Transport Committee on Oct. 18th, 2018

[Daniel-Robert Gooch, President, Canadian Airports Council]

Thank you, Madam Chair.

Good morning to all the committee members.

I am pleased to be with you this morning. My name is Daniel-Robert Gooch and I am the president of the Canadian Airports Council.

The CAC represents 53 airport operators, including the 21 privately operated national airports system authorities, and 32 regional airports.

We're experiencing strong growth in passenger traffic. For the first eight months of the year, Canadian air travellers were up by 5% domestically, 6% to the U.S. and 8.4% to overseas, international destinations. This is tremendously good news, reflected in the record number of global tourists Canada saw in 2017, but industry and government must move quickly to manage this growth, as 75 million more passengers are expected at Canada's airports in 10 years.

Canada's airports model enables airports to respond. Many are surprised to learn that 21 of Canada's largest airport operators are private, with full responsibility for operations and capital investment at their airports. All financial surpluses are reinvested into the airport.

Over the 26 years since transfer began, NAS airports have invested $25 billion into their infrastructure. In consultation with stakeholders, including air carriers, some airports have moved up capital plans to manage millions of travellers arriving at our airports much earlier than anyone anticipated. Many of the airports you see today were built with self-generated funds or user fees, which has been great for taxpayers.

The national trade corridors fund is a new tool the federal government can use to help Canadian airports be more competitive by taking the pressure off airport users to fund improvements. As the first national infrastructure program open to NAS airports, the NTCF has already helped six of our member airports. Other airports are submitting projects under this program, which is designed to alleviate transportation bottlenecks throughout our transportation system.

Many airports are as concerned with bottlenecks on the ground, land-side, as they are within the airport, on the air side. Several airports will have light rail links coming into their airports in the near future. This improves service to travellers and airport workers, but it also frees up valuable space on roads, which can be used for the transportation of goods. On airport, some of the greatest bottlenecks are at federal government services, specifically security screening by CATSA and border services by CBSA.

If waits are long and unpleasant today, without change they will only get worse in years to come. We must set internationally competitive service standards and more nimbly fund these services. Government investment is required in people, technology and process improvements, to ensure the best experience for travellers in Canadian airports.

With respect to our shared border with the United States, the CAC is part of the Beyond Preclearance Coalition, which aims to develop a new long-term vision for the Canada-U.S. border. U.S. pre-clearance has proven to be an efficient way to process travellers and their bags. Pre-clearance of cargo holds great promise as well.

However, the coalition projects a shortfall of some 38,000 additional agents for security screening and border services needed across North America in 10 years' time to support expected demand. We simply must innovate. This is why Canada's airports are pleased to see Transport Minister Marc Garneau play a leadership role on the global development of known traveller digital identity. This is just one piece in a suite of innovations, including biometrics, with tremendous promise to improve the flow of travellers and goods across international borders while improving security. Airports in the U.S. have already begun facial recognition trials in border processes and aircraft boarding, with tremendous results.

Let's simply make sure Canadian government officials are fully mandated and supported to participate in this work now, so that our travellers and shippers are able to benefit early. Airports are ready to implement pilot projects for biometrics in passenger processing, cargo pre-clearance, new ways to provide CBSA border services at small airports and more.

For my final comments, I'd like to speak specifically to challenges in smaller communities. Canada's airports support the motion your colleague, Mr. Stephen Fuhr of Kelowna-Lake Country tabled on flight training earlier this week. The pilot shortage is an industry concern already being felt in regional air service, and a study by you on this topic would be welcome.

Another challenge is infrastructure. Airports are by their nature expensive to maintain. There are many smaller airports with low traffic volumes that can sustain the cost of operations perhaps, but have a challenge paying to rehabilitate aging infrastructure and fulfill changing regulatory requirements. For about 170 regional airports with fewer than 525,000 passengers per year, the airports capital assistance program provides tremendously valuable funding for safety and security-related infrastructure. These airports tend to serve remote communities where air transport is especially vital.

Unfortunately, program funding hasn't increased in 18 years while construction costs have gone up significantly. We see new regulatory requirements for things like runways end safety areas, which are estimated to add about $165 million in costs to small airports that will have to comply over the next few years.

The CAC is working beyond our own members with Canada's regional airport associations to improve infrastructure funding options for smaller airports. As you consider your recommendations, we ask that you keep in mind this vital part of our sector.

