Transport Committee on Nov. 1st, 2023

[Christopher Hall]

Ports have a unique way of describing themselves. Sometimes they'll describe their size in terms of total tonnes of goods shipped. Sometimes they like to refer to the number of containers. Then they'll refer to other volume measures. So, the answer is that it depends. I'm sorry that isn't a clear answer.

In terms of the 17 CPAs, they're all very different, as you know. The old expression is that if you've seen one port, you've seen one port. However, there are certainly many small ones within the system and a few larger ones. You could probably draw your own conclusions as to which ones would probably struggle under the new reporting requirements.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Hall.

Thank you, Mr. Barsalou-Duval.

Next we have Mr. Bachrach.

The floor is yours. You have six minutes, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to both of our witnesses for joining us.

I'll start with a couple of questions for Mr. Sobkowich.

AT a previous meeting, there was a representative from Global Container Terminals who expressed some concern about the ports' wanting to increase their borrowing limits. This is something that we've heard repeatedly from the ports. I'll quote his testimony:

Increasing the borrowing limits for port authorities does not necessarily stimulate private investment; rather, it can deter it. This happens because port authorities must repay what they borrow with interest, and this cost ultimately falls on the shoulders of terminal operators, which in turn pass it to their customers, leading to potential inflation.

I'm wondering if the WGEA shares the concerns that have been expressed here with regard to the ports' passing these costs on to customers.

[Wade Sobkowich]

In principle, we do have a concern.

We've had some major disputes with the port on some cost items. I can't speak specifically to Global Container's comments, but I can say that.... For example, the letters patent of the Vancouver port authority require it to set rents based on local market rates. We would say that when you're dealing with a national supply chain and with a speculative commercial real estate market in Vancouver, setting rent to tenants in the port at local commercial market rates is not appropriate. We need to look at a broader supply chain when setting those types of things.

I know that doesn't answer your question. I'm just trying to characterize our concerns from a financial point of view and characterize what happens with ports and what we've seen in terms of passing those costs on to tenants. We're seeing the same thing with gateway infrastructure fees that are being passed on—exorbitant amounts of money.

To come around to answering your question as directly as I can, I will say that anything that increases costs to port tenants should be avoided. In some cases, you can pass on those costs to customers, but we're competing in a global environment. If we can't supply the grain that the customer wants at the price that the customer wants, then someone else in another country is going to do it. We need to be very cost conscious.

I hope that partially, at least, answers your question.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you for that.

On the ports modernization review, the WGEA said, “Boards of Directors should be amended to include seats for representation from the major user sectors, such as the grain industry.”

We've had an interesting conversation at committee, in discussing this bill, about the makeup of port boards, potential conflicts of interest and how to manage those conflicts.

If a direct representative of a user group like the WGEA were to sit on the board of the port authority, how would you see managing that potential for conflict of interest?

[Wade Sobkowich]

I would first point out that most other major ports in the world have direct users sitting on their boards of directors. They seem to work well, because those who use the port are the ones who know best about operating the port and the decisions that need to be made. Are you going to address all of the community and peripheral issues out there with that? No. That's where the other appointees come in and bring that into the conversation.

The Port of Vancouver doesn't allow even one user representative on the board. You have to be a retired worker from a grain terminal in order to even be appointed to the board of directors. It's not the same. We're saying there should be direct user appointees on that board. Then, of course, they'd have to sign on to the terms of reference, etc., requiring them to operate in the best interest of the port itself.

Does this create a bit of a challenge? Potentially. Is it insurmountable? No.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Your answer is very interesting and, I think, instructive for the committee.

I asked the question because the other group that would like to see themselves represented on the boards of directors of port authorities are the workers at the ports. We've heard representatives from the port union or longshore union suggest that it would be very beneficial to have representation on the board for the same reasons you just indicated. Like users, the unions that represent the workers have unique experiences, skills and expertise to offer to the governance of the port.

Would you say that the same rationale would apply in this case?

[Wade Sobkowich]

No, I wouldn't.

The users are employees of grain companies and terminals. In other sectors, it's the same thing. There's a collective bargaining process to address those types of issues when it comes to employment. The terminals themselves are the drivers of the economy. They're trying to get product to customers. They're the ones with the primary vested interest in having product flow through the port as efficiently as possible.

Could you have an advisory committee? We have a committee for almost everything here now. Could you have one for workers that needs to be consulted? Perhaps, but we don't necessarily see them on the board of directors.

[The Chair, Liberal, Peter Schiefke]

Thank you very much.

Next, we'll go to Mr. Strahl.

Mr. Strahl, the floor is yours. You have five minutes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Chair.

I want to continue along that line with Mr. Sobkowich.

I'm not sure I follow your logic on how the ILWU—which has workers at the port who are very much part of the ecosystem and have an interest in how the port is run—would be excluded, in your mind, but active port users would be included. To me, there is a conflict of interest there.

I would challenge you to be a bit careful of what you wish for, because I would suggest, if you open up this can of worms—if you want to go down that road—that it's a very difficult argument to make: that union representation shouldn't be there when active port users are there.

