Transport Committee on Sept. 24th, 2018

[Jim Weakley]

Yes, sir.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Burrows, speak about the state of infrastructure, then, on the whole Great Lakes-St. Lawrence system.

[Bruce Burrows]

Sure. Let me first say from an infrastructure perspective that our shipowners invest over $2 billion in ship assets. That's a mobile piece of infrastructure—

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I'm more interested in what the ships use to get from one point to another.

[Bruce Burrows]

Right, and I think we also very much need to secure marine's fair share of infrastructure investment on the ground end. We talk a lot about port infrastructure. The seaway I think is in pretty good shape, to be honest. They've done a great job. They've just brought in hands-free mooring, for example, so they're fully modernized now in central control and so on.

I think the focus of investment is probably more on the port side to ensure our ports really come up to that modern standard of being an integrated, value-added multimodal hub. That would probably include some investments in egress and ingress. I don't have specific numbers looking at that now.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

What about the MCTS system, the Coast Guard communications system?

[Bruce Burrows]

That's a good question. I don't have a view on that. If some money is needed to accomplish what Jim was talking about, that probably would be helpful. In terms of numbers of dollars, I haven't got a figure for you. We can get back to you on that.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Ruhl, with respect to short-sea shipping—try saying that seven times quickly—what are the kinds of conditions that exist which make that really work? In other words, what should we be looking for? I have my west coast hat on here. What kinds of conditions exist that make short-sea shipping work very well?

[Gregg Ruhl]

Typically, it doesn't cross an ocean. It requires a different kind of asset that can be optimized and used on shorter trips many times over and over. It becomes almost like a conveyor belt or a pipeline, but floating on the water, which is less expensive to operate and is safer.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Fair enough.

Finally, for you, Mr. Fuller, as I work my way down the line here, it's interesting to hear your story about the new Milton facility. I gather that the location was probably chosen far enough away from built-up areas in the hopes that built-up areas don't chase you down.

[Andrew Fuller]

Yes, that is correct. In fact, we purchased the land well over 10 years ago in advance of any movement and building in the community. Actually, we're very close to a number of distribution centres, such as Lowe's, Whirlpool, and many other retailers and manufacturers that are very near within Milton as well.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Has the—

[The Chair, Liberal, Judy Sgro]

Your time is up.

Go ahead, Mr. Iacono.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Madam Chair.

Gentlemen, thank you for being here this morning.

My first question is for Mr. Fuller.

The Port of Montreal has a particular approach to the rail network. Indeed, its competitiveness and performance are linked to the Montreal model, which emphasizes a certain independence between the port and railway companies, including CN. Moreover, the funding provided by the federal government is aimed at improving intermodality to meet increased demand.

I have three questions for you.

Is the CN network able to handle the increase in rail freight traffic?

What are the main obstacles that can hinder the flow of trade by rail?

What steps is CN taking to address these issues?

[Andrew Fuller]

That's a very good question. Thank you.

First, yes, we would absolutely like to grow with the Port of Montreal as we have grown with that port already and with many other ports in Canada and the United States.

In terms of what needs to be done or what could be the impediment to growth, the first part is how fast and how quickly the growth comes on. If there's good planning in advance and strong dialogue between the ports, customers and carriers, such as CN, I have no issues with it. If the traffic comes on too quickly, then we can't respond fast enough because there are a lot of things that have to be done to prepare for growth, such as new roadways, purchasing new cars, purchasing new trains, etc. With enough advance notice and dialogue in between, it absolutely can be accommodated and we look forward to it.

I'll just highlight again one aspect that's been brought up in terms of silos. The number one thing for supply chain improvement in Canada is that you cannot optimize the supply chain independent of each other. It has to be a shared and committed culture that you're going to look at, have shared measures, and try to improve the entire supply chain, so we can have the best supply chain in the world.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

When you refer to traffic coming too rapidly, what do you mean exactly? What action do you take when it happens?

[Andrew Fuller]

If there are surprises and shocks to the system, it's hard to react and get the assets, people and resources in place. It takes over nine months to train one conductor and much longer for an engineer, so there's just that. We're training and hiring close to 2,000 conductors and engineers this year alone, so it just takes time, if there's a shock to the system.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

My next question is for Mr. Burrows.

Are the costs of maritime transport higher than those of other modes of transport? If so, how is this difference explained?

Moreover, what impact can high costs have on economic activity and economic spinoffs in a region?

[Bruce Burrows]

Those are two great questions.

I would say, in fact, that our costs are lower. Don't forget that a single vessel carries 30,000 tonnes, or up to 30,000 tonnes, so the efficiencies that are driven from that are huge. That translates right down to prices that people like Mr. Ruhl and others charge their customers.

To the second question, on impact, the study that I've left with you is all about that. What is the impact? I talked about the general Canadian numbers, but if you were to look at Ontario, for example, there will be probably about 80,000 or more.... Rather, in Quebec, from your perspective, there would be 80,000 or more jobs at stake there from a marine perspective. You'd be looking at probably a good $16 billion in economic activity in terms of impact, direct and indirect.

[The Chair, Liberal, Judy Sgro]

Okay.

We'll go to Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Burrows, you made a comment earlier which I want to follow up on, but I want to preface it with a couple of brief comments.

Both Mr. Jeneroux and I represent Alberta ridings. It's no secret that natural gas prices have been extremely compressed over the last few years to the point that natural gas producers are basically capping in any new discoveries of gas.

We also know that if we as a society are serious about controlling emissions, the largest percentage of emissions come from the tailpipe. Conversion to natural gas could make a huge difference.

I heard a comment, I believe by Mr. Burrows, about ships moving to alternate fuel sources. Are there opportunities for natural gas? Do any of you in the shipping business have advice for governments, probably on both sides of the border, as to what we could do relative to controlling emissions, especially from truck traffic? I know in the U.S., Mr. Weakley, it's huge.

I'd just like to hear a few general thoughts and comments relative to emission controls, whether natural gas could play a role in that going forward, either on water or on land, and I guess even on rail, as far as Mr. Fuller is concerned.

[Bruce Burrows]

It's an excellent question.

The short answer is yes. Keep in mind that, despite the context that 25% of the problem of greenhouse gas emissions lies with transport, and a majority of that by far is from roads from either personal auto use or trucks, maybe 2% to 3% is marine. Therefore, we are part of that solution, if you can switch into the marine mode.

Having said that, we are still contributors, so we're doing our darnedest to reduce emissions. LNG would be part of the solution. We just christened a couple of vessels this year that are polar class dual fuel. That can reduce emissions on the sulphur side by over 99%, I think, potentially, and also there's a good 20% reduction in carbon emissions. That would be part of the solution for carbon as well. Other particulate matter reductions are significant, over 30% on particulate matter.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I'm going to get you to stop there. I'd like to hear a few other comments from the table, and I only have three minutes.

[Jim Weakley]

I could tell you from the U.S. perspective that one of my member companies did enter a joint venture with an LNG provider, and for whatever reason, the LNG provider pulled out. They were well ahead of the curve. They were going to use LNG on the Great Lakes as a fuel source, and the fuel source—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

It's probably because they were getting more money by shipping it offshore.