I'm pleased to answer any questions you may have, and I hope to see many of you at our information breakfast in Centre Block on November 20.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Straw, you have five minutes.

[Chris Straw, President, Gabriolans Against Freighter Anchorages Society]

Thank you, Madam Chair, and good morning to members of the committee.

I represent a group of residents from Gabriola Island, which is near Nanaimo, British Columbia. My comments today reflect the concerns not only of my community but also of those other community groups throughout the south coast region of British Columbia that oppose the increasing use of our local waterways as an industrial parking lot for ships awaiting berths in the port of Vancouver.

To be clear, we fully understand the importance of shipping to the Canadian economy. We recognize that the efficient flow of commercial freighters in and out of the port of Vancouver plays a vital role in Canada's participation in the global economy.

Much of our work as community groups is focused on the many harmful environmental and safety impacts this activity brings to our waterways, but for the purposes of this committee, I will focus my comments today on economic factors.

From our viewpoint, the west coast freighter anchorage system is out of control, especially the 34 anchorage sites throughout the bays and channels of the southeast coast of British Columbia. Let me cite a few statistics from our own analysis of nearly 120,000 files over 10 years, provided by the Pacific Pilotage Authority.

First of all, by our calculation, 92% of all freighter anchorage usage is by bulk carriers coming to the port of Vancouver to load grain, coal and other bulk commodities. Over the past decade, according to the port of Vancouver's annual reports, the export of bulk commodities has increased by approximately 40%. Over that same period, anchorage usage has increased by a startling 400%. Further, we see that while container ships rarely anchor for any length of time, some 60% of anchorage usage by bulk carriers can be attributed to ships that stay for 10 or more days per port visit. Those stays and wait times can be up to 50 days or more. Also, at least 75% of all anchoring occurs prior to the first visit to a berth inside the port of Vancouver. We believe much of this is excessive and unnecessary.

Here's the problem. Anchored ships are unproductive ships. They're not moving cargo. They're simply burning fuel and incurring overhead charges, which are undoubtedly passed along to the suppliers of their eventual cargo. While we accept that bulk shipping may never achieve the smooth efficiency of the container system through the port of Vancouver, ships sitting at anchor for such long periods of time are a clear indicator of an insufficient supply chain.

Don't just take my word for it. Robert Lewis-Manning, president of the Chamber of Shipping, who appeared before this committee not long ago, wrote to Transport Canada in 2017 that the current framework for anchorage operations in the south coast of British Columbia is not optimized for efficient commercial operations, and that it results in unnecessary costs, delays, unpredictability and impacts on coastal communities.

Mr. Lewis-Manning also referenced this issue in his remarks to the committee last month in Vancouver when he acknowledged that the anchorage issue is having negative impacts on coastal communities. In fact, there are several negative impacts. They include excessive noise and light as well as threats to safety, the environment and local tourism.

I'll focus on the economic implications.

Bulk carriers anchoring in the Gulf Islands travel on average about eight hours more than they would if they went straight to the port and straight back out to sea, as most container ships do. By our calculations, they burn about 30,000 tonnes more fuel every year because of this extra travel. This is not only costly to a ship's bottom line but also degrades air quality and aggravates global warming, which, as we all know, is already having direct economic consequences. Bulk carriers pay hefty pilotage fees for each extra trip they make to and from Gulf Islands anchorages. These fees are passed on to the suppliers of cargo, such as Canadian prairie farmers.

In its 2012 report, the Quorum Corporation, which monitors the handling of grain, found that as the number of vessels waiting increased, average loading time grew. This is evidence that the congestion resulting from an increase in anchorage uses actually reduces productivity. Allowing freighters to anchor for free in the Gulf Islands for as long as they want provides unaffordable wiggle room so that otherwise necessary improvements to the port supply chain can be ignored or postponed.

Finally, about half of the extra travel, or more than 6,000 hours per year, is through southern resident killer whale foraging areas, which contributes to the dire situation, of which we're all aware, that threatens the species.

We believe that all of these factors should compel the port of Vancouver and its many partners in the shipping industry to show discipline around the use of freighter anchorages and to work to curtail this activity.

