Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

You still think we need a Gateway?

with 5 comments

My thanks to Donna Passmore and Rita Dawson for supplying the following

“The slump in traffic to the West Coast of the United States is hitting the massive Yantian container terminal operated by Hutchison Whampoa. It is suffering volume declines for the first time. A majority of Yantian’s traffic is from shipping lines servicing routes to North America, where demand has been driven down by the American property slump and dwindling consumption of household consumer goods. It is expected to report a drop in volumes for the first half, having declined for five consecutive months.”

source: The Times

“Orders for new container ships are drying up as vessel charter rates and ocean freight rates tumble and volume growth slows on key liner trade routes. The collapse in orders, which has affected all ship sizes, follows five straight years of historically high deliveries. Only 179 container ships were contracted in the first eight months of this year, down 49 percent from the same period last year, Clarkson said. This compares with a record 566 contracts in 2005, 479 in 2006 and 530 in 2007. Container ship contracting has been hit by “a good old double whammy” of slowing trade volume and rising shipyard prices.”

source: Supply Chain Asia.com

“Container ships are idle because of lowered U.S. demand for goods.

Commodity carriers are going to be hit the hardest with the tightening credit markets, along with dry bulk, where many of the vessels ordered were going toward.”

source: ETF Trends

Ship Rates Plunge as Credit Freeze Strands Cargo, Demand Slumps

By Alaric Nightingale and Chan Sue Ling

Oct. 15 (Bloomberg) — Commodity shipping rates plunged to the lowest in more than five years as a lack of trade finance left cargoes stranded and the global economic slowdown limited raw material demand.

Traders are finding it harder to get letters of credit that guarantee payments for goods, shipping executives said. Together with a slowdown in trade, that has contributed to this year’s 82 percent drop in shipping costs for grain, coal and other commodities. Rates are so low that Zodiac Maritime Agencies Ltd., the line managed by Israel’s billionaire Ofer family, announced today it may idle 20 of its largest ships.

“Letters of credit and the credit lines for trade currently are frozen,” Khalid Hashim, managing director of Precious Shipping Pcl, Thailand’s second-largest shipping company, said in Singapore yesterday. “Nothing is moving because the trader doesn’t want to take the risk of putting cargo on the boat and finding that nobody can pay.”

The Baltic Dry Index fell 11 percent today to 1,615, the lowest since February 2003. Rates for larger ships of the type Zodiac intends to idle fell 17 percent today, taking this year’s plunge to 85 percent, according to the London-based Baltic Exchange.

Banks are leery of financing commodities and shipping transactions. Rio Tinto Group, the world’s second-largest aluminum producer, may delay the planned sale of $10 billion of assets and Sterlite Industries (India) Ltd. shelved its $2.6 billion purchase of Asarco LLC. Ship owners can’t find cash to finance the construction of new ships.

The reaction so far to the news of the impact of recession from our provincial government is that they intend to accelerate the building of infrastructure projects. Which might make sense as a stimulus package except that these projects are not now justified. It was the government that said we needed more roads to grab more Asian trade – but there is no more to grab. Perhaps if they had been honest and said, ‘we would like to promote a new rash of low density commercial and residential development in some of the most ecologically sensitive parts of the region and rip up the LRSP’ then they might have a case. But they chose not to do that. They stuck to a story that looked thin two years ago, and is totally absent now. The port expansion will be a massive white elephant. The landside development will doubtless be changed swiftly to match the new reality. It is always easy to make money by changing zoning. Though even then I suspect that it will be a while before the property market picks up again.

Recession is being viewed as bad news, but actually it might be our salvation. We have a very short time to make drastic reductions in our ghg emissions. 80% is the target that the UK has picked, though they are giving themselves until 2050 to do it. It is abundantly clear that the path of ever increasing growth is not sustainable. In fact that has been clear ever since the Bruntland Commission. This region is also on the edge. While Metro tries its best to talk a good story. the BC Liberals seem determined to drive us over it. But surely if we are being driven solely by business, common sense would dictate at least a little hesitation before committing us to what now looks like folly. It is not good business to try to increase your share of a declining market when there is already spare capacity.

