get ahead of recessions. I have a feeling the holiday season is going to be very quiet.
Daniel Bineau, president of Groupe Lafrance, which specializes in transportation and logistics
The company, whose trucks make round trips to and from the Port of Montreal, among other things, is first-hand to see the repercussions of the slowdown.
“We have never had so many calls from truckers and valets wanting to get a job,” underlines Mr. Bineau, referring to the scarcity of labor in the trucking industry. They get cut off from work elsewhere. It’s the same story with other competitors. »
The glass half full
The container niche accounts for approximately 40% of activities at the Port of Montreal. The increase observed on the side of liquid and solid bulk – cereals, fuel, kerosene to supply aircraft engines – makes it possible to limit the damage. Taking this sector into account, the overall volume shows a decline of 2.6%.
Nevertheless, everything indicates that there will be less than 1.7 million containers – the result of 2022 – handled on the docks of the metropolis this year.
“We don’t have a crystal ball that signals a recovery,” says Michael Fratianni, president and CEO of Montreal Gateway Terminals, which operates two of the port’s three international terminals. “There are concerns for volumes. Warehouses are full of goods and more services are now being purchased. »
The Maritime Employers Association (AEM) – the employer of some 1,100 stevedores who load and unload ships in Montreal – must also adjust. On average, since May, between 100 and 200 longshoremen find themselves in a layoff situation each week since the workforce has to be adjusted to the volume. The stevedores’ employment contract provides that they obtain financial compensation equivalent to their salary if they find themselves temporarily out of work.
The Port of Montreal can accommodate up to 2.1 million containers on its docks. Technically, it has not yet reached its full capacity. It never recorded a level above 1.7 million units. On the edge of the Atlantic, Halifax estimates that it can accommodate twice as many metal boxes – or 600,000 “twenty-foot equivalent” containers – without overflowing. In this context, some are wondering if the MPA’s expansion project in Contrecœur still has its raison d’être.
“We don’t see the volume coming at this time,” says a source from the Montreal port ecosystem who is not authorized to speak publicly. Do we need a new terminal or is it better to use our current facilities more efficiently? »
Forward, but…
Even before the groundbreaking ceremony, the Contrecœur project is facing major cost overruns. The bill now fluctuates around 1.4 billion – compared to between 750 and 950 million previously – and the financial package is not yet complete. Despite everything, there is no question of backing down, says Mr. Brossard.
“It would be irresponsible to do otherwise,” he said. Our job is to predict the future. Ontario alone will need one million more containers by 2035, according to our analyses. It will not only go through Montreal, but there will be needs. The capacity needs to be there when the economy picks up. »
Despite a capacity of 2.1 million containers, there is a loss of productivity when the space is occupied at more than 85%, argues Mr. Brossard. At 1.7 million cans last year, we are approaching that level, he adds.
Professor of operations and logistics management at HEC Montréal, Jacques Roy believes that the reflection between improving the efficiency of existing facilities and an expansion project deserves to be made.
“When you look at the numbers [du trafic de conteneurs], the argument may seem weaker, says the expert. We don’t have a nice curve to show. There are good sides to the project. But is it relevant? How fast will traffic pick up? Additionally, there is space available in other ports in eastern North America. »
At Concordia University, emeritus professor of maritime transport Brian Slack believes that the expansion project is now a financial question in the context of soaring costs.
“Can the traffic justify the massive sums needed? he wonders. I also have another question: is the Port of Montreal capable of regaining market share in southern Ontario and the American Midwest? It won’t be easy. »
Expansion in Contrecoeur: international appeal, local response
ILLUSTRATION PROVIDED BY THE PORT OF MONTREAL, LA PRESSE ARCHIVES
The planned container terminal in Contrecœur
The interest of foreign consortia in the construction and operation of the Contrecœur terminal has faded over time, learned The Press. These are mainly local players who have discussions with the Montreal Port Authority (MPA), which are also longer than expected.
Of the three groups retained by the federal agency in May 2022, it is the one formed by Axium Infrastructure Canada – one of the owners of Société Terminaux Montréal Gateway – and Pomerleau Capital which is the most active, according to information gathered. from several sources familiar with the case, but who are not authorized to discuss it publicly.
“The context has changed in the private sector,” said one. Rather than expanding, some now prefer to focus on their existing businesses. »
Alongside the local consortium, we find Ports America Holdings, a group present in 33 ports across the United States, as well as Terminal Investment Limited (TIL), a subsidiary of the Mediterranean Shipping Company, one of the main players in the sector. maritime.
These three finalists did not respond to questions sent by The Press.
The decision to launch an international appeal was announced in November 2021 by outgoing President and CEO Martin Imbleau, who will leave his post on Friday to take charge of the VIA Rail subsidiary responsible for the high-frequency train project between Quebec and Toronto.
It was not possible to know how the different levels of interest within the consortia influence the negotiations with the PAM. As part of the Contrecœur expansion, it is expected that the private partner will have to participate in the financial package.
The federal agency does not wish to comment on the state of the discussions, indicated its director of communications, Renée Larouche.
“The Administration should make an announcement on the outcome of the procurement process when it is completed, which is by the end of 2023,” she said in a statement.
Retard
When announcing the three finalist consortia, the PAM expected to have chosen “its partner” during the “second quarter of 2023”. There is therefore a delay in this regard and it is reasonable to wonder whether construction will begin “at the end of 2023”, as indicated by the federal agency on its website.
The vice-president of finance, Geneviève Deschamps, assumes the interim because of the departure of Mr. Imbleau, but it is not known who will take control in the longer term.
At the same time, the MPA is still negotiating with the Trudeau government to obtain funding of approximately $150 million to cover the cost overruns of the Contrecœur project. Discussions are going well, according to our information, but an official announcement has still not taken place. For its part, the Legault government has already agreed to pay 75 million more. It therefore supports the expansion to the tune of 130 million.
Another file is also slow to settle: the protection of the copper knight. Ottawa has protected part of the habitat of this fish, which is partially encroached on by the construction site planned for Contrecœur. The challenge for the Port of Montreal is to obtain a license from Fisheries and Oceans Canada under the Species at Risk Act. This only provides for three exceptions to intervene in an officially designated critical habitat.
On many occasions, the MPA has expressed its confidence in the proposed “compensation measures”, but the decision of the federal authorities is slow to be announced.
The Contrecoeur project in brief
Budget*: 1.4 billion
Capacity: 1.15 million containers
Facilities: two berths and a railway yard
Commissioning*: towards the end of 2026
* According to the most recent information available
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