CN Rail in joint bid for stake in largest container terminal in Eastern Canada

HALIFAX — Canadian National Railway is aiming to recreate its west coast success by bidding to acquire a stake in the largest container terminal in Eastern Canada.

"As part of our action-oriented approach to grow trade volumes on our eastern network, CN is exploring the opportunity with a partner of getting involved in the acquisition of Halifax's Halterm container terminal," spokesman Jonathan Abecassis wrote in an email.

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The Montreal-based company declined to provide details of its bid for an interest in Halterm, a 30-hectare site at the Port of Halifax.

Halifax is Canada's fourth-busiest port in terms of container traffic, behind Vancouver, Montreal and Prince Rupert in northwestern British Columbia.

More than 100 longshoremen work at the terminal, which is at the entrance to Halifax harbour and next to sprawling Point Pleasant Park in the city's south end.

Union spokesman Kevin Piper said CN appears to be interested in transforming Halifax into a so-called gateway port that can handle larger ships and trains that are more than three kilometres long.

"That's what these big ships need," said Piper, president of Local 269 of the International Longshoremen's Association.

"They need to have the rail capacity when they dump off. You don't want to stockpile the containers. You want to load them directly to the rail. That's what they do in Prince Rupert."

Piper said most of the cargo that arrives in Halifax is shipped by rail to Montreal, Toronto and through a tunnel at Sarnia, Ont., to the U.S. Midwest.

CN's proposal could help the Port of Halifax almost double its container traffic, which currently stands at about 500,000 twenty-foot equivalent Units per year, said Piper. Each unit is equal to a standard 20-foot shipping container.

"If you're going to double the capacity, you're going to double the workforce," he said, adding that the port supports about 12,000 direct and indirect jobs. "That's long-term growth and long-term, sustainable, well-paying jobs."

The port was badly hurt by the global economic meltdown in 2008, but its growth since then has eclipsed every other port in Atlantic Canada, helped lately by the weak Canadian dollar.

The Halterm Container Terminal was purchased by New York-based Macquarie Infrastructure Partners for $172.7 million in January 2007.

Industry analyst Walter Spracklin of RBC Capital Markets says the purchase of a minority stake, although not large for CN, would be strategically positive for Canada's largest railway.

"With a 'seat at the table' along with an experienced partner, we believe that CN ensures that capital and strategic planning at Halterm is conducted with long-term growth in mind," he wrote in a report.

Spracklin added that the acquisition would accentuate CN's competitive advantage as the only major rail provider in the east by leveraging the integration of Halterm and CN operations to increase the efficiency, service and overall profitability.

The bid follows the acquisition several months ago of TransX, another non-rail deal, that suggests a new strategy for CN Rail's new chief executive Jean-Jacques Ruest, whose ambition is to create a Prince Rupert of the east, Spracklin added.

The terminal has two piers with five berths that range in depth from 14 to 16 metres, though the longest pier can handle only one ultra-class container ship at a time.

The Halifax Port Authority has been working on a plan to expand the port since 2016. The plan calls for increasing capacity at Halterm to allow the terminal to accommodate two ultra-class vessels at one time.

In October, the authority confirmed that construction of a temporary berth extension had started, with a completion date slated for first quarter of 2020.

The second phase of the authority’s plan calls for expanding the terminal itself to make room for more equipment, trains and trucks.

In October 2017, Halterm announced it would expand its container handling capabilities by purchasing $10 million worth of new equipment.

— By Michael MacDonald in Halifax and Ross Marowits in Toronto.

Companies in this story: (TSX:CNR)

© Copyright 2018 Estevan Mercury

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