How do you respond to that?

[Wade Sobkowich]

I guess we draw a differentiation.

There's a chain of relationship between terminals and their employees, and terminals and the port. There isn't, necessarily, a direct linkage between the unions and the port itself. Maybe I'm wrong about that. That was an immediate and initial reaction to the question. We see the users of the port being the companies that own those assets on port lands. That's what we mean when we're talking about user representation.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Okay.

There's another conflict of interest that this bill specifically allows for now, which again I think is a mistake. If you're going to avoid active participants in the port's operations from sitting on the board of directors, I guess my question is, do you have a concern with the fact that now, for local government representation, which is increasing under this bill, they've removed the conflict of interest provisions?

They've said that it doesn't matter if that municipal employee or provincial employee has a direct relationship with the port. They're still eligible to be appointed to the port. Are you okay with that or do you think that also is a problem for a conflict of interest on the port boards?

[Wade Sobkowich]

That's a good question. I don't really know how to answer that question. I can tell you that our primary concern is the increase of having seats on the board that represent local interests primarily. That's where our concern is focused. We haven't considered the question you're asking about the conflicts of interest of individuals.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

There is a maximum of two new directors that are envisioned in this bill that can be appointed. Both of them, as you say, are local to the port's location. Can you speak a bit to the fact that—I think we even heard it here—the ports should be a social enterprise or that they should respond directly to the needs of, in this case, Vancouver, which is the biggest port in my province?

Can you talk a bit about how the port of Vancouver is actually...? We've heard this before. Do you believe that for your interests in Alberta, Saskatchewan and Manitoba it's actually your port as well?

[Wade Sobkowich]

Definitely, but I don't have the numbers in front of me. Not only grain but much of the product—especially the bulk product—that goes through the port of Vancouver originates in the three prairie provinces, and some in B.C. as well. When we're taking a look at governance of the port and at how the port should be run and what decisions should be made, that needs to be the primary focus.

That's why we're advocating for additional seats from the provincial economies that need to move product, that have industries that need to move product through the port.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Would you say that this shifts the balance too much, that there's too much local and not enough national in terms of focus?

[Wade Sobkowich]

Ports are there for the national interest. That needs to be maintained. With this change, there's too much of a local focus.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Peter Schiefke]

You have 24 seconds, Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Well, in the interest of the time of night, I will turn those back over to the committee.

[The Chair, Liberal, Peter Schiefke]

Thanks on behalf of a grateful chair, Mr. Strahl.

Ms. Murray, the floor is yours. You have five minutes, please.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you.

I'm going to pick up on the idea of national versus local interest. My experience in talking to people about the port of Vancouver is that often the local interests have a real focus on environmental sustainability, and that is part of the objectives of this bill. This is one of the five main themes: the environmental sustainability of port infrastructure and operations. Also, I would say more broadly that the safety and security of the rail system are tied into environmental sustainability as well.

A second piece of this is that your organizations are very much subject to social licence: the support that there is for the operations. With transportation, whether it's shipping or rail, the public's social licence is a very important element.

I would like to get your thoughts about the degree to which this bill is doing what it is aiming to, which is increasing environmental sustainability, whether it's through supply chain efficiency or the preventing of spills and accidents. Do you feel that what it's doing is sufficient and are there are ways in which you see potential amendments to improve environmental sustainability through those kinds of improvements?

Mr. Hall, why don't we start with you?

[Christopher Hall]

Thank you. I'll take that.

Generally, having worked in that system for over seven years, I think that most ports are doing a pretty good job. My exposure to most of the other ports across the country indicates that they have had those principles at heart most of the time, especially in the last few years. The need to intersect appropriately with the community is also top of mind of all Canadian port authorities.

Despite the extra resources that may be required for the smaller ports on the additional reporting, I think that additional reporting adds another layer of transparency and accountability to a port authority, which will only serve the public to the good.

The ports are doing a lot of good things. A lot of times, it stays within that port ecosystem and word doesn't get out about the good things that industry as a whole and the port authority are doing or the collaborations that take place. Perhaps the new reporting requirements and the new community liaison groups that ports must establish will bridge that gap, albeit it a resource problem for the smaller entities.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Can or should ports have any power to determine the fuel sources of the shippers that are coming into those ports? How can ports nudge forward the reduction of bunker C use and the requirement for lower carbon fuels?

[Christopher Hall]

Fortunately, we don't burn bunker C anymore and haven't for a lot years. The drive to decarbonization of shipping is obviously a global initiative. It will take a number of factors all coming together. Frankly, the ports really won't have the ability to drive that. They will need to be ready to respond for what the new fuels are and the production of those fuels.

Ports need to be ready. They need to have the land available, because all of the fuels will require massive land use if that port is to be considered a bunkering port. Many won't. The whole bunkering network around the world will dramatically change as we transition to new fuels. There will probably be more bunkering ports required. There'll be a whole redistribution of bunkering around the world. How that will look remains to be seen.

I think that ports are keeping a very close eye on it, particularly the European and Asian ports. They're making some very good strides, but it is extremely expensive, as you can imagine.