China's growth hits home in B.C.
Those who handle trade traffic in and out of Vancouver say we risk falling behind
Bruce Constantineau
Vancouver Sun; with files from Canadian Press
Friday, December 31, 2004
B.C. ports, railways and road networks will burst without major improvements to handle the explosive growth in trade with China -- that's the transportation industry's consensus.
"We're struggling to handle the business we have today," said B.C. Trucking Association chief executive Paul Landry. "If we don't get going on some of these improvements, our ability to compete as the port of choice on the West Coast will be severely compromised."
The trade numbers with China speak for themselves.
Between 1992 and 2003, the total value of B.C. exports to China grew by 357 per cent to $1.1 billion while the value of imports grew by more than 1,100 per cent to $427 million.
More than 10 million tonnes of commodities to and from China moved through the Port of Vancouver during the first eight months of 2004 -- a 60-per-cent increase from a year earlier.
With a population of 1.3 billion, China has a huge emerging middle class and its $1.7-trillion economy has recently grown by more than nine per cent a year.
Pulp is the most popular B.C. export to China, accounting for about 45 per cent of exports in 2003. The most popular Chinese imports include toys and games, audio/video equipment, footwear, computer equipment and household furniture.
Port of Vancouver officials expect the volume of container traffic at the port -- fuelled by the Chinese economic boom -- will triple to more than five million TEUs (twenty-foot equivalent units) by 2020.
(A TEU is a measure of the size of containers used for shipping cargo, with a 40-foot-long container being two TEUs.)
Vancouver Port Authority president Gordon Houston recently headed a trade mission to China and said the Chinese are anxious to do business, although they consider Vancouver a very small port by their standards. Vancouver handles about 1.7 million TEUs of container traffic a year, compared with 18 million TEUs in Hong Kong and about 12 million TEUs in Shanghai.
"Right now, Canada accounts for just one per cent of Chinese exports," Houston said. "What would happen if we went to two per cent? It's a minuscule percentage but would translate into a huge amount of cargo."
He said the Port of Vancouver plans to accommodate the boom in Asia-Pacific trade by building a new container facility every two years between 2006 and 2020, at a total cost of $1.4 billion.
But Houston stressed those improvements can't be done in isolation and must be complemented with similar upgrades to provincial road and rail networks.
CN Rail representative Mark Hallman feels the railway is well prepared to accommodate future Asia Pacific cargo growth, noting it has already committed to spending $15 million to improve the line from Prince Rupert to Prince George when Prince Rupert develops a new container operation, expected to open in 2006.
CN recently opened business offices in Shanghai and Beijing to capitalize on growing trade opportunities between China and North America and Hallman said everyone in the transportation "logisitcs chain" must work together to handle the surging business -- including ports, railways, terminals and steamship companies.
"The whole issue of China represents a huge logistics change and we all need to talk to each other and plan together," he said.
Hallman said bottlenecks that sometimes occur at the Port of Vancouver more often result from poor management of cargo flows than insufficient facilities.
"Containers arrive in Vancouver at varying times and we need more certainty in terms of what's coming our way and what has to go first," he said.
Landry said trade with China represents a very significant portion of the trucking business in B.C., as many truck drivers do nothing but transport intermodal containers, which can be carried by trains or trucks. Some even turn business away as they get frustrated by long lineups at container terminals that typically operate from 7 a.m until 4 p.m. five days a week.
"We need more extended hours and more flexible hours spread out over the course of the week," Landry said. "Is there any other factory in the world that is overbooked in terms of orders and works slightly more than a 40-hour week?"
He said the Lower Mainland road network is nowhere near ready to handle the traffic volumes expected over the next 10 to 15 years and proposals like twinning the Port Mann Bridge and expanding the Trans-Canada Highway can't happen soon enough.
"We are slowly grinding to a halt and I'm not exaggerating," Landry said. "Trip times are increasing, trip speeds are decreasing and there's no relief in sight."
Besides transportation issues, dealing with China on a corporate level also raised concerns in 2004.
Noranda, a mining company with a stock market value of about $6.2 billion, announced in September that it was in negotiations with Minmetals, a Chinese government-owned firm that wanted to buy it.
Those negotiations seem to have fizzled out, but when the talks were announced, both Finance Minister Ralph Goodale and Industry Minister David Emerson expressed reservations about a Chinese government-controlled company owning Noranda.
Despite those reservations, federal and provincial officials are actively promoting trade with China. Several trade missions to China are planned for 2005 and Chinese firms are actively looking for investments in British Columbia.
China's economy has been booming, stoking a voracious appetite for commodities.
"China's rise in the past 20 years has been spectacular," observed Dan Griswald, director of trade policy studies at the Cato Institute in Washington.
"The world has maybe never seen anything like it."
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ENORMOUS PRESSURE ON THE PORT OF VANCOUVER:
Chinese container traffic has escalated incredibly over the past five years, jumping 218.6% since 1999.
1999: China 1.6 million metric tonnes
Japan 2.6 million
Taiwan 1.1 million
2004: China 5.1 million metric tonnes
Japan 2.8 million
Taiwan 1.2 million
China's 218.6% Increase
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THE CHINA SYNDROME
Everything about China is huge: Its economy, its population and its hunger for trade. B.C. is under incredible pressure dealing with a 357-per-cent increase in exports to China since 1992 and an incredible 1,100-per-cent increase in imports.
China's economy:
1.3 billion people
$1.7 trillion GDP
B.C.'s top export markets*
China: $1.1 billion +357.5%
U.S.: $19.5 billion +129.9%
Japan: $3.7 billion -10.9%
*2003, **Percentage change since 1992
Read the Colossal Change series at canada.com
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