BMI View: In 2015, we anticipate a somewhat mixed bag in terms of performance across Canada ' s main ports. Leading the way in terms of y-o-y tonnage growth is set to be the Port of Montreal with growth of 5.66% pencilled in. In the box sphere, the Port of Prince Rupert is set to be the outperforme r with very impressive growth of 36.24%, although the port does start from a lower base than the ports of Vancouver and Montreal. Lower oil prices are set to curtail export growth in Canada in 2015, which will hold back the country's shipping industry somewhat, but manufactured goods exports will increasingly pick up the slack, ensuring a secular decline of the current account shortfall.
Major currency depreciation and the resurgence of US demand will continue to drive a narrowing of Canada's current account deficit in 2015 and 2016, while simultaneously providing a welcome boost to the Canadian shipping industry due to the US' place as by far Canada's top export partner. Moreover, while the value of Canadian crude oil exports will be substantially lower than in 2014 as a result of the sharp drop in oil prices, this will be partly offset by exchange rate weakness, which will improve competitiveness in other exports, opening up potential new avenues for Canadian shippers.
Headline Industry Data
Port Metro Vancouver tonnage throughput is forecast to grow 5.50% in 2015. We project throughput to reach 147.31mn tonnes by the end of 2015.
Port Metro Vancouver container throughput is forecast to increase by 11.40% to reach 3.25mn twenty-foot equivalent units (TEUs) in 2015.
Port of Montreal tonnage throughput is forecast to increase by 5.66% to reach 32.17mn tonnes in 2015.
Port of Montreal box throughput is forecast to grow by 3.86% to reach 1.46mn TEUs.
Key Industry Trends
Logic of Halifax Nominations Questioned By MP - Following a year of declining box traffic at the Port of Halifax (a contraction of 9.52% by our calculations), an MP in Nova Scotia has questioned the logic underpinning the recent award nominations of the port. The Halifax Port Authority was a finalist for two awards - the corporate social responsibility award and port authority of the year - issued by shipping magazine Containerisation International. Halifax MP Megan Leslie wondered how it is that the Halifax Port Authority is in the running for port of the year even though container traffic has been on a steady decline and person hours are falling.
Tacoma/Seattle Link Up Could Affect Canadian Shippers - The linking of the ports of Tacoma and Seattle in the US under the newly named Northwest Seaport Alliance to create the US' third largest container port could pose a threat to Canadian ports going forward as the move was underpinned by a desire to counter growing threats from ports in Canada, Mexico, and the east coast of the US and Southern California.
New Railcar Deal Could Buoy Shippers -next play/pause pre 1/1 Saskatoon-based Canpotex announced in June 2015 that it had placed a CAD70mn order with National Steel Car to construct 700 new railcars designed specifically to transport potash to coastal ports in Canada, which could provide upside risk to our medium-term forecasts. Canpotex has invested more than CAD500mn since 1999 to build more than 7,000 railcars with National Steel Car.
Risks To Outlook
Ports in British Columbia, such as the port of Prince Rupert in Canada, could benefit from ongoing port congestion at the US West Coast ports, as shippers look to avoid the US altogether to reduce the time taken on journeys. A prolonged labour dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union, which has been ongoing since mid-May 2014, as well as structural and resource issues related to accommodating larger container ships, have combined to create severe bottlenecks at the ports of Los Angeles and Long Beach. The protracted negotiations and delay in resolving the congestion issue have forced global cargo logistics companies to look for alternative routes to deliver their goods.
The Port Metro Vancouver, meanwhile, is set to benefit from the construction of a new export grain terminal. G3 Global Holdings has established a joint venture with Western Stevedoring Company Limited to determine the feasibility of conducting the work. We note that farmers will benefit from the development should it go ahead, as journey times will reduce between the port and farms.