Port Saint John 'rising to the challenge' after nearly $8M drop in revenue, says CEO
COVID-19 and loss of cruise ships had a big impact but announcement coming regarding west side project
Port Saint John's revenue dropped by nearly a third to $16.5 million in 2020, but CEO Jim Quinn considers the year a success.
It was "certainly a year like no other," he told the annual general meeting Monday, referring to the COVID-19 pandemic.
The loss the of cruise ship season accounted for the bulk of the losses, he said. It was the port's first year with no cruise ships since 1988.
"But we did indeed rise to the challenge," Quinn said, a nod to the annual report's title, Rising to the Challenge.
In fact, he contends the port is "well positioned for even stronger performance in the future."
An announcement is coming June 8 in relation to the $205-million west-side modernization project, which Quinn described as being more than half-way completed.
"We're going to be doing a little exposé as part of virtual Port Days where we'll be talking about the results of an economic impact study that has been completed around what we're doing with our modernization," he told CBC News.
"And we'll be talking about another submission we've made to the ... provincial, federal governments to support an enhancement of that project."
Quinn declined to elaborate, other than to say it involves a further expansion, and that the economic impact will be "significant."
The modernization project, which includes a new pier and a deeper, wider channel, is scheduled to be complete in 2023. Construction began in 2020 and is funded by the federal and provincial governments and the port.
The $205-million west Saint John port modernization project is scheduled to be complete in 2023. (Port Saint John)
In March 2020, as soon as it became clear the cruise industry was at risk, the port acted quickly to reduce expenditures without affecting operations, Quinn said. For example, it delayed some capital projects, and travel was "pretty much eliminated."
Meanwhile, terminal operator DP World brought in its highest container volume yet in four years at 580,270 metric tonnes — a 19 per cent increase over 2019.
Overall cargo tonnage rose two per cent to nearly 26 million metric tonnes. This growth was in containers, dry bulk and import liquefied natural gas (LNG), said Quinn.
The dry bulk sector included the export of potash and recycled metals as well as the import of gypsum and petroleum coke
Despite challenges due to rail blockades early in 2020, potash markets rebounded in 2020, jumping to 619,230 metric tonnes, from 285,288.
"Saint John continues to have a geographic advantage for distribution of Saskatchewan-produced potash to South America and other global markets," said Quinn. "As I like to say, we do have a pipeline from the West, it's our potash pipeline from Saskatchewan."
Liquid bulk, which includes crude oil, petroleum, liquefied natural gas, fish oil, molasses, caustic soda, calcium chloride and magnesium chloride, increased by about 320,000 tonnes.
We are excited about what the future holds for us.
- Jim Quinn, Port Saint John CEO
Several major developments occurred in 2020 that will continue to positively impact container cargo, said Quinn.
Canadian Pacific Railway's acquisition of the Central Maine and Quebec Railway has returned Saint John to the unique position of being the only port east of Montreal serviced by both of Canada's Class 1 railways — CP and Canadian National Railway.
"CP is making a very large statement by re-establishing themselves here," said Quinn. "Their plan is to make Saint John their hub on the east coast of Canada."
Saint John also has a new international shipping line, thanks to a deal between CP and an agreement between the Canadian Pacific Railway and German international shipping company, Hapag Lloyd in late 2020.
Between six and seven ships, similar to a bus route, will travel through the Mediterranean, to Saint John, Montreal and then back to the Mediterranean.
The first vessel, the Liverpool Express, arrived from the Mediterranean last Thursday.
"We are excited about what the future holds for us," Quinn said.
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David Amos
Methinks Big Bad Billy Gates and CN may disagree with CP N'esy Pas?
"Canadian Pacific Railway's acquisition of the Central Maine and Quebec Railway has returned Saint John to the unique position of being the only port east of Montreal serviced by both of Canada's Class 1 railways — CP and Canadian National Railway."
Nova Scotia Premier Iain Rankin sent a letter supporting the CN purchase, as did Irving Oil.
"Strengthened logistical connections resulting from CN's proposed acquisition of KCS [Kansas City Southern] are critical to our future growth and success," Rankin wrote on May 12."
https://www.cbc.ca/news/canada/new-brunswick/port-saint-john-shipping-line-1.6040730
New international shipping line sails into Port Saint John
The Liverpool Express arrived from the Mediterranean on Thursday morning
The first vessel, the Liverpool Express, arrived from the Mediterranean Thursday morning.
"Nothing better than being the first North American stop on a shipping service," said Jim Quinn, the head of Port Saint John.
Between six and seven ships, similar to a bus route, will travel through the Mediterranean, to Saint John, Montreal and then back to the Mediterranean.
"It will be a continuous rotation of ships," Quinn said.
