Good afternoon, Mr. Chairman and members of the committee. I will try to speak a little slower.
Thank you for the opportunity to present Global Container Terminals today. As you said, my name is Stephen Edwards. I am the president and chief executive officer of Global Container Terminals.
First, to provide some background on our company and our role in the intermodal supply chain in Canada, Global Container Terminals operates four container terminals in North America: Vanterm and Deltaport in Canada, under our subsidiary TSI Terminal Systems Inc.; and two in the United States, New York Container Terminal and Global Terminal.
TSI is Canada's largest container terminal operator, moving containerized cargo through Port Metro Vancouver at its facilities Vanterm, in the inner harbour, and Deltaport, at Roberts Bank.
Established in 1907, TSI is synonymous with the development of Vancouver as Canada's Pacific gateway. TSI supports annually 1,500 person-years of employment and $215 million in payroll. Our two container terminals handle annually more than two million TEUs—20-foot equivalent units—of which 60% move by rail.
There's been significant investment by governments and the private sector to ensure the ongoing success of the Asia-Pacific gateway. I believe west coast Canadian ports are positioned to grow and gain market share through competitive, efficient, and reliable service. I also believe a commercial approach is the most effective and appropriate means to establish customer-centric rail service standards with accountability by all parties. The primary objective is end-to-end supply chain service, reliability, and consistency that will sustain cargo growth and commercial success for all participants in the intermodal supply chain.
A container terminal is just one component of a...[Technical difficulty—Editor]...and involves all activities that occur between the vessel berth and the port gate. Simply put, these include vessel berthing capacity, loading and unloading full and empty containers to and from vessels, moving containers to staging areas within the terminal for pickup and delivery by rail or truck, and checking containers in and out of terminal gates.
This may sound quite simple; however, to illustrate the complexity of a container terminal, Deltaport on any given day will have between 300 and 350 different cargo container sorts in the yard. Container yard space is always at a premium. Receiving export cargo into the terminal is totally dependent on vessels loading to create yard space. Discharging import cargo from vessels is dependent on rail and truck deliveries to create yard space. Container terminal capacity is a factor of dwell times, and container space can be used three separate times in one week.
Disruptions to the container terminal operation occur each and every day. Vessels are delayed, truck arrivals peak, cargo seasons differ, weather such as fog and wind will cause cargo operations to stop, and rail service will be disrupted. These are real factors that increase costs and, perhaps most importantly, increase consequential costs for different parts of the international supply chain, depending on the day and the issue.
Our approach to managing the supply chains of the railways has been through the service-level agreements. In 2010 TSI and Canadian National Railway entered into a three-year service-level agreement. In 2011 we signed a three-year agreement with Canadian Pacific Railway. The results to date have been significant and mutually beneficial.
In February this year, we entered into a new service-level agreement with CN, which has further improved our criteria and refined our respective performance standards. The joint service-level agreements and daily performance scorecards with both class 1 railroads have increased operational and commercial stability, and have added a level of cost predictability that was previously absent.
The cargo shipping industry measures key performance indicators by the number of railcars supplied by the railway to meet shipping demand and by the length of time containers are idle on the dock, waiting for a train to move the cargo. The average exit dwell time prior to the implementation of our service-level agreements was 3.78 days. Today the average exit dwell time has been reduced to 2.8 days—or, if I state this differently, a 25% increase in our import container yard capacity—with no capital investment required.
In terms of pre- and post-service-level agreements, railcar supply has risen from 19,500 feet per day to approximately 27,000 feet per day. There's been an increase in cargo volumes and a decrease in dwell time, which is the ideal scenario for our companies and our customers.
There has not been a need to initiate a third-party commercial dispute resolution mechanism because the agreed-upon service-level agreement escalation process involving senior corporate officers has effectively addressed any and all disputes to date. The relationship and collaboration between TSI and the two railways has improved dramatically, which in turn has benefited our industry, our customers, and Canada's competitiveness in the global marketplace.
I'm sure you've heard from others that the supply chain is a complex network and is only as strong as its weakest link. It is vital that all components of the supply chain work together for the benefit of our customers and the Canadian economy.
By and large, our experience to date demonstrates that commercial service-level agreements work for all parties. Therefore, I advocate the position that organizations in the supply chain continue to work together using the commercial approach rather than legislation and arbitration. We believe we are on the right track with the service-level agreements, and it is in the best interest of all concerned to continue this effective model.
Thank you.