Written by Stephen Rees

October 28, 2008 at 7:15 pm

Posted in Gateway

5 Responses

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  1. Here’s an article from the Surrey Leader:

    http://www.bclocalnews.com/surrey_area/surreyleader/business/Inland_port_begins_to_take_shape.html

    and an excerpt:

    Inland port begins to take shape

    By Jeff Nagel – Surrey North Delta Leader

    Published: October 28, 2008 10:00 AM
    Updated: October 29, 2008 12:31 PM

    A new container handling centre in Cloverdale is part of a vision for an inland port that aims to avoid cargo train congestion closer to the waterfront.

    Rail cars full of Prairie grain are now rolling into the site, just south of Highway 10 and 180 Street.

    Peas, lentils, beans, wheat and barley are being reloaded from dedicated grain cars into containers there and then trucked to Deltaport for shipment to Asia.

    It’s all part of a strategy by grain handler Parrish & Heimbecker and partner Southern Railway of B.C. to keep trains on the move, rather than being jammed up through Vancouver and Burnaby waiting to be handled at Burrard Inlet.

    Ron C.

    October 29, 2008 at 1:54 pm

  2. Re: Surrey Leader article

    The rail lines are so congested that they truck goods from Cloverdale to Deltaport, and the provincial government wants to expand highways instead of the rail network. Hmmm.

    Sungsu

    October 29, 2008 at 3:04 pm

  3. I have always pointed out here and in my public speeches that the real problem of congestion for the port is the lack of railway capacity. But the Gateway does nothing to address that issue. The current notion of “short sea shipping” seems to be more about double handling than anything else.

    Grain is not normally exported in containers. Most goes in bulk.

    The Burrard Inlet railway tracks are the problem. There is currently no sign of congestion at Deltaport as the many images I have taken there testify (see my flickr stream)

    Stephen Rees

    October 29, 2008 at 3:12 pm

  4. The article suggests that there is a change in handling preference away from bulk handling to containerized shipping for ease of distribution at the destination.

    The article also says that the delays in Vancouver are due to delays in handling in Vancouver – so the capacity is required in Vancouver railyards or in Vnacouver port handling capacity.

    The article does say that Southern Railway will eventually transport the containerized grain to Deltaport by train.

    Here’s the rest of the article:

    “You’re not clogging the Vancouver corridor with trains,” said Parrish and Heimbecker vice-president John Heimbecker. “You’re stopping them out here. So the turnaround is really fast.”

    The operation is putting more trucks on the road through Surrey and Delta.

    But that could change in the future as well, as the aim is to reload the containers onto rail for the final leg to Deltaport.

    “That is the ultimate dream,” Heimbecker said. “All this truck traffic then disappears.”

    He noted containerized grain is easier to ship inland and distribute once it reaches Asia.

    Southern Railway of B.C. hopes it’s the start of an emerging inland port with at least three similar terminals spread out in the Fraser Valley that would handle containers of outbound export products, and potentially inbound imports as well.

    “It’s the first step of building the volume, the density you need to offer the special train concept,” said railway president Frank Butzelaar.

    Southern is looking at other potential sites up the valley in addition to a property it already has in Chilliwack.

    Butzelaar said a train might start in Chilliwack, pick up containers there, roll through to Langley and add more and finally pick up more grain-loaded containers from the new Cloverdale centre before heading to Deltaport.

    Transportation minister Kevin Falcon noted the Cloverdale terminal is well-positioned to take advantage of the Pacific Gateway infrastructure upgrades, as it is near the crossroads of newly expanded Highways 10 and 15.

    Ron C.

    October 30, 2008 at 11:24 am

  5. Ron – I think that if you have provided a link it is not necessary to copy the whole thing into your comments. If people are interested they can easily click on the link. This is also more respectful of the provisions of copyright.

    Stephen Rees

    October 30, 2008 at 1:10 pm


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