We believe that the Vancouver Fraser Port Authority, with direction from Transport Canada, is particularly well positioned, both in terms of resources and capacity, to take a lead role in finding the necessary solutions to this problem, but for now the reality seems to be that instead of limiting anchorage usage we hear about requests for even more anchorages, despite the fact that if you added a hundred more anchorages it would still not result in moving a single tonne more cargo through the port.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Straw.

We now have Mr. Veldman from the Prince Rupert Port Authority.

Thank you very much for joining us today, Mr. Veldman. You have five minutes.

[Ken Veldman, Director, Public Affairs, Prince Rupert Port Authority]

Thank you, Madam Chair and committee members. I appreciate the invitation.

I want to make two impressions on you today.

Number one is that Prince Rupert's development is based on many unparalleled strategic attributes that make it a very competitive gateway for trade, but it's our focus on building mutually beneficial relationships that allows us to develop a deeper understanding of shipper needs and to provide innovative, proactive supply chain solutions. We like to think that we're not in the transportation business. We're actually in the business of adding value, and we're hyper-focused on that.

Adding value to Canadian trade is achieved best by ensuring we are supplying flexible supply chains with the right capacity, resiliency and capabilities as they are needed by our shippers and our communities, as opposed to responding to capacity crises after they occur. To do that, we need robust corridor planning and the right strategic partners, including the Government of Canada.

The port of Prince Rupert has five terminals that facilitate trade through intermodal containers, dry and liquid bulk and cruise facilities. In 2017 the port increased volume by another 28% to 24 million tonnes of cargo, with a current capacity of 40 million tonnes. Our volume represents 35 billion dollars' worth of trade, making it the third-largest port in Canada by that value. For an historical comparison, this represents a significant increase in trade from less than five million tonnes as recently as 2005. We are forecasting growth to an excess of 50 million tonnes over the next decade, and we have a long-term trajectory to go to over 100 million tonnes.

Prince Rupert's success has been based on a model that represents both innovation and investment risk and requires full alignment and commitment from its partners: CN, terminal operators, logistics and supply chain operators, labour, marine carriers, our shipping customers and the Governments of Canada and B.C.

Perhaps most significantly, we have achieved alignment with local first nations communities and have enabled significant participation for them in the gateway economy. We share a valuable common vision and common interest in ensuring we continue to improve port efficiencies, build port services and expand port capacity.

Prince Rupert's continued development is integral to Canada's Asia-Pacific trade agenda. In 2017 over 80% of the port's trade was imported or exported through Asian countries such as China, Korea and Japan. From a trade facilitation and efficiency perspective, our current development plan reflects the importance of considering common infrastructure and land use planning that enables both new and expanded terminal capacities without compromising the actual speed, fluidity and reliability that are at the heart of our value proposition.

This future-looking approach will ensure the port's ability to avoid future congestion issues and the mitigation solutions that would otherwise require very high capital expenditures to add only incremental improvements in fluidity. In order to be successful and to be able to generate tangible results benefiting the broad range of community and industry players we serve, a future Canadian transportation and logistics strategy should reflect the importance of the following recommendations.

Number one, the Government of Canada should continue to support the proactive planning and timely development of major port infrastructure projects aimed at viable future trade opportunities through infrastructure funding programs and policy, including those focused on enabling green infrastructure projects.

Number two, being in a small northern town is an advantage for us, but it also creates challenges in the context of supporting fast growth. The Government of Canada should consider a more proactive role in providing direct financial assistance to ports and gateway municipalities for increased capital infrastructure and, importantly for us, labour force needs that are related to the impacts from national trade moving through local gateways.

Number three, the Government of Canada should implement formal trade corridor initiatives to really hardwire infrastructure policy and marketing co-ordination and collaboration between governments and marine, rail, truck, terminal and other direct stakeholders in gateway supply chains.

Number four, the Government of Canada should continue to play a leadership role in data visibility initiatives. This would lead to improved trade flow forecasting, as well as improved real-time visibility of cargo movement.

By taking these actions as recommended, the federal government will be taking important steps forward to more fully enable Canada's key trade corridors, in particular the Asia-Pacific gateway, and will ensure that we as a country are well positioned to seize future and expanded trade opportunities for the benefit of all.

I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Veldman.

We're on to Mr. Liepert for five minutes.

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

Thank you, Madam Chair.

