The Port of Montreal is not immune to the swing of the pendulum after 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 move backwards with the Contrecœur expansion project, an opinion which is not unanimous.
“The demand for imports is less strong,” bluntly states Guillaume Brossard, vice-president of development, marketing and international relations at the Montreal Port Authority (MPA). “We are noticing 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 13% from January to July. This trend is also observed outside the metropolis. 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 the household budget. Other consumers are now spending in other sectors, such as travel, which reduces new orders.
The company, whose trucks travel back and forth to the Port of Montreal, among other things, has a front-row seat to witness the repercussions of the slowdown.
“We have never had so many calls from truckers and valets wanting to get a job,” said 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 container niche represents approximately 40% of activities at the Port of Montreal. The increase observed in liquid and solid bulk – cereals, fuel, kerosene to power aircraft engines – helps limit the damage. Taking this sector into account, the overall volume shows a decline of 2.6%.
However, everything indicates that there will be fewer than 1.7 million containers – the result for 2022 – handled on the metropolis’s docks this year.
“We don’t have a crystal ball that signals recovery,” says Michael Fratianni, president and CEO of Société Terminalaux Montréal Gateway, which operates two of the port’s three international terminals. “There are concerns about volumes. Warehouses are full of goods and more services are now being purchased. »
The Association of Maritime Employers (AEM) – the employer of some 1,100 longshoremen who load and unload ships in Montreal – must also adjust. On average, since May, between 100 and 200 longshore workers have found themselves laid off each week since the workforce must be adjusted to the volume. The longshoremen’s employment contract provides that they obtain financial compensation equivalent to their salary if they find themselves temporarily without 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 has 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 in 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? »
Even before the first shovel in the ground, the Contrecœur project is facing significant cost overruns. The bill now hovers around 1.4 billion – compared to between 750 and 950 million previously – and the financial package has not yet been completed. Despite everything, there is no question of going backwards, 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 more than 85% occupied, argues Mr. Brossard. At 1.7 million metal boxes last year, we are approaching this 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 is worth doing.
“When you look at the [container traffic] numbers, the case 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 trafficking 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. »
The interest of foreign consortia in the construction and operation of the Contrecœur terminal has faded over time, La Presse has learned. These are essentially 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 Terminals 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 are 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 La Presse.
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 different levels of interest within the consortia influence negotiations with the APM. As part of the expansion to Contrecœur, it is expected that the private partner will have to participate in the financial arrangement.
The federal agency does not wish to comment on the state of the discussions, said its director of communications, Renée Larouche.
“The Administration is expected to 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.
When announcing the three finalist consortia, MPA expected to have chosen “its partner” during the “second quarter of 2023”. There is therefore a delay in this regard and it is questionable 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 unclear who will take charge 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. He therefore supports the expansion to the tune of 130 million.
Another issue is also slow to be resolved: the protection of the copper knight. Ottawa has protected part of the habitat of this fish, on which the planned construction site in Contrecœur partially encroaches. The challenge for the Port of Montreal is to obtain a permit from Fisheries and Oceans Canada under the Species at Risk Act. This provides only three exceptions for intervening in officially designated critical habitat.
The APM has repeatedly expressed confidence in the proposed “compensation measures,” but the federal authorities’ decision has been slow to be announced.
Budget*: 1.4 billion
Capacity: 1.15 million containers
Facilities: two berths and a railway yard
Commissioning*: circa end of 2026
*Based on the most recent information available