The ships will be bringing in fresh goods and manufactured items from across the Atlantic. (F. Bancos/Vessel Finder website)
The new shipping line comes following an agreement between the Canadian Pacific Railway and German international shipping company, Hapag Lloyd in late 2020.
The shipping company has 237 modern ships and serves more than 600 ports around the world. Meanwhile, CP offers significant rail distance into the midwest of the United-States.
The Saint John port was tested a few times over the past year to see if the cargo could easily be distributed from the vessel to the rail service.
"This new service will bring more economic growth to the region and provide a vital link to the world," Keith Creel, CP president and CEO said in a statement.
The vessels will be bringing in manufactured goods and fresh products to the North American market.
Right now, Quinn said vessels travelling from across the Atlantic are heading straight to Montreal. But they can't fully load the vessel because of shallower waters.
Now, those ships can arrive in Saint John and unload in the port city
"Those ships will come out fully loaded, they'll come to Saint John. They'll remove a few hundreds of a container, that will go up to Montreal," he said.
Why Saint John?
Saint John has also become the only Atlantic port to serve both the Canadian Pacific and Canadian National Railways.
"That's good for the competitive environment in which business people like to exist and it's the type of environment consumers like to exist in as well," he said.
The trip to the port in Saint John is 320 kilometres shorter than the travelling to Halifax, allowing businesses to get items on the shelf a lot sooner.
"Shipping lines are looking for ways of how to get things to the marketplace quicker, more effectively, more efficiently," he said.
Quinn said the port is a lot less congested than other port cities in Canada offering both road and rail.
"You can't beat that," he said.
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"CP has been beefing up its presence in the Port of Saint John and promoting the city as its East Coast gateway. Prominent backers of CP's bid included JD Irving Ltd. and New Brunswick Premier Blaine Higgs, who expressed his "enthusiastic support" in a letter to U.S. regulators urging them to reject CN's request.
Nova Scotia Premier Iain Rankin sent a letter supporting the CN purchase, as did Irving Oil.
"Strengthened logistical connections resulting from CN's proposed acquisition of KCS [Kansas City Southern] are critical to our future growth and success," Rankin wrote on May 12."
https://www.cbc.ca/news/canada/nova-scotia/cn-cp-kansas-city-southern-railway-bid-1.6041729
Maritime port rivalry surfaces in corporate battle for U.S. railway
Halifax and Saint John backed rival bidders in the $30B battle for Kansas City Southern railway
Canadian National said Wednesday it is confident it will win U.S. regulatory approval for its $33-billion purchase of the Kansas City Southern railway, a deal that has implications for two Maritime provinces with rival gateway ports.
If approved, CN will own a single, north-south rail network connecting Canada, the United States and Mexico — positioning itself as a carrier for free trade in everything from lumber to cars between the three countries.
Business and political interests in the ports of Halifax and Saint John want to be part of that network.
Halifax's port authority, which backed CN's winning bid against Canadian Pacific Railway, said the deal offers the prospect of more business.
"Any growth in the CN network is a growth opportunity for the Port of Halifax," Capt. Allan Gray, CEO of the port authority, said Wednesday. "We're reaching deeper into the U.S. market. So this is a whole new market space for the Port of Halifax."
Saint John backed competing railway
Calgary-based CP had an agreement earlier this spring to purchase the American railway for $29 billion, only to lose it when CN came in with a sweeter offer.
The competition exposed rivalry between neighbouring Maritime provinces Nova Scotia and New Brunswick.
CP has been promoting Saint John as its East Coast gateway. (Matthew Bingley/CBC)
CP has been beefing up its presence in the Port of Saint John and promoting the city as its East Coast gateway. Prominent backers of CP's bid included JD Irving Ltd. and New Brunswick Premier Blaine Higgs, who expressed his "enthusiastic support" in a letter to U.S. regulators urging them to reject CN's request.
Nova Scotia Premier Iain Rankin sent a letter supporting the CN purchase, as did Irving Oil.
"Strengthened logistical connections resulting from CN's proposed acquisition of KCS [Kansas City Southern] are critical to our future growth and success," Rankin wrote on May 12.
More opportunity for ports like Halifax
On Wednesday, CN and Kansas City Southern filed a 369-page motion with the U.S. Surface Transportation Board seeking approval for the purchase.
"Spreading cargo to uncongested ports allows all importers to have options when dealing with congestion that may arise at larger ports," the railways told regulators in their filing.
The companies said the single line, dubbed Connected Continent, would enhance trade, result in better service, more shipping options and streamlined routing.
"We'd like to see more traffic flowing over these gateways," CN CEO Jean-Jacques Ruest said Wednesday during a joint address with Kansas City Southern CEO Pat Ottensmeyer.