I want to take a few minutes as part of my presentation to make sure that members around this table are informed as to the crisis happening on the Prairies today. Unfortunately, of the official members of this committee, my colleague is the most westerly of the members, besides Ms. Block and me. I think it's important that everybody understands what the Prairies are going through today.

We've had a fall where half of the harvest is under snow. Only in the last couple of days are farmers back on the field and able to harvest. Then they'll have the problem of trying to ship by rail to get their product to market because it's not a product that is going to be of high quality.

Then, we have the situation with what's called the “price differential” in our oil. I want to put this in perspective so that everyone around this table understands it. Brent oil, or the world price, is trading at somewhere around $80 a barrel. U.S. West Texas oil is trading at somewhere around $70 a barrel. Alberta oil, and to a degree Saskatchewan oil, is trading today at $20 a barrel. There is a $50-per-barrel differential that the U.S. is taking, because we only have one market, which is the United States, through Keystone pipeline and others.

I want to put that in perspective. What does that work out to? In Canada, we, as Canadians, are missing out on one new school a day and one new hospital a week because we are not getting a good price for our natural resources.

Let me put it in another perspective for those who are very familiar with the Ontario economy. Let's say that a car is built in Mr. Oliver's riding of Oakville, and it sells for $70,000. When it's shipped across the border to the United States, the Americans say thank you very much and we'll give you $20,000 for it. We wouldn't stand for that if that happened to the auto industry, but that's what's happening on the Prairies today.

I'd like to direct a question to our guest from Prince Rupert.

One of the options that I believe is underutilized is the Prince Rupert port. Under the former Conservative government, the northern gateway pipeline was approved, and had construction started, it would have been at the point of almost flowing oil through your port today.

Are you underutilized in Prince Rupert? Do you have the capacity to bring more oil through your port for the Asian markets?

[Ken Veldman]

First, I'll make a point of clarification. The northern gateway project was to flow through Kitimat as opposed to Prince Rupert, so that would not be a part of our operations.

However, let me speak more broadly to utilization.

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

To be clear, it could have been deviated to Prince Rupert. That was one of the options they were looking at. Because of environmental regulations around Kitimat, it could have been deviated to Prince Rupert.

[Ken Veldman]

Potentially, but let me point to utilization. I wouldn't say we're underutilized in terms of what we have right now. In fact, we've been on a very strong growth curve, as I demonstrated.

Right now, we're looking at trying to take advantage of the opportunities we do have. A good example of this is AltaGas. It is just completing a propane export terminal to ship liquid propane to Asian markets. We have a proponent by the name of Vopak, which is advancing an open access liquid bulk terminal that would have the ability to ship a combination of liquids. This would include everything from methanol to value-added petroleum products to LPGs.

These are all areas where we find we can add value. We have the capacity on rail to be able to bring those products in. We have a proponent that's advancing that project through an environmental assessment process right now. That's a focus where we have a very good understanding of shipper needs, and we're moving that forward.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Liepert. It's always important we recognize and understand all parts of Canada.

Mr. Iacono is next, for five minutes.

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

Madam Chair, I'll give my time to Mr. Sikand, to go first. I'll go in his place.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you.

My questions are going to be directed to Mr. Gooch.

As you know, I represent a riding in Mississauga, right beside Pearson airport. I was wondering if I could get your opinions on having another airport open up in Pickering, maybe as a relief airport or just a stand-alone in the future.

[Daniel-Robert Gooch]

That's not really something our organization has taken a position on. I will say, though, that there are quite a few airports in the greater Toronto area. My colleagues, our members and other airports in the region have been collaborating quite closely through the Southern Ontario Airport Network.

They're looking at the needs of the southern Ontario region over the next decade and seeing how airports—Toronto Pearson in particular—are getting quite full. They're looking at creative ways the other airports in the region could be better utilized to take pressure off that growth. A lot of work is going on through that organization, and they're looking at all the options.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

I fly through Pearson twice a week and am really happy with the CATSA Plus. I think it's working, and I welcome your comments on that.

You were also talking about the biometrics, though. Often, when you have such sensitive data, there's a balancing act between security and giving up that much information. I'd like to know what has been done or what will be implemented on the security side of preserving the data points for all those biometric options.

That's in addition to your comments on CATSA Plus.

[Daniel-Robert Gooch]

A lot of work is going on in government on facial recognition. As I said, in the U.S., the CBP, working with TSA, the Transportation Security Administration, which does screening there, just announced how they are going to use facial recognition in the screening process.

