FILE : THE TRANSFORMATION OF SHIPPING ROUTES
Port of Montreal's Adaptation Strategy
In an industry undergoing profound change, Montreal is determined to strengthen its global reach: A resilient port’s adaptation strategy.
Who would have thought 10years ago that the Port of Montreal would be competing with West Coast ports over routes to Asia? Today, China accounts for 7% of the port's container traffic, and it is about to surpass leading markets such as the United Kingdom.
The new rules of the game
The marine transportation scene is changing. Strong economic growth in developing countries coupled with the slowdown in developed countries is making economic poles slip southward, particularly towards Asia. South-south trade is exploding, supply chains are stretching around the world, while giants of the sea able to carry more than 18,000 TEUs are emerging, and gigantic hub ports with waters deep enough to serve them are emerging to accommodate them.
In this context, ports are testing their capacity to adapt. Each has is own assets. One port’s solution does not necessarily suit another. The Port of Montreal has developed a multifaceted strategy.
Better use of the water column
Mega-ships are only used on the very high-volume routes between Europe and
Asia. Secondary routes are inheriting larger vessels. This general increase in
vessel size causing displacement is called the "cascade effect".
Located 1,600 km upstream from the Gulf of St. Lawrence, the Port of Montreal is not a deep-water port. Like many other ports, it will never welcome the 400-metre-long giants, yet it has managed to maximize the use of its water wealth: the river’s navigation channel. Its efforts are providing convincing results: the average size of vessels heading to the port has increased eightfold since 1975. The port now welcomes post-Panamax-type ships carrying up to 6,000 TEUs.
To be able to accommodate larger and larger vessels, the Port of Montreal developed electronic navigation tools through a project that involved several partners: the Coast Guard; St. Lawrence River pilots; the Canadian Hydrographic Service; and the shipping lines.
These tools can measure the available water column in real time and make simulations, which makes it possible to prepare loading plans for the vessels and maximize their loads when the leave Europe, eight days before their arrival.
In response to the migration of economic development poles to developing countries, especially Asia, diversification became a major element in the Port’s strategy. The process was already underway 10 years ago. Back in 2000, 77% of container traffic came through Northern Europe. In 2013, this market accounted for only 44%. Asia took 14% of the traffic and the Middle East, 8%.
Now that goods are transshipped from mega-ships to smaller vessels, via the Suez Canal, the Port of Montreal has become an alternative to the West Coast ports to reach the Pacific Basin.
Transshipment makes it possible for the Port of Montreal to diversify its markets and reach emerging
markets. One of every three containers moving to the port is transshipped.
Today, one in three containers is transshipped at the Port of Montreal. Typically, a container leaves Montreal aboard an average-size vessel to a transshipment port, or transfer hub, in the Mediterranean or Northern Europe. There, it will be transferred aboard a mega-ship that will carry it to markets in the Middle East or Asia via the Suez Canal.
It’s the same in Latin America: a service connects Montreal to a hub port in the Bahamas, and from there, South America becomes accessible.
“The priorities change from one shipper to another,” said Yves Gilson, Marketing Manager at the Port of Montreal. “For some, it’s time; for others, it’s cost. In the case of a delivery from Vietnam to Montreal, for example, the importer seeking the best cost will optimize vessel transportation to the final destination, via the Suez Canal and the Mediterranean.”
The EU agreement: stimulating
In other news, the Port of Montreal intends to make the most of Canada’s new trade agreement with the European Union, which should result in an upsurge in trade with Europe, one of its traditional markets. Quebec exporters are only eight days away from the world’s largest economic bloc. A collaborative agreement with the Port of Antwerp will ensure VIP treatment to shippers who use the services between these two ports.
The Port of Montreal occupies a strategic geographic position on the route between Europe and the huge market of the U.S. Midwest, and it remains the leader. But competition there is lively! To stay in the lead, the Port is working with its rail partners CN and CP to improve its operational efficiency and enhance its service offering. Its added value took the form of a reduction in the container dwell time for rail imports. Dwell time has fallen below 2.5 days in the last five years and is still dropping.
Among its efforts to develop value-added services, starting in 2014 the Port of Montreal will provide containerized grain transportation in partnership with CanEst Transit. An old grain elevator annex that is no longer used (Elevator No. 3) will be converted into a modern world-class facility where grain will be stored and loaded into containers. Read the article on CanEst in this edition.
A worldwide presence
Along with its efforts to offer value-added services and further improve the flow of cargo movement and operational efficiency, the Port is strengthening its international presence. In addition to its representatives in Europe and the United States, a new colleague is representing the port in Asia, very close to the decision-making centres of large industry players. At its Montreal headquarters, the Port’s Growth and Development team has itself grown. We have launched a microsite in Germany and a branding campaign, and sharpened our marketing tools.
In short, the Port of Montreal is showing great resilience and is keenly focused on innovation to adapt to a dramatically changing environment.