Neither Saint John nor Halifax were mentioned by name during the conference. However, the plan offers hope to Halifax, which is operating under capacity and sells easy access and speedy turnaround times for shippers.
Needs U.S. approval
To address competition concerns, CN has pledged to sell a 100-kilometre stretch of the Kansas City Southern line between New Orleans and Baton Rouge, La.
It's the only section of overlap between the two railways.
CP president Keith Creel said the railway is ready to "re-engage" if regulators reject the deal between CN and Kansas City Southern.
"We believed then and we believe now our proposal between CP and KCS is a perfect marriage between two rail networks," Creel said.
The company declined an opportunity to top CN's bid.
Ruest said he expects a decision in June with the deal closing in 2022.
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Bill Gates owns largest ownership stake at CN
The founder of Microsoft is also the largest farmland owner in the United States and has invested heavily in plant protein
The fourth richest man in the world has quietly become by far the biggest shareholder in Canada’s largest railway.
Microsoft founder Bill Gates has amassed a sizeable ownership stake in Canadian National Railway Co.
Most of those shares were acquired through Cascade Investment LLC, an investment firm solely owned by Gates. Cascade owns 101,400,770 shares, or 14.28 percent, of the railway, according to CNN Business.
The Bill & Melinda Gates Foundation Trust owns another 13,661,683 shares or 2.08 percent of the company.
Combined, that is a 16.36 percent ownership stake in CN. The next largest shareholder is Massachusetts Financial Services Co., with a 4.79 percent share of the company.
Gates has been investing in CN since 2006, and his total investment in the railway is valued at $16.3 billion.
Barry Prentice, professor of supply chain management at the University of Manitoba and former director of the university’s Transport Institute, said railways are popular investments for rich folks like Gates.
Warren Buffet, the world’s seventh richest man according to Forbes, owns the Burlington Northern Santa Fe Railway Co., the largest freight railroad in North America, according to Wikipedia.
“Just imagine owning a railway. Who could dream of that?” said Prentice.
He thinks railways are asset-heavy investments that are a good hedge against inflation.
“People like that who have a lot of wealth, they want to put it into something that’s going to hold value,” said Prentice.
Technology stocks have rapidly risen in value of late, but Prentice wonders if somebody like Gates, who is intimately familiar with that world, recognizes that tech stocks may not be as sustainable and reliable as something like a railway.
He referred to it as investing in things that hurt when you drop them on your foot.
“The railways are pretty essential and they’re pretty guaranteed. They’re going to run no matter what,” he said.
“This goes back to that notion of value investing. If you’re investing in assets, they’re likely going to hold their value one way or another.”
That same logic may have led Gates into investing in farmland.
According to The Land Report magazine, Gates has become the largest farmland owner in the United States.
He owns an estimated 242,000 acres of farmland. A little more than half of his landholdings are in Louisiana, Arkansas and Nebraska.
Gates has more than US$690 million tied up in farmland, according to The Land Report.
The vast majority of that land was accumulated in a 2017 deal when Cascade acquired a group of farmland assets from the Canada Pension Plan Investment Board (CPPIB) for US$520 million.
The CPPIB had previously acquired the assets when it bought the Agricultural Company of America in 2013 and a 40 percent stake in Glencore Agricultural Products in 2016, according to The Land Report.
Gates has become keenly interested in food production in recent years, in particular with the vegetable protein business.
He was one of the initial investors in Impossible Foods, Beyond Meat and Memphis Meats. Gates was also an early backer of Hampton Creek Foods, which became JUST Inc.
In a 2013 blog post, the man who revolutionized the computer software business said he had recently sampled a chicken taco made out of plants.
“It was a taste of the future of food,” he wrote.
Gates said he is not a vegetarian — in fact, he loves hamburgers — but raising meat takes a great deal of land and water and there isn’t enough meat production to feed the world.
In a 2015 blog, he noted that raising animals takes a “big toll” on the environment.
“You have to feed the animal far more calories than you extract when you eat it,” he said.
“It’s especially problematic as we convert large swaths of land from crops that feed people to crops that feed cows and pigs.”
Sustainability could have also been a motivating factor for Gates to invest in CN, said Prentice.
The railway recently announced that it ranked 10th on the Corporate Knights 2021 Global 100 index of the most sustainable corporations in the world. It is the only railway on the list.
Prentice said rail is pretty sustainable compared to other forms of transportation due to the low rolling resistance of steel on steel.
When he was a youth he travelled to Western Canada and visited a cousin who was the manager of a grain elevator. His cousin asked Prentice to help move a rail car with nothing more than a pry bar.
“The two of us actually got a rail car to move. I couldn’t believe it. I mean, the rolling resistance is so small that you can actually do this,” he said.