I can't really speak to what they do in terms of the back end of security, but I was just at a conference in Vancouver over two days where we talked about this. How do we use the latest technology, facial recognition being one of the big ones there, to improve the flow of legitimate travellers and goods across the border and across security screening? That was a big topic of discussion.

Everybody knows that for this to move forward, the public and government need to have confidence that the information is going to be safeguarded, so it's really front of mind as this moves forward. There won't be progress on this unless everybody's confident that we can do so safely and securely.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Again, I'm right beside Pearson, so I always use this as my benchmark. They're underutilized and they have that gap of screening officers, border officers. Is this a norm throughout all the airports, or is it just specific to that airport?

[Daniel-Robert Gooch]

You asked about CATSA Plus. We are seeing growing wait times around the country. I understand that last summer was fairly good, but it's a constant effort to stay ahead of the growth.

We are seeing CATSA Plus. CATSA Plus is an improved lane. It's not necessarily the latest technology. It's actually applying technology that's been used in other parts of the world for a few years now. If you travel through Paris Charles de Gaulle or Schiphol in Amsterdam, you'll recognize CATSA Plus. However, it gets people through the lines more quickly, and it also takes the pressure off the next person in line to take all their stuff off, because you have four individuals unpacking. Where it's been deployed, it's actually dramatically improving the experience for travellers.

That's where the challenge is, though. It's been deployed on a limited basis at the four busiest airports, which were having some of the biggest problems. It's now being deployed into Halifax and Edmonton, but investment has essentially stopped. We're looking to the next budget to see whether we are going to get funding for CATSA Plus to be deployed more broadly, because there are other airports that could use it. It's not going to go everywhere necessarily. It's certainly having a big impact at high-volume checkpoints, but there's only limited deployment.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

When that was implemented, did it exceed your expectations or have the results been pretty much as expected?

[Daniel-Robert Gooch]

I'd say it's probably been a bit of a mixed reaction. Most of the airports I have spoken to say it's been really good for them, but there are two sides to it. For CATSA Plus, there's the equipment side, but it also requires officers as well—screening agents. There really is a shortage of screening hours available to CATSA, so if you're using a piece of equipment that is optimal with a certain number of screeners but you have fewer people on it, then it's understandable that you might not get the same performance.

There is some of that, but generally it's being well received.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Ms. Malcolmson.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Thank you, Chair.

This concerns Chris Straw and the GAFA group. Just two weeks ago I hosted a round table with member of Parliament, Alistair MacGregor. We had four first nations and maybe a dozen community organizations right down to the U.S. border: local governments, concerned citizens and rate-payers groups. There were a lot of solutions proposed to address this problem you've identified where bulk commodity exports have gone up 40%, yet anchorage use and the time of anchorage use has gone up 400%. It's certainly pointing to some kind of supply problem.

Can you give us a sense of the recommendations to the committee that would alleviate that bottleneck?

[Chris Straw]

We're not experts in this area, but we have been having conversations with the Chamber of Shipping and Transport Canada officials. The primary thing we would like to see addressed is the early arrival times. It's not only studying them and understanding what is causing them. We believe it's really just that there's no restriction on early arrivals at this point. We need to understand that and provide some disincentives for it.

We feel it is important to look at the contracting situations that are allowing huge gaps in what appears to be the time between a ship's readiness to load in the terminal and the time it actually goes to a terminal. We believe there are infrastructure improvements inside the port that would add to their current capacity to anchor more ships within the port jurisdiction, and we believe that many aspects of the supply chain were referenced regarding the rail situation and the impediments to delivering Canadian grain on time. These are improvements to the infrastructure itself that would reduce bottlenecks and hopefully alleviate the situation.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Some of the pieces I've heard you talk about before are foul weather loading facilities at terminals, use of fixed mooring buoys inside the port to help alleviate the need for external anchorages, expansion of digital tools such as blockchain and other supply chain management applications to increase the scheduling efficiency and increase—

[Chris Straw]

That's right. These are all recommendations we're making. The weather situation is interesting. Grain suffers from moisture and dampness, yet we all know it rains all the time on the west coast of Canada. We feel that there should be adequate infrastructure that could allow for that to happen, even when it's raining, which happens a lot.