Good morning, Madam Chair and members of the committee.
Thank you for the invitation to be with you today as you continue your important study.
My name is Marko Dekovic, and I'm the vice-president of public affairs at GCT Global Container Terminals.
I am speaking to you today from the traditional and treaty territories of the Coast Salish people in British Columbia.
GCT is headquartered in Vancouver and operates two container terminals: GCT Vanterm, with a capacity of about 850,000 TEUs, located in Burrard Inlet in downtown Vancouver; and GCT Deltaport at Roberts Bank near the city of Delta, with a current capacity of 2.4 million TEUs. It is currently Canada's largest container terminal, but the Prince Rupert Fairview terminal is quickly catching up. We are tenants of the Vancouver Fraser Port Authority and direct employers and infrastructure investors where Canada's rail network meets tidewater.
GCT is a majority Canadian-owned company with three institutional investor shareholders: the Ontario Teachers' Pension Plan, British Columbia Investment Management Corporation and IFM Investors. Our active experience in this sector uniquely positions us to provide input to the committee related to your current study.
First we have to reflect on the causes of the supply chain challenges. The effects of the pandemic and climate change on the global supply chain in the last years have brought a series of major disruptions to the overall network. Canada was not immune. We have seen them materialize in manufacturing, trucking, raw materials, supply, inland storage, and distribution. Moreover, the extreme weather in B.C., namely the devastating floods and forests fires, furthered the problems, with the closing of the rail lines resulting in backups of cargo ships at anchorages in the Port of Vancouver.
At present, from our perspective, the railways have been utilizing capacity at our Vancouver intermodal terminals to truck in imports from the ports to help ease the congestion. In recent months, we have also seen a more fluid network with daily rail car supply being more consistent, even though outbound trains have been restricted at times by congestion and capacity issues in Toronto and Montreal warehouses, as you have just heard from CN before me.
However, increased rail surge capacity is urgently needed in order to support restoration of Canada's supply chain fluidity. CN and CP are the only two railways that move container trains into and out of metro Vancouver. It is important to consider in your study that approximately 35% of all inbound containers entering Canada's west coast ports hold discretionary cargo headed for the U.S. by rail. This means that importers and shipping lines, at their discretion, can redirect containers through other ports on Canadian or U.S. west or east coasts depending on variables such as price differentials, rail dwell times, reliability of rail and terminal services and even port authority fees.
It is also important to note that about 70% of containers that arrive at our GCT Deltaport terminal are rail-bound. If containers are not being evacuated at an appropriate rate by rail, the container dwell time will increase. Terminals will be congested, and soon enough, vessels calling those terminals will back up at anchorages. No matter how many container terminals or operators you have, if the rail supply is not keeping up with the demand, the system will congest.
This leads me to my next point.
It has been suggested by the Vancouver Fraser Port Authority that container terminal capacity has been a contributing factor to supply chain challenges and that a proposed Roberts Bank terminal 2 will somehow solve them. That is not the case, as it will be connected to exactly the same rail lines as the existing terminals. The west coast container terminal capacity has not been a contributing factor to supply chain challenges. In fact, Canada has container terminal capacity available to meet current and future demands well into the 2030s.
At GCT, we're doing our part as a private operator, optimizing and investing in infrastructure to support our customers' needs. In 2018, GCT invested $300 million in the semi-automated intermodal rail yard densification project, which has provided superb rail cargo surge capacity at the recent times when it was most needed.
When it comes to solutions, it is all about surge capacity and collaboration; there is no single solution to this problem. The government has a role in facilitating the collaboration that ultimately must be executed by supply chain partners through experience and commercial relationships. It must include a holistic approach and consider inland container storage, inland warehousing, and flex capacity that will make the supply chain more resilient and fluid when the next natural disaster, hard winter, pandemic or blockade hits. The recent supply chain task force report has identified some good recommendations for immediate actions in this regard.
GCT strongly supports efforts being made by our rail supply chain partners toward capacity increases and resiliency upgrades. GCT knows that improvements to Canada's rail system will improve the movement of Canada's trade domestically and to key U.S. and international markets.
Thank you again for the invitation to appear today. I look forward to questions.